State and Local Public Workforce Hit With Thousands More Job Losses

Heavy job losses continued across state and local governments in May, despite signs the nation’s labor market was improving as economic activity began to thaw from the dramatic freeze brought on by the coronavirus outbreak.

Local government employment was down by 487,000 jobs in May. Education accounted for almost two-thirds, or 310,000, of the jobs in that decrease, according to figures the Labor Department released on Friday. Employment also continued to deteriorate in state government, falling by 84,000 jobs overall and 63,000 in state education. 

The education losses reflect widespread school closures that took place across the nation to help control the spread of the virus.

Overall, the nation’s total non-farm payroll employment increased by 2.5 million in May, as the unemployment rate dropped to 13.3% from 14.7% in April.

The public sector job losses come as state and local officials and advocates continue to press for further emergency financial assistance from the federal government. Republican leaders in Congress haven’t moved urgently in recent weeks to approve a new package with this sort of aid.

“People who work in public service continue to bear the brunt of this economic downturn,” said Lee Saunders, president of the American Federation of State, County and Municipal Employees, the nation’s largest labor union of public workers.

“We need paramedics, school employees, sanitation workers and others on the job if we’re going to safely reopen the economy,” he added in a statement.

The latest state and local government job losses come after employment fell by nearly 1 million positions in the sector during April, according to Labor Department figures released last month.

"It's not good,” said Michael Madowitz, an economist with the left-leaning Center for American Progress. "This is not a sector we tend to see rapid recovery in. It took us a full decade to get back to where we were before the Great Recession in terms of state and local employment.”

Last month’s state and local government job losses had already surpassed low points seen between 2011 and 2015 in the wake of the Great Recession, which struck at the end of 2007.

A share of the state and local government layoffs since the pandemic began are expected to be temporary.

State and local governments curtailed services over the past three months as they sought to limit the spread of the virus. In other cases, there wasn’t demand for certain services as government-mandated business closures and stay-at-home orders were in effect.

Now, as restrictions are lifted and the economy comes back to life, and as new safeguards are put in place to protect government workers and the public, some of the temporary layoffs may be reversed.

But the threat of permanent job cuts looms for many employees as governments are grappling with sudden and sharp losses in tax revenue due to the virus-driven economic crash and the unplanned costs of responding to the disease outbreak.

“I think a lot of it is revenue-driven,” Gerald Young, a researcher at the Center for State and Local Government Excellence, said of the job losses. He pointed out that for places looking for savings, “that’s often going to involve the largest line item in their budgets, which is their staffing.”

For most states and many localities, July 1 marks the start of a new fiscal year and a deadline when they’ll need to have a balanced spending plan in place for the next budget cycle.

"My hope is that the feds get their act together before the balanced budget deadlines kick in, because I think a lot of people thought that was going to solve this problem for them,” said Madowitz, with the Center for American Progress.

Young noted that in the case of the Great Recession, the hit to state and local budgets was delayed compared to the downturn’s effects on other parts of the economy—like housing and the stock market. Government revenues like sales taxes didn’t take a nosedive overnight.

“I think the impact on that this time around has been much more immediate,” he said.

Erie County, New York, provides an example of the sorts of financial decisions local officials are weighing right now. On Thursday, County Executive Mark Poloncarz unveiled a “deficit remediation plan” for the county's 2020 fiscal year, which runs through Dec. 31. The proposal aims to close a projected $137.8 million budget gap that his office says is related to the pandemic.

This plan outlines $40 million in departmental cuts. The Buffalo News reported Thursday that the proposal calls for eliminating vacant county positions and laying off 65 employees, with 30 of the layoffs coming from social services positions and 42 from part-time jail and correctional health jobs. At least some of the slashed jobs would be tied to a jail consolidation.

A spokesperson for the county manager’s office did not respond on Friday to requests for comment about the plan. But Poloncarz is urging federal lawmakers to take action on another relief package. 

“Erie County, like counties nationwide, needs another round of federal stimulus to help our economic recovery,” he said in a statement. If such federal aid flows to the county, he added, “we can avoid the many proposed cuts to services and staff.”

Economists and others have warned that state and local spending cuts, tax increases and public sector job losses could be a drag on any forthcoming economic recovery.

Looking across the economy, the Labor Department said the sectors that saw notable job gains in May included leisure and hospitality, construction, education and health services, and retail trade.

The latest unemployment rate, while an improvement, is still extremely high by historical standards and well above the 3.5% rate recorded in February, before the virus upended the nation’s economy. Millions of Americans remain unemployed.

This story has been updated with additional comment and other information.