StateStats: Good-bye Government Jobs: July/August 2012 | STATE LEGISLATURES MAGAZINE

More than half a million public sector jobs have disappeared since September 2008. And, while private sector jobs have slowly increased during the last two years, with 25 straight months of job growth, those gains have been offset by massive cuts in state and local government jobs. This news is welcomed by those who want to shrink government, but all job losses have an economic impact on states beyond just the reduced buying power of idled workers.

Unemployed government workers have increased the demand on unemployment funds in many states that already are short of cash. Payroll tax collections decline with fewer workers, so less revenue is generated at a time of increased demand for unemployment benefits. Puerto Rico and the 12 states with the highest public sector job cuts together account for more than 340,000 public sector job losses since 2009. These 12 states currently are borrowing from the federal Unemployment Trust Fund to cover unemployment benefits.

Schools have been the hardest hit. Nearly 300,000 education jobs have been cut since 2008, accounting for 54 percent of all local government job losses. Reduced state funding for schools has been a key factor in those cuts.