Public employment lags behind the private sector in a strong labor market
The overall job market remains remarkably strong with all the jobs lost during the pandemic recovered long ago. But, public employment is not doing so well. Portions of state and local government employment are still well below their pre-pandemic levels. Governments have a hard time attracting the talent they need for a myriad of reasons. As a result, public services such as education, transportation, public health, and others are woefully understaffed, and individuals, businesses, and communities suffer as a result.
The latest data from the Bureau of Labor Statistics shows a strong and resilient labor market in the face of strong headwinds from higher interest rates, Republican bets on the debt ceiling, and foreign risks such as the continuation of the war in Ukraine. Employment grew by 517,000 jobs and the unemployment rate fell to its lowest level since 1969 at 3.4%. These top-line numbers are good news, as they show that the labor market and the economy remain fundamentally sound.
But, that’s not all there is. Private sector employment is now above its February 2020 pre-pandemic level by 3.2 million jobs or 2.5%. But, public sector jobs, especially in state and local governments, are still below pre-pandemic levels. State governments are missing 200,000 jobs, a decrease of 3.8% relative to February 2020, while local governments have lost 305,000 jobs or 2.1%. The initial onslaught of the pandemic decimated state and local government employment and that part of the job market is only gradually recovering.
Job losses in the public sector are widespread. Take local government employment as an example, which is substantially higher than state government employment at 14.4 million to 5.1 million in January 2023. Education jobs in local government, primarily elementary and secondary schools , are down from where they were in February 2020 at 174,000 jobs, a 2.2% drop. By comparison, non-education jobs in transportation, hospitals, administration, and everything else, such as city clerks, urban planning, and public health, among others, were down 131,000 jobs, or 2.0%. At a time when people, businesses, and communities need more services due to increased public health needs, increased investment in infrastructure, a growing economy, and more attention to diversity, equity, and inclusion, local governments have a severe staff shortage.
The lack of government jobs also has further ramifications for economic inequality. No one gets rich working for state and local governments, but those jobs provide steady employment, decent benefits, and meaningful career paths. People can often achieve middle-class financial security by working for state and local governments. Similar opportunities are rarer in the private sector for many groups, such as people without a college degree. However, the number of people without a college degree working in state government decreased 2.2% in the last three months of 2022 relative to the last three months of 2019. My calculation here compares the same three months of a year to avoid seasonal fluctuations to influence the conclusions. The situation was even worse in local governments. There, employment of people without a college degree fell 5.8% relative to pre-pandemic levels. And, in K-12 education, employment of people without a college degree dropped by 12.1%. Schools desperately lack the support staff needed to ensure children can go to school and work in clean and safe learning environments.
Public sector employers, especially towns, cities and counties, are struggling to fill vacant positions. This means that individuals, businesses, and communities receive fewer critical services and have to wait longer for those services. The problem seems especially acute with regard to K-12 education. Governments will need to find new ways to attract staff. This starts with higher salaries, but you will also need to include more and more broader benefits such as emergency savings, more telecommuting options, and expanded paid family and medical leave. There really is no alternative as communities, businesses and individuals depend on critical public services.
