Major Job Losses and Rise in Poverty Rate Forecast

The Center on Budget and Policy Priorities issued a report November 24 finding that the recession could push millions into deep poverty:

Because this recession is likely to be deep and the government safety net for very poor families who lack jobs has weakened significantly in recent years, increases in deep poverty in this recession are likely to be severe. * * * * Goldman Sachs projects that the unemployment rate will rise to 9 percent by the fourth quarter of 2009 (the firm has increased its forecast for the unemployment rate a couple of times in the last month). If this holds true and the increase in poverty relative to the increase in unemployment is within the range of the last three recessions, the number of poor Americans will rise by 7.5-10.3 million, the number of poor children will rise by 2.6-3.3 million, and the number of children in deep poverty will climb by 1.5-2.0 million.

Meanwhile, on the same day, New York State Controller Thomas DiNapoli issued a report on the impact of the current financial industry crisis on the state's economy. He stated that the financial crisis could cost New York State $6.5 billion in securities industry-related tax revenue over the next two years, and will have a major impact on private sector job losses:

The Office of the State Comptroller estimates that the financial services sector in New York State will lose 55,000 jobs during the two-year period beginning in October 2007 (when employment in the sector peaked), including 40,000 in the securities industry. Of these losses, New York City could lose 48,000 jobs in the financial services sector, including 38,000 in the securities industry. Total private sector job losses during this two-year period could reach 225,000 in New York State, including 175,000 in New York City. Job losses could be even greater if the downturn is longer and deeper than currently forecast.

The Securities Industry in New York City, p. 12. The Controller's report concerned the impact of the New York City financial industry cutbacks, and did not address broader recessionary impacts.

This underscores the need for the New York State Public Service Commission to focus more attention to affordability and continuity of service to low income customers when it sets utility rates. See PSC Expresses Concern for Utility Welfare; PSC Policies Foster Increase in Utility Service Terminations as a Collection Tactic; Candle Fires: A Symptom of "Rolling Blackouts" Affecting Low-Income Households.