New numbers from the federal government show that government — and local government in particular — has not been immune from the current economic havoc. And because of budget cycles, the job losses might increase.
The public sector has not escaped the coronavirus’ drain on the American economy.
New seasonally-adjusted data from the U.S. Bureau of Labor Statistics showing employment numbers by industry for the month of April illustrate what unemployment insurance claims numbers had already hinted at: After years of expansion, the COVID-19 pandemic sent the economy careening downward. Total non-farm employment dropped about 13% from April 2019 to April 2020, representing more than 19 million lost jobs.
The worst-hit industries were, as expected, in the leisure and hospitality sector. That sector shrank 47% year over year, sloughing off 7.7 million workers. Measuring yearly trends, only two sectors saw employment increases; in monthly trends no sectors did.
Although budgets — set months and years in advance — would have appeared to offer something of a delaying effect when it comes to public-sector employment, the government lost workers as well. Total government employment, including federal agencies, the U.S. Postal Service and education, shrank 4% year over year.
Teryn Zmuda, deputy chief innovation officer and chief economist for the National Association of Counties, said the numbers didn’t surprise her. A previous survey found that most local governments were bracing for revenue loss as businesses started shuttering and people started staying at home.
“The solutions that counties have been implementing to serve residents have been hitting budgets hard — so, standing up field hospitals, buying up hotels and motels to protect the unsheltered, protecting the most vulnerable residents … those increased costs, combined with a reduction in revenues … it’s left counties in a tough spot. And we saw furloughs begin to happen within a few weeks of the beginning of COVID-19.”
When one breaks down the details of government employment, a clearer picture emerges: Local government and public education suffered the most. While the federal government (excluding the postal service) and state government (excluding education) actually saw year-over-year employment increases, state education jobs dropped 9%, local education shrank 5% and local government (excluding education) fell 4%.
That’s especially significant, given that local government and education employ nearly twice as many people as state and federal government combined.
Much of the impact has been because of trade-offs counties are forced to make to accommodate the new expenses, Zmuda said.
“In paying for overtime for (first responders and public health workers) … you have to find a way to balance the budget somehow, and that’s left behind workers who are not serving in those essential fields,” she said.
It’s possible the numbers will continue to drop for government employment in future data releases. Since losses in other industries generally mean fewer tax and fee revenues coming in for government, the shrinkage in April could hit government budgets in later months.
But it's also unclear to what extent some of the changes might be temporary — how much of the data reflects jobs that will come back as offices reopen, and how long it will take for the economy to recover.
“It’s certainly still uncertain what the costs will be,” Zmuda said.
NACo is projecting a $144 billion hit to county budgets nationwide in the next 18 months, reflecting both increased costs and lost revenues. The organization is asking for more assistance from the federal government, since the CARES Act only gave direct aid to local governments with populations greater than 500,000.
“That’s about 137 counties out of 3,000 eligible for direct aid in the CARES Act,” Zmuda said.
They would also benefit from greater flexibility in that funding, she said. The CARES Act’s direct funding was set aside specifically for increased costs, rather than lost revenue, which limits what localities can do with it.
“Flexibility … encompasses the ability to inject quick funds where needed,” she said.