WV Center on Budget and Policy > Blog > Economic Development > Declining Public Sector has Hurt Recovery

Declining Public Sector has Hurt Recovery

Our recent Jobs Count report showed that the economy has added zero net jobs since June and the unemployment rate remains above 8 percent. As a previous post had noted, the momentum the economy seemed to have been building during the recover has been lost over the past few months. However, one sector of the economy has been performing much worse than the rest, and its poor performance has been a drag on the recovery.

West Virginia’s public sector employment, particularly state and local government workers, has dropped off during West Virginia’s recovery. Since February 2010, when West Virginia’s employment bottomed out, state and local government employment has declined by 2,100 jobs, or -1.6%, while total employment has grown by 13,100 jobs, or an increase of 1.8%.
 
So not only has a declining public sector held down employment, its decline has accelerated. The chart below compares average monthly growth rates for the 18 months before the beginning of the recession in West Virginia, the past 18 months since employment bottomed out, and the past three months for which there has been no net job growth.
 
Source: Bureau of Labor Statistics
 
While private sector employment has grown at twice the monthly rate it did in the 18 months before the recession, state and local government employment been on the decline. And that decline has accelerated recently, while the private sector has limped along, unable to make up the difference. As a result, the recovery has stalled.
 
Maybe a proposal to prevent further decline in public employment isn’t so absurd.

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