State, local governments struggle to recover jobs after COVID-19 recession

State and local governments have shed more than 400,000 jobs since the beginning of 2020, and those jobs have been far slower to return than the private sector positions that have rebounded after the initial shock of the coronavirus pandemic and its economic lockdowns.

And there are signs that the exodus of government employees has not reached its nadir: Private sector employment has risen 3.4 percent since December, while state and local governments jobs, exclusive of education positions, are down 0.6 percent, according to an analysis by The Pew Charitable Trust’s State Fiscal Health Initiative.

Mike Maciag, a coauthor of the Pew study, said many of the jobs that have been lost are temporary layoffs that might come back at some point. 

More than 74,000 employees at casino hotels or amusement and gambling businesses run by governments — mostly tribal governments — were let go. So were 7,500 employees of museums, historical sites, zoos and parks, and 15,000 people at libraries and other information-related operations.

“The vast majority of these though we don’t have hard figures are not necessarily permanent layoffs,” Maciag said in an interview. “Many of them are related to the pandemic in some ways.”

The biggest job losses have come in executive and legislative positions, which have declined by more than 78,000 jobs, according to data from several reports released by the Bureau of Labor Statistics. Those positions might include public-facing administrative posts, maintenance or other jobs that were no longer needed during the shutdowns, and have not yet returned.

The temporary layoffs, retirements or departures from other jobs have left open positions that might be difficult to fill even in normal times, Maciag said. Positions like those in correctional facilities, which have high turnover rates, have gone unfilled; information technology jobs are also hard to fill, as private sector businesses often offer higher wages.

The number of jobs in state and local governments today stands at about the same level as during the depths of the great recession, a decade ago.

Public sector job losses tend to lag behind private sector losses, because the two types of business are on different schedules: A government budget is often funded through the first months or years of a recession, which is then cut when revenues begin to dry up. 

But public sector jobs — especially in state and local governments — are such a significant portion of the overall economy that a lag in government recovery can stifle an overall economic recovery, something that happened in the wake of the great recession.

“It wasn’t until really 2010 and 2011 when states and localities really started to experience dramatic declines in employment,” Maciag said. “This time around, we did not see that. Both sectors were hit very hard right away when the pandemic arrived.”

Today, about 22 million people are employed by government at all levels, according to the BLS’s latest employment report. Five million are employed by state governments, a little more than half of whom, 2.65 million, hold non-education jobs. Fourteen million Americans hold local government jobs, 6.29 million of which are noneducational positions.

A year ago, in August 2020, 2.7 million people held noneducational state-level jobs, and 6.36 million people held noneducational jobs in local government.

Job losses have not been uniform across state lines. Tourism-heavy states like Hawaii, New Mexico and Louisiana have all shed more than 6 percent of their government jobs — New Mexico in particular has a lot of tribal government positions. 

More than 6 percent of state and local government positions in New Hampshire, New Jersey, Illinois and Pennsylvania have disappeared in the last two years, as have more than 5 percent of those jobs in Nevada, Kansas, Virginia, Vermont, Massachusetts and New York.

On the other hand, four states — South Dakota, Texas, West Virginia and Rhode Island — have more state and local government positions today than they did in July 2019.

Overall, the number of government positions has increased over the last year by about a million. That figure is fueled by 3 million new federal jobs, most of which are temporary positions related to the decennial census.

There are reasons to hope that state and local governments will be able to hire a substantial number of new workers to fill vacant positions. In March, Congress appropriated $350 billion in federal aid to state and local governments as part of the American Rescue Plan, the first coronavirus-related relief package signed by President Biden.

“States and localities have a lot of federal aid to work with now,” Maciag said.