Report | Economic Growth

Local government job losses hurt entire economy

Issue Brief #279

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America continues to reel from the worst recession in 75 years. While the American Reinvestment and Recovery Act successfully mitigated the severity and length of the downturn, robust economic recovery—though hoped for—is far from guaranteed.

Although recent economic indicators suggest a turnaround, much of the economy is still struggling, and these elements could keep unemployment high. Local governments in particular have suffered from the recession, which has led to massive budget gaps caused by a combination of depressed tax revenues and higher costs from a social safety net that more and more Americans are forced to rely on.

These budget gaps will translate into a loss of jobs, over half of which have yet to occur. Unlike the federal government, most local governments must balance their budgets each year. This means, among other things, that vital local public servants like teachers, firefighters, and police are a target of budget cuts and could be laid off. According to the Bureau of Labor Statistics, 180,000 local public-sector jobs have already been lost since August 2008.

And it will get worse—much worse.