Government job losses dragging down growth

April 6, 2012 at 7:05 AM ET

Economic Policy Institute /

The economy has been adding jobs lately, but not government jobs.

More than half a million, local, state and federal jobs have been cut since the recession ended in June 2009, according to an analysis released this week by the Economic Policy Institute.

That's the opposite of what happened following the previous three recessions and could be part of the reason why this recovery has been so weak, particularly when it comes to jobs. The government reported Friday that the unemployment rate fell slightly, to 8.2 percent in March, as the economy added 120,000 jobs, much fewer than had been expected.

Despite the government job cuts, more than 20 million people work in the public sector, making it a key part of the overall jobs picture.

In previous recessions, the public sector saw a percentage gain in jobs once the economy began to grow again, according to EPI’s analysis of government data. This time, there’s been a percentage loss.

Josh Bivens, the economist with EPI who compiled the data, said the biggest job losses this time have come from state and local governments. Those employers have had to deal with a drop in tax revenue, in part because of the housing bust, along with an increase in the need for social services and support programs such as unemployment insurance and Medicaid.

“States have two options when they’re faced with a looming budget gap: Raise taxes or cut spending, which means cutting jobs,” Bivens said. “It does seem like they’ve gone the spending cut route, judging from these numbers.”

The federal government also has cut jobs in certain sectors, such as the Postal Service, and faces the looming prospect of more cuts in areas such as defense. Overall, however, federal government employment is about the same as in mid-2009. The analysis excluded Census workers, who were hired temporarily by the government from late 2008 to late 2010.

There could be good news on the horizon for people want to get – or keep – a government job. In recent months, the pace of public-sector job losses has started to slow, and there has even been some net hiring in areas such as state and local education.

In the March unemployment report released Friday, there was a net gain in state government education jobs, but local education jobs recorded another drop from the previous month.

“The hope is that eventually this swings from negative to positive,” Bivens said. “I don’t expect it to continue to drag.”


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