State and local government workers unlikely to see job recovery before 2017

A new report from IHS Global Insights shows that any near-term economic recovery in the US isn’t likely to include adding jobs to state and local governments. The data tracks with the the National League of Cities budget report, CivSource reported on last month which shows that cities and states are still making layoffs. Some areas are relying on part-time workers to fill the gaps.

According to the economic forecast from IHS, state and local government workers shouldn’t expect to see their ranks hit pre-recession levels until 2017. Total employment by states and cities could grow 3.2 percent to 19.9 million in 2017 from 19.3 million in 2012 – an addition of 620,000 jobs, IHS Global Insight said.

Jobs for teachers, firefighters and other public workers are slowly expected to be filled back over the next few years as cities and states start hiring once again. But the federal government is expected to lose 9 percent of its workforce. The main growth in jobs is expected to come from the private sector. In the next five years, the nonfarm private sector is expected to add almost 11.5 million jobs. Sectors such as the professional and business services are expected to add 3.7 million jobs. Even construction is expected to recover from its present slump and add 2.1 million jobs while the growing healthcare industry is expected to create 2.3 million jobs.

Data released earlier this month from the global research firm, notes that the US workforce has become increasingly less mobile as wages continue to decline relative to the cost of living. This is making it more difficult for states to attract skilled labor from surrounding states. Creating economic development has also become more difficult as individuals who cannot travel for work also have difficulty traveling for job training.

“Flexibility is a key characteristic of the US labor force, but the housing bust constrains this flexibility. With the average American losing 16% of their wealth from the housing correction, US workers are more reluctant to relocate. Unfortunately, US regions with the highest unemployment rate for skilled workers are also the markets suffering the largest decline in median existing home prices. Since housing prices are just beginning to inch up again, there is currently a substantial relocation cost for skilled workers,” the report says.

In some cases, state and local governments are relying on part-time workers to close the gaps although that coms with its own training and turnover related challenges. Cities have been the last to feel the after effects of the recession, as many of the layoffs started at the state level. However, National League of Cities data suggests that while cities may still be making cuts they are turning corner and becoming more stable.

“These are serious times for cities and their residents. Difficult, but manageable, financial hurdles for cities will remain for the foreseeable future,” said Michael Pagano, co-author of the report and Dean of the College of Urban Planning and Public Affairs at the University of Illinois at Chicago.