Any plan to cut the deficit, no matter how good, had better bide its time: With each week bringing news of more layoffs by big companies, the public sector has become one of the few sources of new jobs in a weak labor market. Since June, 1991, which many economists consider the start of the recovery, federal, state, and local governments have added 191,000 jobsmainly education and health-related posts in local government. Contrast that with the private sector, which lost 65,000 jobs over the past yearthe only time in postwar history when private payrolls have shrunk in the first year of the recovery.
Indeed, while the private sector is shrinking, governments are adding more jobs than they usually do at the beginning of an upturn. Over the past year, government employment has risen by 1%. By comparison, the public sectors job gain in the first year of past recoveries has averaged 0.1%, calculates Mark M. Zandi, an economist at Regional Financial Associates Inc., making government the only employment category in which employment recovery has outstripped the norm. And while the jobless rate in the private sector rose from 7.4% in January to 8% in June, the jobless rate among government workers dropped from 3.9% to 3.5%, which helped hold down the overall increase.
But will budget-strapped governments be able to keep hiring if the economy loses momentum again? They wont motor ahead, but theyll trend higher, says Steven D. Gold, director of the Center for the Study of the States at the State University of New York at Albany. People dont want their services reduced. And with school enrollments increasing, its likely that the demand for teachers will continue to grow. That means that oft-berated government jobs may again turn out to be a lifeline for a tottering economy.