Trends in State Employment

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The Great Recession has had an unprecedented effect on state and local government employment and will continue to affect levels of employment in the coming years. John Lonski, chief economist for Moody’s Capital Markets Research, told Reuters, “We are looking at the worst contraction of state and local government employment since 1981.” The loss of stimulus funds will exacerbate the downward trend in public employment, especially in education. 
 
A marked increase in federal aid helped preserve a significant number of state and local jobs since 2009, but those funds are now dwindling.
  • Stimulus spending totaled $112 billion in the 2010 fiscal year and more than $89 billion in the 2011 fiscal year.1
  • The loss of significant amounts of this support in the 2012 fiscal year, including enhanced Medicaid funding and funding for the State Fiscal Stabilization Fund, will likely lead to continued loss of state and local government jobs throughout the upcoming year.
  • Jobs in education are particularly vulnerable to a loss in stimulus spending. Stimulus funding covered $84.4 billion for education, primarily through the State Fiscal Stabilization Fund, Student Aid, Training and Employment Services, Aid for the Disadvantaged, and Special Education and Rehabilitative Services.2
  • In 2010, nearly 9 million state and local full-time equivalent personnel, commonly called FTEs, worked in education, including higher, elementary and secondary education, representing 54 percent of all state and local employment. The next largest functions of state and local employment included hospitals at 5.9 percent, police at 5.7 percent, corrections at 4.4 percent, highways at 3.2 percent and public welfare at 3.1 percent.3
The Great Recession has been unique in its impact on state and local government employment.
  • In past recessions—such as those in 1973, 1980, 1990 and 2001—state and local government employment was quite stable as compared to private sector employment. Not so for the Great Recession, which began in 2007 and precipitated a downward trend in state government employment.4
  • The 90,740 state and local governments across the country in 2010 employed 16.6 million FTEs.5
  • State and local government employment started falling around August 2008, with significant declines beginning in late 2010.6
  • From 2009 to 2010, state and local governments lost 203,321 jobs, or a drop of about 1.2 percent.7
  • Over the same period, the private sector lost around 2.5 million jobs, which is about 2.4 percent.8
  • As of July 2011, private employment made up 83 percent of total employment. The remaining 17 percent was composed of state government employment with 4 percent, local government with 11 percent and federal government with 2 percent.9
Change in state government employment varied across states, with 37 states losing and 13 states gaining employees.10 
  • The Census data show that most state governments saw decreases in full-time or FTE employment between 2009 and 2010. Connecticut, Idaho and Rhode Island saw the largest declines, each losing about 5 percent of their employees.  Texas, on the other hand, added 5.6 percent more employees to its workforce, which was the largest percent increase of any state.
  • Thirteen states added employees in 2010, ranging from a high of 17,800 FTEs in Texas, 4,365 in Pennsylvania, a 2.6 percent increase, and 4,334 in North Carolina, a 2.6 percent increase. Five of those 13 states whose workforce grew added around 500 or fewer FTEs.

References:

1 National Association of State Budget Officers. “Spring 2011 Fiscal Survey of the States.” 

2 Recovery.gov. “Breakdown of Funds Paid Out.” Accessed September 1, 2011.

3 U.S. Census Bureau. “2010 Annual Survey of Public Employment and Payroll.” Accessed September 1, 2011.

4 Dadayan, Lucy and Robert Ward. “State and Local Government Employment Shows Broad, Continuing Declines.” Nelson A. Rockefeller Institute of Government at SUNY-Albany. July 22, 2011. 

5 U.S. Census Bureau. “Press Release: State and Local Governments Employ 16.6 Million Full-Time Equivalent Employees in 2010.” August 30, 2011. 

6 U.S. Department of Labor, Bureau of Labor Statistics. “Employment, Hours, and Earnings (CES) database.” Accessed September 1, 2011.

7 U.S. Census Bureau. “2010 Annual Survey of Public Employment and Payroll.” Accessed September 1, 2011

8 U.S. Department of Labor, Bureau of Labor Statistics. “Employment, Hours, and Earnings (CES) database.” Accessed September 1, 2011.

9 U.S. Department of Labor, Bureau of Labor Statistics. “July 2011 Employment Situation.” August 5, 2011. 

 10 U.S. Census Bureau. “2010 Annual Survey of Public Employment and Payroll.” Accessed September 1, 2011.