Are Local Government Cuts Nearing An End?

New data shows local public employee cuts have slowed. Does this mean governments are about to rehire?
by | March 9, 2012

Labor Department data released today shows local government payroll cuts coming to a halt, with employment levels virtually unchanged since November.

That’s a stark contrast from the past few years as localities made historic cuts to account for budget shortfalls. The new figures, along with gains in private sector employment, give reason for optimism that public employee reductions are finally nearing an end.

Public sector academics and researchers told Governing earlier this week local government cuts are close to bottoming out. However, they don’t expect municipalities to begin hiring anytime soon.

“We’re in a trough now at the local government level,” said Elizabeth Kellar, president of the Center for State and Local Government Excellence. “In the next year or two, we may begin to see things pick up very gradually in the places that have been hardest hit.”

Employment for schools and local agencies has nearly unchanged since November, declining by only 2,000 workers nationwide. During the same period a year ago, local governments slashed 50,000 jobs, according to Labor Department estimates.

The few job openings at the local level frequently remained frozen for months. But some governments struggled to find qualified candidates for engineers and other highly-skilled positions, Kellar said.

To compensate for increased workloads, Kellar said many local managers opted to train existing employees to assist with added duties. “If you’re asking the people to step up and take on more responsibility, you need to do everything you can to develop your skillsets,” she said.

Kellar expects a slow recovery for most areas. Municipalities in Florida, California and other states taking a significant hit in property values will be last to rehire, she said.

As economic indicators show, some areas of the country have gradually begun to recover.

A National League of Cities survey of city officials released today reported local economic improvements over the previous six months for 57 percent of localities, compared to only 10 percent identifying worsening conditions. Still, public employee reductions continued, with 39 percent of city administrators reporting personnel cuts. Local governments have eliminated 481,000 jobs since the beginning of 2009, according to Labor Department data.

“We’re not completely out of the woods yet, but I don’t think we’re talking about hundreds of thousands of jobs [being cut] either,” said Chris Hoene, research director for the National League of Cities.

Hoene estimated localities will not see sizable revenue increases to allow for rehiring for another 18 months to two years. “They’re still reeling from the effects of the recession,” he said.

State governments -- more dependent on income and sales tax -- will likely add employees before those at the local level. As revenues replenish state and federal coffers, grants funding local agencies will follow.

Hoene said cities may elect to hire back contractors, though, before full-time staff because they require less training and are easier to bring back on board.

Walter Broadnax, a professor of public administration and international affairs at Syracuse University, said governments will continue to target personnel cuts if budgets remain tight.

“I am hopeful that we are close to bottoming out,” he said. “I think there’s going to probably be a little more before we turn sharply in another direction.”

Broadnax points to a boost in private sector confidence as good news for local governments. Private sector hiring and growth should help to spur better revenue projections as governments prepare budgets for the next fiscal year.

“If we can keep the private sector engine running warmer and warmer, then I think we’ll get the reaction we want on the public side,” Broadnax said.

Data

The graph below shows estimated month-to-month changes in total employment for local governments, according to the Labor Department. These figures are current as of March 9, and could be revised at a later date, as is usually the case with BLS data.

UPDATE: This graph illustrates total government employment since 2009. Because reductions in recent years represent only a small portion of the total workforce, changes are not visible unless the graph is scaled (as in a previous version of this report).

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