State and Local Employment Remains Stubbornly Down

A student leaves after the first day of in-person learning at Maurice Sendak Elementary School in Los Angeles in April 2021. Education job losses account for most of the employment declines in the state and local public sector during the pandemic.

A student leaves after the first day of in-person learning at Maurice Sendak Elementary School in Los Angeles in April 2021. Education job losses account for most of the employment declines in the state and local public sector during the pandemic. AP Photo/Jae C. Hong

 

Connecting state and local government leaders

There's been some improvement in recent months, but there are still about 1.2 million fewer state and local public sector jobs compared to pre-pandemic levels. Most losses are in education.

State and local government employment was still down by nearly 1.2 million jobs in May compared to February of 2020, just before the coronavirus took hold in the U.S., according estimates the Labor Department released on Friday.

Most of those missing jobs—800,000 as of last month—are in the state and local education sectors. About 556,000 of the education losses are at the local level. Education employment declined as many schools switched to remote learning programs during the pandemic.

Hiring in other parts of the economy picked up last month, with non-farm payrolls rising by 559,000 and unemployment dropping by 0.3 percentage points to 5.8%.

Employment in the state and local public sector has edged up in recent months. For instance, jobs were down by 1.4 million in December compared to last February, based on the federal statistics. Last month marks an improvement from that low. But nothing close to a full recovery to pre-pandemic employment has occurred so far.

In recent weeks, the Treasury Department has started to distribute money to states and localities from a $350 billion fund established under a coronavirus relief law. That money could lead to an uptick in hiring as the summer goes on. But some of the education figures could remain depressed until a new school year approaches in the fall and in-person learning becomes the norm again.

Not all of the job losses that appear in the estimates are layoffs. They can also be furloughs or unfilled positions.

Local government employment excluding education totaled about 6.6 million in February 2020, but has hovered in the 6.3 million range since last September, down by around 300,000 to 350,000 during that time compared to before the pandemic. In May it was a similar story, local government jobs excluding education checked in near 6.3 million, down by 354,000 from the February benchmark.

Overall state employment rose in May to around 5 million jobs, up from around 4.98 million in April. There were 50,000 jobs added in the state and local education sector and about 5,000 non-education losses.

Before the pandemic, state government employment totaled around 5.3 million. Compared to that level, state government employment is down by 280,000 positions. That's an improvement from the November to December timeframe when losses were closer to 370,000.

Economy-wide non-farm payroll in May was still down by 7.6 million jobs, or about 5%, from its February 2020 level. The leisure and hospitality sector, hard hit by pandemic restrictions over the past year, added 292,000 jobs in May, with 186,000 of those positions, or about two-thirds, tied to businesses like restaurants and bars.

The overall jobs gains in May were more robust than in April when the nation added just 278,000 jobs. In March the increase was 785,000.

In a brief sent out on Friday, Robert Dye, chief economist with Comerica Bank, described the overall May jobs increase as strong, but also pointed out that it "fell short of consensus expectations of a 650,000-700,000 jobs gain." Referring to the April and May numbers, Dye added: "Despite the two-month miss, labor market indicators are all pointing in the right direction."

About half of states, predominantly those led by Republican governors, now have plans to end expanded unemployment benefits adopted as part of the nation's pandemic response, including a $300 weekly supplement financed by the federal government.

Bill Lucia is a senior editor for Route Fifty and is based in Olympia, Washington.

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