Without federal aid, many state and local governments could make the same budget cuts that hampered the last economic recovery

by nyljaouadi1
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If policymakers should learn one lesson from the long, sluggish recovery from the Great Recession, it is that cutting public spending, particularly by state and local governments, is a recipe for prolonged economic pain. My colleague Josh Bivens has described in detail how the state and local austerity of the early 2010s was both an unprecedented cutback in public spending following a recession and directly to blame for the slow pace of recovery.

Unfortunately, facing massive projected losses in revenue as the coronavirus has forced them to lock down their economies, many state and local governments are already cutting critical services and laying off staff. The April jobs report showed that nearly 981,000 state and local public-sector jobs have already been lost. To put that in perspective, that’s more than all the state and local public-sector jobs lost in the Great Recession and its aftermath.

As shown in Figure A, the peak for state and local government employment occurred in July 2008. As state and local budgets deteriorated throughout that year, governments began cutting services and staff. When the recession officially ended in June 2009, lawmakers in many states were already cutting jobs, choosing to slash budgets rather than pursuing new revenues. These cuts accelerated in 2010 as relief funding from the federal recovery act dried up, and continued for several years, particularly in many states where conservative lawmakers took control following the 2010 elections. The result was a loss of nearly 800,000 state and local public sector jobs by July 2013.

April’s state and local government job losses were larger than the entirety of cuts in the Great Recession: State and local government employment, December 2007–April 2020

State and local actual
2007-12-01 19620
2008-01-01 19650
2008-02-01 19670
2008-03-01 19691
2008-04-01 19695
2008-05-01 19726
2008-06-01 19758
2008-07-01 19801
2008-08-01 19801
2008-09-01 19769
2008-10-01 19777
2008-11-01 19782
2008-12-01 19781
2009-01-01 19793
2009-02-01 19781
2009-03-01 19763
2009-04-01 19755
2009-05-01 19757
2009-06-01 19762
2009-07-01 19695
2009-08-01 19712
2009-09-01 19625
2009-10-01 19681
2009-11-01 19691
2009-12-01 19651
2010-01-01 19631
2010-02-01 19604
2010-03-01 19595
2010-04-01 19585
2010-05-01 19580
2010-06-01 19547
2010-07-01 19518
2010-08-01 19475
2010-09-01 19378
2010-10-01 19431
2010-11-01 19421
2010-12-01 19396
2011-01-01 19384
2011-02-01 19339
2011-03-01 19315
2011-04-01 19314
2011-05-01 19258
2011-06-01 19304
2011-07-01 19187
2011-08-01 19167
2011-09-01 19137
2011-10-01 19148
2011-11-01 19129
2011-12-01 19118
2012-01-01 19113
2012-02-01 19119
2012-03-01 19115
2012-04-01 19105
2012-05-01 19088
2012-06-01 19106
2012-07-01 19098
2012-08-01 19096
2012-09-01 19103
2012-10-01 19079
2012-11-01 19074
2012-12-01 19081
2013-01-01 19063
2013-02-01 19075
2013-03-01 19076
2013-04-01 19075
2013-05-01 19089
2013-06-01 19069
2013-07-01 19054 
2013-08-01 19077
2013-09-01 19082
2013-10-01 19091
2013-11-01 19097
2013-12-01 19079
2014-01-01 19078
2014-02-01 19094
2014-03-01 19105
2014-04-01 19125
2014-05-01 19104
2014-06-01 19166
2014-07-01 19170
2014-08-01 19120
2014-09-01 19162
2014-10-01 19182
2014-11-01 19192
2014-12-01 19204
2015-01-01 19215
2015-02-01 19231
2015-03-01 19222
2015-04-01 19242
2015-05-01 19259
2015-06-01 19261
2015-07-01 19294
2015-08-01 19300
2015-09-01 19281
2015-10-01 19297
2015-11-01 19315
2015-12-01 19321
2016-01-01 19346
2016-02-01 19366
2016-03-01 19397
2016-04-01 19401
2016-05-01 19405
2016-06-01 19387
2016-07-01 19486
2016-08-01 19465
2016-09-01 19496
2016-10-01 19488
2016-11-01 19491
2016-12-01 19491
2017-01-01 19487
2017-02-01 19506
2017-03-01 19514
2017-04-01 19530
2017-05-01 19524
2017-06-01 19540
2017-07-01 19554
2017-08-01 19555
2017-09-01 19564
2017-10-01 19566
2017-11-01 19601
2017-12-01 19587
2018-01-01 19554
2018-02-01 19613
2018-03-01 19611
2018-04-01 19619
2018-05-01 19639
2018-06-01 19663
2018-07-01 19664
2018-08-01 19689
2018-09-01 19685
2018-10-01 19680
2018-11-01 19675
2018-12-01 19686
2019-01-01 19695
2019-02-01 19699
2019-03-01 19713
2019-04-01 19730
2019-05-01 19725
2019-06-01 19724
2019-07-01 19756
2019-08-01 19780
2019-09-01 19793
2019-10-01 19801
2019-11-01 19809
2019-12-01 19832
2020-01-01 19859
2020-02-01 19878
2020-03-01 19831
2020-04-01 18850 
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