The number of workers employed by local governments in the U.S. fell to the lowest since November 2005 as teachers and other public employees lost their jobs.
Local government payrolls, adjusted for seasonal swings, dropped 35,000 in September to 14 million, the Labor Department reported today. The loss was driven by education payrolls, which slipped 24,400 to a more than six-year low of 7.8 million.
The declines are in contrast to the overall U.S. economy, where payrolls rose by 103,000, easing concern about a resurgent recession. Cities, counties and school districts have been squeezed by diminished tax collections brought on by tumbling home prices, as well as cutbacks in aid from state governments coping with their own budget shortfalls.
Property-tax collections have slipped during the past three quarters, according to the Census Bureau. Most municipal officials said their finances were worse off this year than last, a report last month by the National League of Cities found.
“This confirms for us in real hard numbers the impact of the budget reductions at the local level, both last year and this year,” Chris Mauro, a municipal-debt strategist at RBC Capital Markets in New York, said in a telephone interview.