The good news is Colorado’s unemployment rate is 8.5%. The bad news is Colorado’s unemployment rate is 8.5%. Lame joke, I know, but it is true. The unemployment rate is essentially unchanged from July 2010 to July2011, but the factors impacting unemployment are not promising.

Predictions are that Colorado will add about 10,000 jobs in 2011. In order to get Colorado back to where we were before the recession began, we need to add 150,000 jobs. With the addition of those jobs, Colorado could achieve a 4.5% unemployment rate in four years, which is considered “full employment.”

During July 2011, Colorado’s private sector jobs increased by 4,200, but government jobs decreased by 900. We can expect government jobs to continue to slide as governments balance their budgets and increasingly pursue austerity programs.  While the Tea Party will cheer smaller government, as evidenced by fewer jobs in the public sector, the individuals losing those jobs are homeowners and parents who will require assistance to survive.

Who are those people losing jobs in the public sector? We can certainly expect some of them to be school teachers. Mill levies, which are a major component in school finance, are based on the value of local real estate. As real estate values decline, the taxes collected on the property also decline. There is a lag time between the decline in value and the decline in tax revenue. Mill levies are reevaluated, based on an 18 month period of sales of comparable properties, or a five year period if properties are so unusual that comparable sales are not frequently occurring events. Right now the assessor’s office is using data from January 1, 2009 to June 30, 2010 to decide current mill levies.

There were 1,290 foreclosure filings in 2009.  There were 767 foreclosure filings in the first two quarters of 2010. Each foreclosure carries its own lag time. Homeowners have the right to redeem their property out of foreclosure, which seldom happens. But the grace period means that it is at least one quarter from the date of a foreclosure filing to the time that there is a foreclosure sale.

It is the sale that determines the new property value, and the mill levy on that piece of real estate. In hard economic times, the only buyers at foreclosure sales are the lender trying to get access to their collateral, or bottom feeders looking to make a quick buck when the market turns around. Even bottom feeders stay out of the market if economic recovery is uncertain. The net result is that the value of the property almost always drops in a foreclosure.

All of these foreclosures mean that the school district is going to have less revenue. Less revenue for the school district means they will have to cut expenses, and salaries are a very big piece of school budgets. That means that some teachers will lose their jobs. Teachers who lose their jobs may find it impossible to pay their mortgages. Thus continues the downward spiral of job losses resulting in foreclosures, resulting in fewer people buying things from local retailers, resulting in fewer sales for wholesalers and manufacturers, resulting in private sector layoffs, resulting in foreclosures…

There is nothing in plans promoted by Republicans that will change this dynamic. Regulations do not change mill levies. Regulations do not change local government’s requirement to balance their budgets. Scott Tipton’s plan to change how banks account for loan losses will not change foreclosure rates. Passing trade agreements and improving patent protection will not change foreclosure rates. Nothing will change foreclosure rates until workers find jobs and have enough confidence to buy things. FDR had it right--create a public works program. Governments should be spending money now, not giving tax breaks to the people who least need government help.

Republican policies are increasing the gap between the haves and the have-nots. We are heading into a new feudal era where the wealthy will gobble up properties in foreclosure. Workers will have to pay them rent in order to live indoors. The choke-hold on workers will solidify with high rents and low or no wages. If current trends continue, workers will become slaves to the property owners with no way out.

Homework

Colorado Jobs

Everything You Never Wanted to Know About Real Estate Assessments in Mesa County

Foreclosures in Mesa County

Feudal Society

The Tea Party held the full faith and credit of the United States of America hostage, and the White House surrendered. Enjoy your victory now, but don’t expect a return to prosperity any time soon.

The GOP answer to every problem, since Regan, has been to cut taxes and decrease regulation. The GOP blindly follows this doctrine of deliberate blindness, even when the facts prove that it doesn’t’ work.

Under Bush the largest tax reduction in the history of the nation passed. Instead of it resulting in more jobs, we now have the highest unemployment rate this nation has seen since the great Depression. Under Bush and Cheney, who were both former oil and gas men, the oil and gas industry became the driving force behind all federal policies. They even tried to dismantle the EPA library so that all the dirty secrets of the industry would be buried.  Even after the horrific spill in the Gulf of Mexico, the mantra of the GOP continues to be “deregulate”.

In the last election cycle, Americans were feeling the pain of high unemployment, and decided that they wanted divided government. What they didn’t see coming was a freshman class of Representatives who literally would fiddle while the nation burned. They are so determined to make government smaller that if Washington caught fire they would call it a win, and let it burn to the ground.

The deal struck by Obama will not improve a thing in our economy, other than making the suffering of ordinary Americans continue, and likely increase. The only bright spot I can see in the deal is that there won’t be any new debt ceiling fights until after the next election. That should make Wall Street investors less uncertain, and stop the free fall in the markets that we watched last week.

I’m confused by the dates in the deal. A bi-partisan super committee will decide on additional cuts by November. Congress hasn’t passed a budget for 2012, which begins October 1. So, a budget passed in September is going to be cut in November? And if congress can’t decide on the cuts to be made, there is a trigger that will cut every program until a specified dollar amount of cuts is reached. That removes all motivation to reach a budget deal by October 1, so we are looking at another stalemate in the budgeting process, and nothing has been gained.

Let’s look at some facts:

Unemployment is high. Cutting federal budgets, and by extension state budgets, is going to cause governments, who DO create jobs, to lay-off more people. During the last budget cuts locally, we were told that cuts had reached the point of lopping off limbs. The path that we have embarked upon contains no incentives for anyone, government or private sector, to create jobs.

Our debt level is unsustainable at current levels of unemployment. The fastest way to improve the debt picture is to do what American families do—get a second job. Economists tell us that there is no way that the national debt can be paid down without increases in revenue. But any discussion of increases in revenue results in hostage taking by the extreme right.  They may get their wish and drown government. I wish I knew with what they plan to replace government. Anarchy isn’t very appealing to me.

Homework:

White House Fact Sheet About the Deal

Winners and Losers in the Deal

Bloomberg Describes the Lay of the Land

What is Happening and Expected to Continue Happening in States

Current Unemployment Rates

Government Analysis of Jobs Market

Historic Look at Trends in Private Public Sector Jobs

Public Sector Jobs Threaten Recovery