State, local governments could cut most jobs since '80s

Colorado state workers got an extra day off yesterday – without pay. Their California colleagues have three unpaid days of furlough every month through at least next June. Faced with the worst economic slump in decades, cash-strapped state governments are trying to soften the blow for employees by cutting their working hours rather than laying them off.

But it's not enough.

For the first time since the 1980s, state and local government payrolls are shrinking simultaneously, according to US Labor Department data. The downtrend is slight so far: just over a 1 percent cut over the past year in state employees and less than that for local government workers (not counting teachers and others involved in state and local education). More cuts are expected as rising unemployment and slow economic activity raise costs and trim tax revenues.

The last time state and local payrolls fell together was the early 1980s. Back-to-back recessions trimmed state noneducation workforces by 1 percent between 1980 and 1983. Noneducation local government employment fell more – 6.5 percent between 1980 and 1984, due also to the property-tax revolts in Massachusetts and California.

The last downturn in state noneducational employment, between its peak in 2001 and bottom in 2004, brought a 2.6 percent cut to state payrolls. This downturn will probably be larger, says Donald Boyd, a senior fellow at the Nelson A. Rockefeller Institute of Government in Albany, N.Y.

Of course, these public-sector cuts are modest in comparison with what's happened elsewhere in the economy, Mr. Boyd says. But “even in recessions, significant cutbacks are rare” in the public sector.

Why are state-government jobs resilient, despite the crummy budgets?

The federal stimulus has helped. There’s a reluctance to cut jobs until it’s clear the fiscal crisis is prolonged, Boyd says. And for all their clamoring on taxes, citizens are often loath to give up firemen, teachers, and prison guards that government provides.

That's why even the modest reductions are causing such a stir. Excluding education workers, local government staffing is almost 40 percent higher than it was in 1980. State governments employ about 27 percent more people.

State governments, so far, have been able to make most of their cuts by not filling vacancies, says Scott Pattison, executive director of the National Association of State Budget Offices. The unpaid furloughs are more“palatable” quick-fix to handle a state budget crisis, he adds.

Unpaid time off is becoming common. At least 19 states have enacted mandatory furloughs or are trying to, according to the National Conference of State Legislatures.

Where can pink-slipped workers turn to for jobs? The federal government is filling its vacancies. It will need to fill 270,000 mission-critical positions in the next three years due to a retirement boom, according to a report last week from the Partnership for Public Service in Washington, D.C.

– Guest blogger Taylor Barnes is a Monitor contributor.