Public-sector layoffs soar

Associated Press

For years, most people who worked for state or local governments accepted a fact of life: Their pay wasn’t great. The job security was.

Now that’s gone, too.

States and municipalities are facing gaping budget gaps. Many have responded by slashing services, raising taxes and, for the first time in decades, making deep job cuts.

And public employees should brace themselves: Some economists say the job cuts could worsen in the second half of the year.

The economy is already under pressure from weak consumer spending, sinking stock prices, a European debt crisis and a teetering real estate market.

“It’s certainly a drag on economic growth in our outlook,” Mark Vitner, an economist at Wells Fargo, said of the loss of public-sector jobs.

It’s also a burden for residents. As state and municipal employees are cut, so are services. It takes longer to register a car, see a school nurse or travel to work by bus.

In California, state-run Department of Motor Vehicle offices have been closed on selected furlough Fridays to cut costs.

In New York City, a new budget will close up to 30 senior centers, shutter a 24-hour homeless center in Manhattan and eliminate nurses at schools with fewer than 300 students.

In Atlanta, the metro transit agency shut 40 bus lines and closed restrooms in June. Even so, 300 employees might lose their jobs to close a $69 million budget gap.

State and local governments cut 95,000 jobs in the first half of the year even as the economy slowly recovered. Private employers, by contrast, added 593,000 jobs in that time. It’s the first time the public sector has cut jobs while the private sector has added jobs since 1981, said Marisa Di Natale, a director at Moody’s Economy.com.

In the second half of the year, 152,000 more local and state government employees will be laid off, estimates Nigel Gault, an economist at IHS Global Insight.