The U.S. Bureau of Labor Statistics reported this morning that state governments shred 20,000 jobs in October, the largest monthly decline in more than a year.
Michael Wasylenko, professor of economics at Syracuse University, said reductions at the state level are part of a cycle that began with steep cuts in local governments. With larger reserve pools, states were able to stave off payroll cuts longer than local governments.
“They’re just making the budget cuts they need,” Wasylenko said. “This is what people say they want."
Employment figures for local governments remained nearly unchanged in October, with a total decline of 2,000 workers. Over the past year, though, local governments across the country have dropped 200,000 employees from payrolls, according to employment estimates.
Further job reductions could trickle up to the federal government, but Wasylenko said there likely isn't much room for cuts at the federal level.
Combined figures for all governments declined 24,000 for the month after losing 35,000 jobs in September. Figures have fallen every month this year, except for August, as governments make spending cuts.
Along with slashing payroll, reductions in benefits are also on the chopping block in many states. Wasylenko said concessions from employee unions will help mitigate further cuts.
Members of the New York State Public Employees Federation ratified a new contract earlier this week, freezing wages until 2014. Governor Andrew Cuomo had planned to begin laying off nearly 3,500 workers today if the union failed to reach an agreement.
While public payrolls continued to shrink, private sector growth pushed the nation’s seasonally-adjusted unemployment rate down from 9.1 to 9 percent.
Private sector employment experienced marginal gains, adding 104,000 positions in October. Industries adding the most jobs include professional and business services along with health care and social assistance businesses.
Wasylenko expects added tax revenues from the private sector will help limit future public workforce reductions.
“I think the biggest cuts are behind us," he said.
Still, the slight uptick represents continued sluggish growth for the labor market as the country pulls out of the recession.
The Federal Reserve revised its economic forecast on Wednesday, predicting slower long-term growth than previously expected. The unemployment rate will fall to no less than 8.5 percent by the end of next year and remain at least 6.8 percent by the end of 2014, the Fed now expects.
View and compare government employment statistics using the chart below:
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Source: U.S. Bureau of Labor Statistics
