Explaining Southern California's economy

Why this recovery is different for state and local workers

California Budget

Rich Pedroncelli/AP

Gov. Jerry Brown discusses the cuts he has already made to help reduce the state's budget deficit. For the state to get its financial house in order, it will need to cut workers, reversing a hiring trend that has taken place in previous recoveries.

At the New York Times' Economix blog, Ben Polak and Peter K. Schott, both of Yale, have written a "Duh, so that's the problem!" post about what they're calling America's "hidden austerity" program. In case you've been on an extended vacation, "austerity" is shorthand for cutbacks in government spending, versus throwing money at various debt and banking crises. Greece, for example, has been suffering through austerity as a condition of the bailouts it's received from the European financial authorities.

In the U.S., we're theoretically not yet engaged in official austerity. We're in more of an in-between phase, with the stimulus packages of 2009 in the rear-view mirror and the potential for deficit-cutting and tax cuts on the horizon. 

Polak and Schott argue that austerity has already arrived, however, in the form of reductions in workers at the state and local level. Neither has recovered at a pace that resembles previous bounce-backs from recessions. This trend is particularly evident in California, where a state-level hiring freeze has been in effect since last year (there have been some workarounds, but there you have it).