Public-Sector Cuts Drag Down State and Local Economies

Source: David Cooper, Economic Policy Institute, Economic Snapshot, August 21, 2014

Some states and cities struggling to dig themselves out of post-recession job losses are suffering from additional self-inflicted wounds. State lawmakers can affect state labor markets through the budgetary choices they make about the state and local public-sector workforce. As the recession took hold and revenues dropped, lawmakers in states and localities were faced with difficult decisions on how to achieve budget balance. While some state lawmakers attempted to preserve public-sector jobs—such as by raising taxes on the wealthy—too many chose to slash vital investments in the public sector, weakening the critical services provided by police, firefighters, teachers, and social workers. As the chart below shows, since the start of the Great Recession in December 2007, 28 states plus the District of Columbia have added state and local government jobs, while 21 states have cut public sector workers….