State and local governments have shed about 1.5 million jobs since March, bringing employment in the sector to its lowest level since 2001, according to a review of Labor Department data by the Pew Charitable Trusts. Most of the job losses have been furloughs or temporary layoffs, with public education accounting for about two-thirds of the reductions.
As the coronavirus pandemic hit the economy in March, local “governments issued hiring freezes, furloughed staff, or laid off seasonal employees,” Pew says. “School districts made significant cuts to noninstructional hourly staff, such as bus drivers and maintenance workers. Most of the hits to school payrolls so far resulted from closures, but any future downsizing would be driven primarily by budget cuts in the wake of the recession ...”
While many state and local officials view the job cuts as temporary, much depends on how schools reopen in the fall — and how quickly tax revenues return to pre-pandemic levels. On Monday, the Center on Budget and Policy Priorities, a left-leaning think tank, released its latest estimates for state revenue losses, which indicate that state and local governments face enormous losses in revenue that could last for many months.
CBPP estimates that states alone will see a $615 billion shortfall in revenues across three fiscal years from 2020 to 2022 — a much larger loss than in the previous two recessions. The deepest shortfall will occur in the 2021 fiscal year, which begins on July 1 in many states.
“The projected shortfall for the upcoming fiscal year (2021) is much deeper than the shortfalls faced in any year of the Great Recession,” CBPP said. “These figures underscore the continued urgency of the President and Congress enacting substantially more fiscal relief and maintaining it for as long as economic conditions warrant.”