Quote:

---

Metro economies struggling the most to recover from the Great Recession typically lost government jobs, a new Brookings Institution report found.

Fourteen of the 20 metro areas that have performed the worst since the start of the nation's economic troubles lost government jobs, according to the report, published Wednesday.

They include: Bridgeport, Conn.; Cleveland; Detroit; Grand Rapids, Mich.; Las Vegas; Minneapolis; New Orleans; North Port, Fla.; Palm Bay, Fla.; Phoenix; Riverside, Calif.; Sacramento, Calif., and Toledo, Ohio.

These areas include: Allentown, Pa.; Buffalo, N.Y.; Chicago; Dayton, Ohio; Detroit; Greensboro, N.C.; Harrisburg, Pa.; Las Vegas; Pittsburgh; Portland, Ore.; Providence. R.I., and Scranton, Pa.

Many of these struggling metro areas have other problems, such as falling home prices and rising unemployment overall. But the loss of government jobs has only added to their woes.

Conversely, many metro areas that have done well in recent years have experienced growth in government jobs, the report found.

The study is the latest in a series of warnings from experts who say that cutting deeply into public payrolls can hinder the economic revival.

"This is not the time to be shrinking the size of government," said Howard Wial, a Brookings fellow and co-author of the report. "We're in a very precarious recovery. If we shrink the size of government right now, we'll only make that recovery more precarious."

State and local officials, not to mention members of Congress, have been tripping over themselves to reduce government payrolls.

State and local payrolls have shrunk by an average of 23,000 jobs a month over the past three months, while federal payrolls have stayed essentially flat. Meanwhile, the private sector has created an average of 180,000 a month during the same period.

The worst is yet to come. State and local governments are forecast to shed up to 110,000 jobs in the third quarter, according to IHS Global Insight. That would be the first time above 100,000 job cuts in just one quarter.

---

Quote:

---

Don't look to state and local governments to prop up the job market.

To the contrary, this cash-strapped sector is set to go on a record-breaking layoff binge when the new fiscal year starts on July 1.

"We're on a downward path," said Greg Daco, principal U.S. economist at IHS. "It's not looking good."

State and local government employment has been a drag on the economy all year, averaging a loss of 23,000 jobs a month over the past three months. Meanwhile, the private sector has created an average of 180,000 a month during the same period.

In May, public employment shrunk by 29,000 jobs, mostly at the state and local level, while businesses created 83,000 jobs, the Labor Department reported Friday. All told, the sector has lost 510,000 positions since its peak in August 2008.

States still cutting
Though tax revenue is starting to rise, states are still wrestling with multi-billion-dollar budget gaps. Federal stimulus funds helped minimize job cuts until now, but that money essentially runs out on June 30.

So states are planning to slash funds for education, social services and local governments, as well as downsize their payrolls even more, in the coming fiscal year.

And that's the good news.

The bad news is that local governments are in even worse shape. Not only are they losing state aid, but they are finally feeling the fallout from the mortgage meltdown. Property tax assessments, a major funding source for municipalities, have only started to drop.

Hiring slows, unemployment rises
Caught in a fiscal bind, local governments will have to reduce personnel expenses since it is the costliest part of their budgets and they've already slashed their programs and services.

"We're at the tip of the iceberg," said Christiana McFarland, the National League of Cities' program director for finance and economic development. Cities "don't have many options at this point."

Teachers and school staff will bear the brunt of the layoffs this summer, as hundreds of thousands will likely be laid off around the nation. The national job numbers should reflect the hit in July and September.

It's not uncommon for state and local governments to take longer to emerge from a recession. But usually by then, businesses have ramped up their hiring. This time around, private sector hiring has remained soft, making government cutbacks that much more painful.

And it will likely take at least a year before the state and local government job market revives, economists said. Until then, they are waiting to see the extent of the downsizing.

"The only question is 'how much worse?," said Dean Baker, co-director of the Center for Economic and Policy Research.

---