The Great Recession ended - but tell that to state and local government employees
October 11, 2010
Employment dropped by 95,000 in September, representing the fourth consecutive monthly decline. Since the start of the Great Recession in December 2007, the economy has been able to add jobs on a monthly net basis only seven times. Consequently, the overall unemployment rate still hovers at just under 10 percent. While the media largely focused on the headline numbers in September's employment report, there are some crucial figures tucked away in the minutiae that shed light on the worrisome trends currently unfolding at the state and local government level -- a topic we recently tackled in our report, Ensuring State and Municipal Solvency.

Governments across the country have reverted to cutting services and laying off workers in an attempt to right the budgetary ship. Last month alone, state and local governments handed out 83,000 pink slips. September's figure is quite shocking; monthly layoffs in state and local government have exceeded this level only one other time in the past half century - during the recession of 1981-1982, when the unemployment rate also reached 10 percent.

Perhaps even more startling is the fact that states and local governments have had to cut workers at an increasing rate over the last several months, just when private-sector payrolls had finally begun to rebound - albeit at a tepid pace.


Thus, while the Great Recession "officially" ended in June 2009 according to the National Bureau of Economic Research, it appears that states and local governments did not get the memo. Although states and local governments added 167,000 jobs from December 2007 through June 2009, they have already laid off 367,000 since the end of the Great Recession. States and local governments account for 15 percent of total employment, so the dreaded double-dip scenario becomes more likely if the current rate of bloodletting persists unabated.