In this time of crushing budget deficits and guaranteed public pension plans, one sentiment seems widespread among voters: government always grows. Even with cutbacks and a floundering economy, many Americans clearly believe that government only gets bigger.
But in California, government has indeed shrunk by one metric: the number of employees on the payroll. Employment numbers independently collected by the state Employment Development Department show that since the housing market collapsed in 2008 more than 100,000 federal, state and local government jobs have been eliminated in California, creating the worst job market in that sector since at least 1990.
All of those lost jobs can be attributed to cuts made to address the state’s chronic, multi-billion budget deficit or to the economic conditions that contributed to the deficit, California economists say.
“It’s indicative to how very wired government is into the economy,” said Christopher Thornberg, founding principle at Beacon Economics in Los Angeles. When the economy is weak, government contracts. “It never shrinks voluntarily,” Thornberg said.
For public school teachers, city planners and other workers at all levels of government, the current conditions are rough. More than 3,600 government jobs have been lost, on average, each month since June 2008, when government employment in California peaked at more than 2,522,000. In all, more than 118,000 government jobs (5 percent) were lost through March 2011, the worst 40-month period in that sector since at least January 1990.
That doesn’t compare to the pain faced by the construction industry, which lost 280,000 jobs (33 percent) during that period, or the manufacturing industry, which lost more than and 201,000 jobs (14 percent). But over the last year, the government sector has been the biggest drag on California’s job recovery while construction, manufacturing and other industries have begun to rebound.
In government, the hardest hit were employees of school districts, counties and cities, who combined accounted for the vast majority of the lost government jobs. State government, on the other hand, lost a few thousand jobs while the federal government actually increased its job offerings in California by a few thousand, all in the Department of Defense.
The city of San Jose, for example, cut almost 800 jobs in fiscal year 2010-11 and is now looking to cut almost another 600, bringing the municipality’s total employment to 5,252. The city of Costa Mesa, which employs 472 people, has begun the process of potentially laying off as many as 213 of its employees, reducing its workforce by as much as 45 percent. Sacramento County has lost 2,524 positions since fiscal year 2008-09, leaving it with a total of 11,600 jobs — and more cuts are on the way.
“We are looking at our fourth consecutive year of reductions, and we know there will be more service reductions coming in the next fiscal year,” said county spokeswoman Chris Andis. She said the county has reorganized how it does business to save money while minimizing the impact to services, but even so service delivery takes longer, building inspections may not be done on the same day and phone calls take longer to return. “It has been tough… and we have more to do,” Andis said.
Although the recent declines have been due the recession and the housing crisis, by one measure, government employment was falling long before then. Per capita employment in government peaked last decade in 2002 at a little more than 700 government workers per 10,000 Californians. Since then, there have been two sizable drops in employment numbers, sandwiched around moderate gains from 2004 to 2007. By 2010, the state had roughly 656 government employees per 10,000 Californians.
“It is a perfect storm,” said Steven Levy, director of the Center for the Continuing Study of the California Economy in Palo Alto. California was walloped by two recessions in short succession, while more and more government employees are reaching retirement age, forcing agencies to choose between paying for current employees or retirement costs. The result has been that government employment in California has not kept pace with the population, although Levy noted that the state has been among the lowest in per capita government employment. “We’ve always been fairly frugal,” he said.
The employment figures collected by the state Employment Development Department represent its best approximation of an objective picture of the job market. The process is sealed off from any politicians who might want to pump up employment numbers to make themselves look good.
The department, however, uses a slightly different methodology for collecting government employment data than private employment. For private employers, the department bases its numbers off of a monthly survey of 42,000 businesses. For government employers, it collects reports from all of them in the state.
Thus, the government employment data is, in theory, more accurate because it’s derived from a census, while the private employer data is estimated from a survey. But that’s assuming the governments do a good job of tracking their payroll, which they might not always do. Both sets of data have a margin of error.
At the same time, the Employment Development Department also collects data on wages. From 2007 to 2009, total wages paid to government employees increased a little over 4 percent — which translates into a jump of more than $5 billion.
“Part of that is going to be for overtime,” said Jane V. Hall, an economist and government policy specialist at Cal State Fullerton, noting that the functions of lost jobs often still have to be filled in government, even if there are fewer employees. Sometimes that means the remaining employees have to work more, and labor laws require that some of those employees be paid time and a half, contributing to an increase in payroll costs
So, in other words, even when government shrinks, sometimes it also grows.