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  Unemployment Rate Without Government Cuts: 7.1%
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ContributorRP 
Last EditedRP  May 11, 2012 12:19pm
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CategoryAnalysis
AuthorJustin Lahart
News DateTuesday, May 8, 2012 05:15:00 PM UTC0:0
DescriptionOne reason the unemployment rate may have remained persistently high: The sharp cuts in state and local government spending in the wake of the 2008 financial crisis, and the layoffs those cuts wrought.

In April the household survey showed that that there were 442,000 fewer people working in government than in March. The household survey has a much smaller sample size than the establishment survey, and so is prone to volatility, but the magnitude of the drop is striking: It marks the largest decline on both an absolute and a percentage basis on record going back to 1948. Moreover, the household survey has consistently showed bigger drops in government employment than the establishment survey has.

The unemployment rate would be far lower if it hadn’t been for those cuts: If there were as many people working in government as there were in December 2008, the unemployment rate in April would have been 7.1%, not 8.1%.

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