Government Layoffs Contributing To Persistent Unemployment

In a recent article in the New York Times, several state and local government officials share the observations that cutbacks in public programs — and the lost jobs arising from them — have played a part in the difficulty of an economic recovery, and have swelled the rolls of unemployed by as much as one full percent. From the article:

Government payrolls grew in the early part of the recovery, largely because of federal stimulus measures. But since its postrecession peak in April 2009 (not counting temporary Census hiring), the public sector has shrunk by 706,000 jobs. The losses appeared to be tapering off earlier this year, but have accelerated for the last three months, creating the single biggest drag on the recovery in many areas.

With the economy expanding, albeit slowly, state tax revenues have started to recover and are estimated to exceed prerecession levels next year. Yet governors and legislatures are keeping a tight rein on spending, whether to refill depleted rainy-day funds or because of political inclination.

At the same time, costs for health care, social services, pensions and education are still rising. Fourteen states plan to resolve their budget gaps by reducing aid to local governments, according to a report by the National Governors Association and the National Association of State Budget Officers.

The National Governors’ Association report detailing the cutbacks to local governments also shows the widespread trend of states balancing their own budgets in part by reducing aid and shifting costs to local governments.

Michael Sanderson

Executive Director Maryland Association of Counties

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