Three Steps Forward, One Step Back

While the private sector has been hiring, state and local governments have been firing. The nation gained 863,000 private sector jobs during the first nine months of this year, but lost 269,000 state and local government jobs – close to half of which were jobs in public schools. This means that for every three individuals who have found work in the private sector so far this year, one state or local government employee joined the ranks of the unemployed. In other words, each time we take three steps closer to recovery, state and local budget cuts drag us one step back.

As we’ve written many times before, state and local budget cuts work against the recovery because they disproportionately affect low- and middle-income individuals, such as teachers, child care providers, and in-home care workers, who spend most of their incomes locally. One less dollar spent by state and local governments means one less dollar circulating in local economies, since that dollar otherwise would have gone to local grocers, shopkeepers, and landlords.

While federal aid to states prevented even deeper reductions in state spending in 2010-11, most of that aid will run out by next year. Yet the budget outlook for most states remains grim: 39 states have projected budget gaps for 2011-12 that total $112 billion, according to the Center on Budget and Policy Priorities (CBPP). The CBPP concludes that “federal assistance will [likely] end before state budget gaps have fully abated. … [Consequently,] states are likely to respond with spending cuts and tax increases even larger than those that have already been enacted.” This suggests that public sector job losses will continue to slow recovery in the nation’s job market for the foreseeable future.

Stay tuned next Friday the 22nd, when the Employment Development Department (EDD) will release September jobs data for California, which will include employment in public schools at the beginning of the school year. According to the EDD, “deeper job losses are widely anticipated, particularly in public education.”

— Alissa Anderson