Hiring curbs chill job market

Ohio is one of the 27 states with shortfalls that has announced hiring curbs.

ASSOCIATED PRESS

As U.S. states struggle with about $39 billion in total budget shortfalls, at least 10 have announced hiring curbs and others may follow — chilling one of the few parts of the economy that had been adding jobs.

More than half the states are experiencing budget shortfalls. Under state constitutions, most can’t borrow money or run a deficit, making spending cuts a necessity. That has brought hiring limits or freezes in states from California to Maryland.

The hiring curbs — and the threat of government job cuts — could spread. At least 27 states, including several of the nation’s largest, are facing budget shortfalls in fiscal 2009, according to the nonpartisan Center on Budget and Policy Priorities.

That comes amid slowing state revenue from personal income taxes, sales taxes and corporate taxes, while prices rise for everything from retired teachers’ prescriptions to gas for state troopers’ patrol cars.

The state shortfalls, together with that in Washington, D.C., come to more than $39 billion. And the hiring curbs — in California, Delaware, Louisiana, Maryland, Michigan, Minnesota, New Hampshire, New York, Ohio and Rhode Island — follow a hiring binge by governments at every level.

If states’ money problems worsen and the hiring curbs are taken seriously by legislatures and governors, that could mean even more bad news for battered job hunters.

Those states with shortfalls are Alabama, Arizona, California, Delaware, Florida, Illinois, Iowa, Kentucky, Louisiana, Maine, Maryland, Massachusetts, Michigan, Minnesota, Mississippi, Nevada, New Hampshire, New Jersey, New York, Ohio, Oklahoma, Rhode Island, South Carolina, Tennessee, Vermont, Virginia and Wisconsin.

State budget cuts are already hurting human services, from subsidized lunches for children in South Carolina to nursing home care in Rhode Island. Under new state budgets, more than 10 million people will lose dental care, access to medical specialists, name-brand prescription drugs or other benefits.

State and local government employment has grown for the last decade, and governments at all levels continued adding jobs in March, according to the Bureau of Labor Statistics. Employment in the sector is now the highest on record and payroll jumped 40 percent in the last 15 years, growing to a nationwide total of $60.74 billion in March 2006, according to the most recent U.S. Census Bureau data.

In the last quarter, as most industries have shed jobs, government has been the rare bright spot, adding about 18,000 jobs between February and March for a total of 22.39 million workers at the federal, state and local levels, according to preliminary data from the Bureau of Labor Statistics. Most of the month’s increase came at the federal level, while state and local government employment stayed steady.

Government employment expanded as growing states and cities hired teachers, police and firefighters, said Bob Ward, deputy director of the State University of New York’s Rockefeller Institute of Government.

But “public payrolls seldom shrink as the service base shrinks, whether it’s school enrollment or population in Northeastern cities such as Buffalo, Pittsburgh and Philadelphia,” he said.

Though most recessions don’t lead to deep state and local government job cuts, in the 2001 downturn, a sharp drop in tax revenue forced payroll reductions.

Economists expect unemployment, now at 5.1 percent, to rise slightly to 5.2 percent when the Labor Department releases employment data today.

Michigan has whittled total of state workers to the lowest number since 1973.