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Government jobs decline as employment rate improves

Bureau of Labor Statistics/Matt Higgins MEDILL

While private employment has been improving, the number of government jobs has been falling over the past two years.     


Government jobs disappear as the unemployment rate improves

by Matt Higgins
Aug 16, 2013


Other graph government jobs decline

It’s the time of the year for back-to-school sales, with just about every major retail store offering discounts to attract students, parents, and teachers.

 

But for the first time in 17 years, Vera Harris won’t be shopping for her fourth-grade classroom at Lewis Elementary School in Chicago's Austin neighborhood. Harris, 55, learned over the summer that she, along with 2,000 other Chicago Public School employees, 1,000 of them teachers, were losing their jobs.

“I’ve never seen anything like this,” Harris said. “I sort of expected it in May, and I found out in June.”

CPS said it was forced to lay off teachers and staff because of a $1 billion deficit for the coming school year. Nearly half the deficit, $405 million, is blamed on continued high pension costs after the Illinois legislature failed to reach agreement on reforms that would address the state's pension crisis.   

 

Chicago is not the only major American city to have mass education employment cuts. Philadelphia laid off 3,800 teachers and support staff in July.

 

According to Bureau of Labor Statistics data, 5,000 state government education employees across the country have lost their jobs during the last 12 months. For federal workers, under mandatory budget cuts, the number who have lost their jobs totals more than 65,000.            

 

Even as the overall unemployment rate has dropped to 7.4 percent from a high of 10 percent in October 2009 in the wake of the Great Recession, government workers at state and federal levels continue to suffer rising unemployment and underemployment.

The number of federal government workers working part-time involuntarily totaled 200,000 in July, nearly four times higher than the 55,000 two years earlier in July 2011.


The number of state workers in the U.S. has decreased as well, by 0.8 percent over the past 12 months, and almost 4 percent from July 2008 to July 2013. Many states are prohibited by law to run budget deficits, so job cuts come sooner than those in the federal government. 

The lone bright spot among government workers was in local municipalities, with 50,000 jobs added over the past 12 months; however, there are 550,000 fewer local government jobs in July 2013 than there were in July 2008.   

For older government workers like Harris and at her career stage, there are not many jobs that pay as well or provide the same benefits as a public sector job. At the same time, she and others like her are too young to retire and likely do not have enough retirement savings to sustain themselves. CPS teachers are not eligible for their full pensions until they are age 65 and have completed 32 years of employment.

For now though, Harris said, she and her husband are "okay."

Federal government jobs remain at risk due to the ongoing effects of mandatory budget cuts known as sequestration that went into effect March 1. State and local budgets rely on federal assistance for parts of their budget, and these are threatened as well.

Diane Swonk, chief economist with Mesirow Financial Holding Inc., wrote in an August 2 blog that private industry is being impacted as well.  “We are also seeing the effects of sequestration, with a reduction in earnings due to unpaid furloughs in the defense industry,” she wrote.

The Congressional Budget Office released its final report last week on the sequestration, reporting that discretionary spending was cut by $64 billion since March 1.

Senior Economist Kim Fraser of BBVA Compass predicts that government employment will be down at least through 2014, but believes it will pick up, eventually.

“Depending on the progress of sequester implementation over the next 10 years, we expect to see that number go up as the economy strengthens and the fiscal situation improves,” she said.

However, Fraser predicted subpar GDP growth of under 3 percent for the next two years. Economists consider a 3 percent GDP growth rate a sign of a healthy and prospering economy.

Harris will receive her full pay and benefits until December, but plans to join her husband in Las Vegas if she doesn’t find another teaching position with CPS.

Harris’ husband was in a similar position with the U.S. Postal Service.  The USPS has been downsizing in recent years, and he transferred last year to Las Vegas to avoid losing his job.
     
Harris is taking a wait-and-see approach before she decides to pick and move and sell her house.

“It’s demoralizing and distressing,” Harris said.  “You're constantly thinking about your kids.”