Retirement

Amid Strong Labor Market, State And Local Governments Struggle To Hire

The labor market in general remains remarkably strong with all of the jobs lost during the pandemic long recovered. But, public employment is not doing so well. Parts of state and local government employment are still well below their levels before the pandemic. Governments have a difficult time attracting the talent that they need for a myriad of reasons. As a result, public services such as education, transportation, public health and others are woefully understaffed and people, businesses and communities suffer as a result.

The latest data from the Bureau of Labor Statistics show a strong and resilient labor market in the face of stiff headwinds from higher interest rates, Republican gambles with the debt ceiling and overseas risks such as the continued war in Ukraine. Employment grew by 517,000 jobs and the unemployment rate fell to its lowest level since 1969 with 3.4%. These top line numbers are welcome news as they show that the labor market and the economy remain fundamentally strong.

But, that is not all there is. Private sector employment now exceeds its pre-pandemic level from February 2020 by 3.2 million jobs or 2.5%. But, public sector jobs, especially in state and local governments, are still below their levels from before the pandemic. State governments are missing 200,000 jobs – a decline of 3.8% relative to February 2020 — while local governments are down by 305,000 jobs or 2.1%. The initial onslaught of the pandemic decimated state and local government employment and that part of the labor market is only gradually recovering.

The job losses in the public sector are widespread. Take local government employment, which is substantially larger than state government employment with 14.4 million to 5.1 million in January 2023. Jobs in education in local governments – mainly elementary and secondary schools – are down from where they were in February 2020 by 174,000 jobs, a drop of 2.2%. In comparison, non-education jobs in transportation, hospitals, administration, and everything else such as town clerks, city planning and public health, among others, are down by 131,000 jobs or 2.0%. At a time, when people, businesses and communities need more services due to greater public health needs, increased infrastructure investments, a growing economy and more attention on diversity, equity and inclusion, local governments are severely understaffed.

The lack of government jobs has also larger ramifications for economic inequality. Nobody gets rich off working for state and local governments, but those jobs provide stable jobs, decent benefits and meaningful career paths. People can often achieve middle-class financial security working for state and local governments. Similar opportunities are rarer in the private sector for many groups, such as people without a college degree. Yet, the number of people without a college degree working in state government was down 2.2% in the last three months of 2022 relative to the last three months of 2019. My calculation here compares the same three months of a year to avoid seasonal fluctuations to influence the conclusions. The situation was even worse in local governments. There, the employment of people without a college degree was down 5.8% relative to pre-pandemic levels. And, in K-12 education, employment of people without a college degree was down by a whopping 12.1%. Schools are desperately lacking the support personnel necessary to make sure that children can get to school and work in clean and safe learning environments.

Public sector employers, especially towns, cities and counties, are struggling with filling open positions. This means that people, businesses and communities are getting fewer critical services and have to wait longer for those services. The problem appears especially acute with respect to K-12 education. Governments will need to find new ways to attract the personnel. This starts with higher wages, but also will need to include more and broader benefits such as emergency savings, more telework options and expanded paid medical and family leave. There really is no alternative since communities, businesses and people rely on critical public services.

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