Public Employee Ranks Drop, Ending Decade of Growth

Press of Atlantic City, September 24, 2012. All Rights Reserved.

The number of public workers and the amount of their wages in southern New Jersey fell in 2011, ending nearly a decade of steady increases as federal, state and local governments shed employees, recently released U.S. Bureau of Labor Statistics data show.

Government jobs in Atlantic, Cape May, Cumberland and Ocean counties fell 6 percent in 2011 from the prior year, eliminating nearly 1,700 positions at all levels of government, according to the preliminary data.

The role of government as an employer has been redefined following the recession, as budget-strapped municipalities and states deal with plummeting revenues, dropping property values and weak economies.

Monetary savings (about $23 million less in wages) have resulted, but also higher unemployment in southern New Jersey, which has the weakest labor market in the state. Cumberland and Atlantic counties had New Jersey’s highest unemployment rates this summer.

"I have members right now saying, ‘Can you get me a job?’ And there’s no new work,” said Marcus King, president of Egg Harbor City-based Teamsters Local 331 union, which represents various public workers at local and county jobs in Cape May and Atlantic counties, including Hamilton Township, Linwood, and Egg Harbor City.

“We did get hit hard, and I can’t blame the towns because they’re trying to hang in there as well, but it hurts our members,” King said. cq  “The employees we represent aren’t the higher paid salaries. We represent the clerks, the public works guys that take care of the towns. … When we lose those jobs, there’s a greater impact.”

Some economists say governments cutting back on workers is slowing the recovery, adding to unemployment when private sector job creation is too weak to compensate for it.

Others argue growing government and soaring debt are holding the economy back.

The public sector — which makes up nearly 8 percent of the regional work force — took a drubbing in 2011.

The federal government reduced manpower 9 percent in Atlantic, Cape May, Cumberland and Ocean counties, while the state reduced jobs 8 percent.

The local government work force — including municipalities, schools and counties — was reduced by 4 percent, but represented the largest number of jobs lost since it is the majority of government workers.

Private sector jobs remained about the same during that period.

Job losses in the region had a smaller impact on budgets, where total wages of federal, state and local workers combined dropped less than 2 percent from 2010 to 2011 and remained higher than in 2009, labor data show. With fewer workers, the average annual pay for area government workers increased from 2010 to 2011, nearly $10,000 in some areas in state and federal government.

The size of government and pay of its workers is a hot-button topic, but employment cuts have a cost, said Heidi Shierholz, cq labor market economist at the Economic Policy Institute in Washington, D.C.

“It’s a massive drag on the economy,” she said. “There may be an idea there’s a ton that can be cut with no pain, that there’s a huge fraud-and-abuse line you could just cut. People think there are a lot of cuts that can take place without actually harming the economy, and it’s just not true.”

Among local government workers in Atlantic County, 5 percent of positions — or about 250 jobs — were eliminated in 2011. Cape May County workers likewise saw 5 percent of local government jobs lost, while there was a 7 percent fewer in Cumberland County and a 3 fewer cut in Ocean County.

The public sector had been spared from more drastic cuts the two prior years in part because of the American Recovery and Reinvestment Act of 2009. The federal stimulus helped the public sector support employment, said Gary Burtless,cq labor economist at the Brookings Institution, a Washington, D.C.-based research institute.

When the money ran out, the impacts on public jobs became more evident.

Burtless said the federal unemployment rate would look better had jobs in the public sector simply remained stagnant, and even lower had it grown with the population.

“If the government industry had done as well as the construction industry — which also added no jobs, and the construction industry remains very depressed — we would have an unemployment rate 0.7 percentage points lower,” he said.

Tad DeHaven is a budget analyst for the Cato Institute, a Washington, D.C.-based policy research organization promoting limited government.

DeHaven said taxpayer money that funds public salaries s ultimately hinders the private sector and the economy.

“Money that went to a government employee’s salary is money that could have gone to the baker down the street or the movie theater. You just can’t look at is as you have a loss of a government employee, the loss of a salary-paying job. You had to take money out to the economy to begin with to pay the government to begin with.”

Public and private sector employees cannot be viewed  the same way, he said.

"Businesses that don’t make a profit go out of business, and wages and benefits are going to reflect that accordingly," he said. "When government spends too much money, they issue more debt, and they can increase taxes."

Dimitri Papadimitriou, president of the Levy Economics Institute of Bard College in New York, disagrees. He said cutting public jobs is the wrong way to recover from a recession.

“It’s always very easy to suggest the private sector should be the driver of economic growth,” he said, “but it will only be the driver if the prospects and expectations and forecasts of the future are more euphoric …This is the time not to do this cutting, but actually to promote employment and in some ways to increase public-sector employment.”

The prolonged economic slump makes this recovery much different than previous ones, said Michael Busler,cq a Richard Stockton College of New Jersey business professor and a fellow at the William J. Hughes Center for Public Policy.

“After the 1981 recession, we were adding over 400,000 jobs per month, and there were two months we added over one million jobs. If we could get that kind of growth, the loss in the public sector would be negligible,” he said.

“If the economy was recovering the way it traditionally does after a steep recession, the answer is yes, the private sector could compensate for that. The problem is the recovery has been so slow,” he said.