Nearly 1 Million Job Losses Reported in State and Local Government Sector

The state and local government workforce has not been spared from the devastating job losses that have swept the nation due to the coronavirus pandemic, with states and localities laying off or furloughing nearly one million employees last month, according to new federal estimates.

U.S. Labor Department figures released on Friday show that in April the number of local government jobs fell by 801,000 and the number of state positions by 180,000. Most of the state losses—176,000—were tied to education. The same was true for 468,000 of the jobs included in the overall local government figure, reflecting widespread school closures.

“I was floored by how dramatic the losses are already,” said Heidi Shierholz, who is the senior economist and director of policy at the liberal-leaning Economic Policy Institute and a former chief economist at the Department of Labor. “It’s just a testament to just how bad what we’re going through is.” 

“What typically you see in recessions is that public sector jobs aren’t hit right away,” she added.

State and local public employment fell into a trough in the 2011 to 2015 timeframe following the Great Recession. But Friday’s jobs figures showed a decline that had plummeted below even the low points seen during that period, according to Bureau of Labor Statistics data compiled by the Urban Institute.

"What being laid off or furloughed means, is that you're going to have people who are not going to be able to pay their rent, they're not going to be able to pay their mortgage," said Irma Esparza Diggs, director of federal advocacy for the National League of Cities.

"The majority of Americans live paycheck to paycheck and that includes city employees," she added.

The latest state and local government jobs figures were part of a bleak national jobs report that showed the U.S. lost 20.5 million jobs in April, with unemployment rising to 14.7%. The scale of the losses is unlike anything the country has experienced since the Great Depression era.

Leisure and hospitality workers were among those that suffered the worst job losses. Employment in the sector dropped by 7.7 million, or 47%, with almost three-quarters of the decrease in food services, restaurants and bars, according to the Labor Department.

Retail workers also took a hard blow, with a decline of 2.1 million jobs, 740,000 of them in clothing and clothing accessories stores and another 345,000 among motor vehicle and parts dealers.

But the job losses were widespread, affecting all major sectors of the economy.

State and local governments have been grappling with how to deal with the strain that the virus has caused for their finances.

Sweeping business closures and stay-at-home orders put in place to stop the spread of the virus have left much of the economy frozen. As a result, a range of tax collections are taking a hit. Governments are also incurring unplanned costs as they manage the health crisis.

For weeks now, state and local government leaders have been considering and moving ahead with furlough and layoff plans as they try to rein in expenses and keep their budgets balanced.

"Cities in different states that I've talked to, the situation is getting, each day that goes by, increasingly dire," said NLC's Diggs.

She said cities are seeing operating reserves and rainy day fund balances depleted, and are borrowing to make ends meet, in addition to resorting to layoffs and furloughs.

Teryn Zmuda, chief economist for the National Association of Counties, said the group was aware of over 60 counties that have furloughed or laid off workers—in some cases cutting up to 50% of their workforce.

She said that smaller counties, with fewer than 100,000 or 50,000 residents, can be especially vulnerable to these staff reductions because these places often rely more heavily than larger jurisdictions on public sector jobs to support the local economy. Smaller jurisdictions also tend to have leaner budgets.

Zmuda pointed out that some county jobs, like first responders and health care staff, are in high demand as local governments battle the virus, with workers in these fields putting in extra hours and in some cases receiving hazard pay.

As a result, county furloughs and layoffs are more likely to target administrative positions or jobs in areas like economic development. Zmuda noted that some places are using a mix of pay cuts and furloughs to reduce costs, and also tapping reserve funds, but emphasized that these measures are only sustainable for so long.

"Counties are doing everything they can to keep employees on board," she added.

The expectation is some of the roughly 20 million workers who found themselves out of work in April are temporarily off the job, but will be able to come back as the pandemic subsides. It’s not clear from Friday’s Labor Department estimates what share of the state and local public sector job losses could be permanent.

Overall, the figures show that 78.3% of the April job losses involved people who expect to be laid off temporarily, as opposed to permanently losing their positions.

Many state and local government leaders have been advocating for additional federal aid to help them backfill the tax revenue losses they are contending with due to the virus-driven economic crash, and warn that without additional help drastic budget cuts will be in order. 

Economists have warned that these budget cuts—or moves by state and local governments to raise taxes to pay for services—could extend the length of a recession. 

But debate over another relief package to provide hundreds of billions of dollars in state and local government aid has increasingly become bogged down in congressional politics, with Republican leaders generally showing less enthusiasm for moving ahead with such a plan.

"Republican leaders are slow-walking that now," said Diggs. "We're still seeing this narrative that state and local governments are asking for a bailout, which is not the case."

EPI's Shierholz said Friday's state and local government jobs numbers, in her view, reinforce the notion that the federal government should provide additional state and local relief funding.

“If places who did furloughs instead of laying people off, if they don’t get the aid they need," she added, "many of those furloughs will just translate into layoffs.”

This story was updated with additional comment.