Federal, state, and local governments employ about 15 percent of U.S. civilian workers, so budgetary conditions often have labor market implications. Total government employment fell sharply in the aftermath of the great recession, and, despite recent upticks, has yet to recover in a material way. Although private payroll employment surpassed its pre-recession peak in March 2014, total government employment is still more than 2 percent lower than it was in mid-2008, and about 7 percent below its pre-recession trend.
State and Local Employment
State and local employment—which accounts for about 90 percent of total government employment— declined sharply between 2008 and 2012, as states and localities trimmed payrolls in an attempt to balance their budgets, as shown in the following chart from the Hutchins Center’s Fiscal Barometer. Employment has edged up since 2012 as state and local budget conditions have improved, although total employment still remains more than 3 percent below its pre-recession peak.
The declines in employment were widespread. Local employment—about ¾ of total state and local employment—remains just over 3 percent below the 2008 peak, with reductions in both education workers (mostly K-12 teachers) and non-education workers (police, fire, etc.). State employment is also about 3 percent lower now than in 2008, although those cuts were borne by workers outside of education.
Federal employment outside of the uniformed military accounts for only about 10 percent of total government employment. As shown in the following chart from the Hutchins Center’s Fiscal Barometer, federal employment increased during 2009 and 2010, in part as the result of a lower propensity for federal workers to quit or retire during the recession. Tight spending conditions in recent years reversed that trend, and federal employment declined by an average of almost 5,000 jobs per month from the beginning of 2013 to mid-2014. Employment has stabilized, on net, since then, and we expect federal employment to remain relatively stable in the coming year. All told, federal employment (excluding uniformed military) is now about 4 percent below its level when President Obama took office in January 2009.