Economic Development

When Will Governments Hire Again?

Even where the fiscal picture has brightened, state and local officials are understandably wary about taking on new obligations.
by | December 2012
 

Revenues are starting to pick up or at least stabilize for state and local governments. So when will they start hiring again?

Public-sector employment has been a big drag on the economy over the past few years, accounting for 600,000 fewer jobs than was the case back in fall 2008. It appears that the layoffs, for the most part, have stopped. Thirty thousand state and local jobs were lost in September, which was the smallest retrenchment in any month in more than three years.

But that doesn’t mean there are a lot of “help wanted” signs showing up in City Hall windows. Even where the fiscal picture has brightened, state and local officials are understandably wary about taking on new obligations at this point.

“We’re coming off a pattern of four years where communities have reduced their workforces and payrolls,” says Geoff Beckwith, executive director of the Massachusetts Municipal Association. “They’ve been extremely conservative and there really is not a lot of expansion planned.”

At this point, given population growth, the number of state and local government employees in relation to the total number of adults residents in the U.S. is 8 percent lower than it was back in 2008, according to Matt Fabian, managing director of Municipal Market Advisors, a research firm. Some governments are now looking to make up the backlog, particularly school districts. But officials say they’re in a Catch-22 situation: Staff cuts have led to a decline in service, but those reduced levels of service have left citizens in no mood to support increased spending. “One of the problems,” says Fabian, “is that, with the reduction in average services, state and local governments have a less legitimate claim on tax revenues.”

The good news is that governments that are hiring have plenty of talent to choose from. “We’re one of the few agencies in Arizona that’s actually hiring right now,” says Liz Skeenes, a recruiting officer for the Tucson police force. As a result, her department recently received 1,600 applications to fill up to 120 positions over the next few years. “We’re trying to get people before the bigger agencies and some of the more lucrative paying agencies start hiring,” she says.

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