June U.S. Jobs Report Signals More Job Loss to Come for PA

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Commonwealth Must Maintain Spending to Forestall Additional Job Loss

The following analysis is provided to Pennsylvania reporters as part of the Keystone Research Center’s ongoing tracking of the health of the Pennsylvania economy. The Keystone Research Center is a nonprofit, nonpartisan research organization that promotes a more prosperous and equitable Pennsylvania economy.

The carnage in the national job market continued unrelenting in June, with the U.S. shedding 467,000 jobs and the national underemployment rate reaching 16.5% - roughly one of every six Americans in the labor force.

Today’s national job numbers place the debate about Pennsylvania’s state budget in a new context. It is well known to economists that the best way for state government to limit job loss in an economic recession is to maintain spending levels. Nobel Prize-winning economist Joseph Stiglitz and others have shown that direct spending reductions may generate more adverse economic consequences than tax increases, particularly tax increases on higher-income households. That means tax increases can be the least damaging way to close state fiscal deficits in the short run and provide for long-term economic growth. (www.fiscalpolicy.org/10-30-01sfp.pdf)

Basic economics underscores that Governor Ed Rendell’s proposal to balance the state’s budget in part through an increase in the state’s personal income tax is on target and that the alternative course of draconian cuts in state spending would reduce job creation and increase unemployment. So far Pennsylvania unemployment remains about a percentage point lower than the national rate - an advantage that translates into 60,000 jobs. The wrong budget agreement would jeopardize that Pennsylvania advantage.

The basic economic reasons that maintaining state spending ideally through revenue increases that fall on higher earners are straightforward:

1. Government injects every dollar it raises into the economy.

2. Taxpayers, by contrast, save some of their income and those savings do not stimulate the economy in the short run. The income of higher earners is most likely to be saved rather than used for consumption or investment in a deeply depressed economy.

3. State spending financed through bonds - in effect, through future state revenues - can be especially stimulating to the state economy in the short run, one reason that bond-financed water and sewer infrastructure and the state’s $650 million Alternative Energy Investment Fund are so well timed.

From the point of view of maximizing short-run job creation, an even better alternative to the Governor’s current proposal would be to collect needed state revenues more substantially from higher earners, through a differentially higher tax on investment income. This can be done in Pennsylvania without a constitutional change. (As a result of private sector pessimism about future demand, investment income is especially likely to stay on the sideline in today’s economy. This makes the stimulating impact of spending financed by higher tax rates on investment income especially great).

While Pennsylvania’s unemployment rate is lower than the national one, it continues to move higher as the U.S. labor market weakens further. Moreover, initial claims for unemployment insurance also released this morning were above 40,000 in Pennsylvania for the third week in a row, a figure which is 87% higher than during a comparable period prior to the start of the recession. Unemployment is higher in every part of Pennsylvania, although manufacturing-dependent rural areas have been especially hard hit. County-level unemployment rates are available now for May and can be seen in an online map at http://www.keystoneresearch.org/unemploymap.html.

Source: The Keystone Research Center

New law effective today will provide free mercury thermostat recycling & help protect public health

More Collection Locations Will Help Californians Recycle Toxic Thermostats

A new law designed to protect public health and reduce taxpayer costs through the collection of mercury thermostats is effective today. The Mercury Thermostat Collection Act of 2008 (AB 2347, Ruskin) increases the number of thermostat collection locations and makes recycling more convenient. The law requires heating and air conditioning wholesalers with physical locations in California to collect thermostats from the public and contractors. Retailers are also encouraged to participate.

Co-sponsored by the California Product Stewardship Council (CPSC) and Sierra Club California, AB 2347 is California’s first full producer responsibility legislation and makes California only the third state to pass such a law in an effort to protect public health.

Mercury is a potent neurotoxin. On average, mercury thermostats contain about three grams of mercury. Each year in the U.S., as many as 630,000 infants are born with mercury levels associated with IQ loss, according to the Centers for Disease Control.

“We want contractors and the public to know that this new law is in effect to protect the public from mercury exposure,” says Heidi Sanborn, CPSC Executive Director. “Having the producers fund and manage the collection system reduces public costs to manage the product at the end-of-life and is in line with the overall framework for an Extended Producer Responsibly (EPR) system adopted by the California Integrated Waste Management Board in 2008.”

Sanborn praised the efforts of Honeywell International Inc., as part of the Thermostat Recycling Corporation (TRC), and the California Retailers Association for supporting the recycling legislation.

CPSC is an organization of local governments and other partners, formed to support development of EPR policy and its implementation. EPR is a policy whereby product manufacturers are responsible for the life cycle of their products. CPSC’s mission is to shift California’s product waste management system from one focused on government-funded and ratepayer-financed waste diversion to one that relies on producer responsibility in order to reduce public costs and drive improvements in product design that promote environmental sustainability.

Information about free thermostat recycling in California can be found at http://www.calpsc.org/products/thermostats.html

Source: California Product Stewardship Council