Despite recovery, U.S. public employees face more layoffs

(Reuters) - Since 2009, the city of Chesapeake, tucked up against the Great Dismal Swamp in southern Virginia, has cut its workforce twice. This summer, nearly three years after the recession ended, the city of 222,209 has plans for a third round of layoffs.

"We're not seeing the recovery we want to see," said Budget Director Steven Jenkins, who is hoping many of the 20 people will move into other jobs.

The city's revenues are still feeling the concussions from the housing market downturn, which started in 2006, even as overall growth in the United States has improved.

"We are heavily reliant on the residential real estate market," said Jenkins. In a recent assessment the average property value dropped 3.7 percent, which hits property taxes, and hurts government budgets. "The reassessment we just had was as big as any we've seen since the recession started."

While Friday's report of weak growth in U.S. March payrolls raised concerns about the pace of private-sector hiring, local government jobs remain a drag on the recovery, one that is not anticipated to end soon.

State and local governments for a time were able to shield public safety and education workforces from harmful cuts as the recession deepened. The 2009 federal stimulus fund helped offset lost tax revenue, but that money is gone.

Now, many cities and counties nationwide are facing the same dilemma as Chesapeake. Squeezed by depressed property tax revenues and cuts in state aid, they are chipping away at their workforces.

The result? The last three years of job losses at the state and local government level has been the most dramatic since Labor Department records began in 1955, according to a Reuters analysis.

Public-sector employees tended to have more job security, which in some ways helps during weak economic climates, as their steady demand for goods and services spread through the economy. The recent trend, conversely, can make things worse.

"If public-sector employment had grown since June 2009 by the average amount it grew in the three previous recoveries (2.8 percent) instead of shrinking by 2.5 percent, there would be 1.2 million more public-sector jobs in the U.S. economy today," said the Economic Policy Institute in a recent report, which included federal employees in the calculation.

Local governments have cut 482,000 jobs since the beginning of 2009. They added jobs in just two months since 2011 started. Previously, states only had two consecutive years of layoffs, 1995 and 1996, when they scrapped about 57,000 jobs, or about one-third of the 150,000 cut since the beginning of 2009.

"The current recovery is the only one that has seen public-sector losses over its first 31 months," the report said.

As of March, 14.1 million people worked for local governments and 5.1 million for states. Public employees outnumber those in manufacturing, construction, and other areas typically considered engines of the economy.