Connecting state and local government leaders
Without more staff, state and local governments may not be able to compete for federal funding programs—or deliver on grants they win.
This coming Labor Day weekend, Americans will fire up their grills and wave goodbye to the hottest summer on record as they celebrate the unofficial end of the season. But the holiday meant to honor American workers comes as many public sector employees are navigating staffing shortages at their agencies. And with billions in federal funding about to flood state and local coffers, those employees’ workload is set to grow even more, one expert says.
Private sector employment fully recovered from the pandemic a year ago, but the public sector has yet to catch up, according to a recent analysis by the Urban-Brookings Tax Policy Center. Overall, state and local employment is about 0.1% below pre-pandemic levels. While the sector has recently made strides in hiring, it is still not enough to handle the work related to the Inflation Reduction Act and the Infrastructure Investment and Jobs Act, according to Nikhita Airi, a co-author of the report.
“A lot of the provisions in [the Inflation Reduction Act] need to be implemented on a local and state level and rely on grants that require a significant amount of capacity from these governments to first apply for the grants, and then implement the projects over a period of multiple years,” Airi said.
For some governments, the approaching tide of federal funding will feel familiar. When the American Rescue Plan Act released billions of dollars to state and local governments, Airi said, many employees felt like they were “drinking water from a firehose.”
Even before the pandemic, the Great Recession in 2008 hollowed out the public workforce, according to Airi, who added that it’ll likely take hiring at rates not seen since the early aughts to have the manpower to handle the influx of federal funds.
The rate of hiring that governments may need to undertake varies by category. Local government jobs outside of education are 1.7% below March 2020, and non-education jobs at the state level are similarly lagging. The local workforce is much larger compared to the state, and shrank 9% early in the pandemic. The state workforce, meanwhile, decreased by 4%.
There are a number of reasons for the widespread job vacancies, the report notes. Early in the pandemic, many state and local governments furloughed employees in anticipation of rocky financial times ahead. Other employees retired or left for private sector jobs that offered better compensation and remote work options, in many cases bolstered by federal funding.
Jurisdictions are also recovering at different rates. In West Virginia, for example, state and local government jobs are down 6% from pre-pandemic levels. Delaware, meanwhile, is 4% ahead of public sector hiring compared to March 2020.
Multiple factors are likely contributing to the disparities in recovery rates, Airi said. State economies that rely on tourism and regional natural resources saw less revenue during the pandemic, as did areas that saw declining populations with the rise of remote work. As those revenue streams shifted—in some cases, for the worse—governments have changed how much they are willing to budget for hiring.
But that will need to change. As states and localities staff up, one of the biggest challenges has been trying to compete with private sector compensation. That’s likely why, for fiscal year 2024, 33 states proposed across-the-board pay increases for some public employees.
But there’s no single narrative to describe changes in the public sector workforce, Airi said. “The story of the pandemic has been that states with different economies and different sectors that dominate their economies are having drastically different outcomes.”