Wednesday, May 13, 2009

Don't expect government jobs to hold on

Forbes is running an article on jobs in government, Government Jobs You Should Apply For Now. Accordingly, there is a lot of job growth in the federal job market - well, there may be. The Department of Labor is opening positions from Program Analyst to Contract Specialist to General Attorney (Labor). And the April employment report showed a record 72,000 jobs added by the government sector alone, which is massive compared to its +8,000 average over the last year.

However, "government" is federal, state, and local; and the federal payroll accounted for just 13% of all government jobs in April.

The chart illustrates job growth at the federal, state, and local levels since 1980 (indexed to 1980). During the 1990 and 2001 recessions, both state and local governments hired throughout the recession. However, this time, they are more likely to fire than hire, where job growth has already slowed to a small crawl.

State jobs are roughly 23% of the government's workforce, while local governments account for 64% of government jobs. And state budgets are going deeper into the red according to the Wall Street Journal's Real Time Economics blog:
Revenue declined in 45 of the 47 states that have reported first-quarter numbers (the exceptions were Iowa and South Dakota). Let’s remember that many states consider deficits to be those times when revenues don’t grow as fast as they’d hoped, an have no contingency plans for double-digit decreases. “If green shoots are sprouting in the overall economy, it’s still weeds and dust for state governments,” says Robert Ward, deputy director of the Rockefeller Institute.

Chart source: Real Time Economics

And amid such budget shortfalls, spending cuts are already underway. As an example (one of the states highlighted in the chart above that is experiencing a 15% drop in revenues over a year ago) is California, which according to the WSJ, is again accommodating the mound of budget red ink by another round of spending cuts:
The possibilities include cutting $3.6 billion from education, reducing the state's firefighting budget by 10%, and releasing 40,000 low-risk inmates to cut prison costs, Mr. Schwarzenegger said. The state also may have to borrow $2 billion from local governments, he said.
Jobs are certain to be slashed alongside the spending cuts. And unless the feds can offset the job loss at the state and local level, government is not the illustrious job maker portrayed by Forbes. The labor market - all sectors of it - is awful.

Rebecca Wilder

11 comments:

  1. Rebecca,

    The next few reports will be interesting to see. As I pointed out the other day, you have been a proponent of the "vulnerability" of government jobs for many months now.

    On one hand you have Newark, NJ Mayor Cory Booker saying his city is about to lay off "hundreds" of gov. employees, and that the state can't sustain itself for another 10 years. On the other hand, the Fed. gov announces pay increases and the hiring of hundreds, if not thousands, of new employees.

    The percentage breakdown of how many employees make up each sector only further bolsters your warnings of "vulnerability."

    Great post,
    Tim

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  2. Hi Tim,

    Thanks for the comment. I read your blog almost everyday - good stuff! Thanks for the plug.

    Best, Rebecca

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  4. There's an 85 million dollar shortfall in my county. But there's also alot of "fat" (cronyism).

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  5. Same here (for the state), Flow5. don't hear much about elected officials, department heads, etc. taking a pay cut to help out. Seems like that is only happening inside departments where groups ban together on a pay cut to save the jobs of their co-workers.

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  6. Very nice post, Rebecca. Because of the size of the government sector, a very small trend change can have a big effect on unemployment and employment.

    There are very few companies who could sustain the drops in revenue that half the states are experiencing without cutting employment through attrition and other measures.

    There is another aspect to especially the local government employment situation. The bulge of retirements is due to hit a few years earlier there, due to generally more generous retirement plans and provisions. And many of the local governments have poorly funded programs and will see an almost immediate budget problem due to these retirements.

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  7. Rebecca,

    Thanks for the kind words...Perhaps I'm ignorant to the fact that others have said this too, but you've been one of the only ones whom I have read that have really pushed this prediction (that gov employment will start to slip). Not that I want to see the stats get worse, but if it happens it will be nice to be right huh?

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  8. Hi MaxedOutMama!

    "And many of the local governments have poorly funded programs and will see an almost immediate budget problem due to these retirements."

    I suppose that you are speaking of the baby-boomers. This will then climb back to the state level through increased unemployment claims....

    Good point.

    Thanks for the plug on your blog - I keep up with your stuff. You get a lot of readers!

    Best, Rebecca

    ReplyDelete
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