By Ted Nesi
PBN Web Editor
PROVIDENCE – Rhode Island has laid off a larger share of its state and local government employees than any other state over the past year, according to a report released yesterday by the Nelson A. Rockefeller Institute of Government.
State and local government employment in Rhode Island shrank 3.5 percent between June 2008 and June 2009, according to federal jobs data analyzed by the Albany-based research center at the State University of New York. No other state cut a larger percentage of its public-sector jobs during that time.
The next-highest decline was in Nevada, which cut 2.9 percent of state and local government jobs, followed by Maine (down 2.2 percent), Arizona and South Carolina (both down 2.1 percent), the study found. They were the only states to cut more than 2 percent of public jobs.
The number of private-sector jobs in Rhode Island shrank 4.7 percent over the same period. Twenty states saw larger declines in private employment.
The findings help explain why Rhode Island’s unemployment rate, which reached 12.7 percent in July, is now the second-highest in the nation after Michigan. The report also noted that Michigan, which never fully recovered from the 2001 recession, has cut government jobs throughout this decade as its auto industry collapsed, reducing the number of cuts it made more recently.
Taken separately, Rhode Island cut the second-highest percentage of both state and local jobs, with public education falling the most.
Rhode Island cut 5.7 percent of its state government jobs between June 2008 and June 2009, second only to Arizona, which cut 8.6 percent of state jobs.
Cities and towns in Rhode Island cut 2.5 percent of local government jobs over that period, the most after Nevada, which cut 3.3 percent of municipal jobs.
Altogether, 16 states reduced their total number of government workers in the 12-month period, with declines concentrated in Eastern states and those where housing prices have fallen most sharply.
Housing values in Rhode Island dropped 10.8 percent from the first quarter of 2007 through the first quarter of this year, the fifth-largest decline in the nation, according to the Federal Housing Finance Agency. Nationwide, housing values fell 3.7 percent.
State and local government employment accounted for 22.6 million jobs, or 17 percent of total U.S. employment, as of June 30, according to the Bureau of Labor Statistics. The bulk of those jobs – 11 percent – were in local government, particularly education. Of the rest, 3.9 percent were state government jobs and 2.2 percent were federal jobs.
Nationwide, state and local governments have added 110,000 jobs since December 2007 even as the private sector has cut 6.9 million jobs, the study found.
For the nation as a whole, state and local government employment peaked last August and has been falling since. Public-sector jobs will continue to be cut in the coming months as budget shortfalls reduce spending, the study predicted.
The report’s author, Rockefeller Institute senior fellow Donald J. Boyd, said the result was typical of past recessions. “It is common for state and local government employment to rise in recessions, or if it falls, to decline only after a substantial lag,” he wrote.
The reasons Boyd cited include the relative stability of municipal property tax revenue; continued public support for public education, safety and health expenditures even in economic downturns; and the more than $36 billion in economic stimulus money the federal government has sent states in recent months.
Additional information is available at RockInst.org.