State and local job losses threaten recovery

Two years ago, state and local governments began shedding workers as they struggled to balance their budgets. What began as a trickle of job losses is becoming a flood. As the chart shows, a total of more than 300,000 state and local government jobs have been lost since August 2008, with 48,000 payroll jobs cut last month alone. The pace of job loss is accelerating and threatens to overwhelm the meager job gains in the private sector.

Legislation passed the Senate last week to slow this tide of unemployment—$16.1 billion of funding for state Medicaid programs and $10 billion to save education jobs. We estimate that the Medicaid funds will save 158,000 jobs, including police officers, firefighters, and health care workers. But more than half the jobs saved will be in the private sector, including workers who contract for or supply services to state and local governments. The Department of Education estimates that the education funds will save another 161,000 jobs in public schools. These jobs and the funding to save them are desperately needed, and Speaker of the House Nancy Pelosi deserves praise for calling the House back from recess to vote on them.