Government job losses thwarting recovery

Crippled by plunging tax revenues, state and local governments have shed over a half million jobs since the recession began in December 2007. And after adding jobs early in the downturn, the federal government is now cutting them as well.

States cut 49,000 jobs over the past year and localities 210,000, according to an analysis of Labor Department statistics. There are 30,000 fewer federal workers now than a year ago -- including 5,300 Postal Service jobs canceled last month.

By contrast, private-sector jobs have increased by 1.6 million over the past 12 months. But the state, local and federal job losses have become a drag on efforts to nudge the nation's unemployment rate down from its painfully high 9.1 percent.

The economy has been expanding, at least modestly, since the middle of 2009. And state and local governments are usually engines of job growth during recoveries. But not now, said economist Heidi Shierholz of the labor-aligned Economic Policy Institute.

"The public sector didn't start to lose jobs right away. But then it did as the budget crunch really hit. State governments are not allowed to run deficits. So the private sector is expanding while the public sector is shedding jobs -- to the tune of 35,000 jobs a month," she said.

Cities and counties are hampered by lower property tax revenue because of collapsing real estate values. States are hurt by lower income and sales tax revenue because of the deep recession and stubborn unemployment.

The National Association of State Budget Officers says states were able to sustain spending growth through 2010 principally with federal stimulus money. But it has since dried up. The loss of the federal stimulus "combined with a slow recovery in state revenue collections will continue the tight resource environment for states in fiscal 2012," reports the association.

More government job losses could be looming as the clock ticks down on Congress' deficit-cutting "supercommittee." The panel, a product of this summer's debt-limit deal and comprising six lawmakers from each party, is tasked with delivering recommendations by Thanksgiving for $1.2 trillion in deficit reductions over the next decade.

If the panel fails to strike a deal that wins congressional approval by year's end, the $1.2 trillion would be triggered in indiscriminate across-the-board cuts beginning in January 2013.