The number of workers employed by local governments fell to the lowest level since October 2006 as U.S. cities and towns reduced the ranks of teachers and other school employees in a bid to cut costs.
“State and local governments, particularly local governments, probably didn’t recall a lot of teachers,” Stuart Hoffman, chief economist of PNC Financial Services Group in Pittsburgh, said in a Bloomberg Television interview. “That is the weak spot in the report.”
Cuts in education, to a four-year low of 7.9 million jobs, reflect the struggle of local governments to balance budgets amid declining property values and falling tax receipts, according to the National League of Cities. Local general-fund revenue was projected to drop 3.2 percent in fiscal 2010 from 2009, when it fell 2.5 percent, the group said Oct. 6.
Government employment at the local level declined by 76,000 jobs, the Labor Department said. More than half (55 percent) of local government employees work in schools, the agency said. At the state level, 46 percent work in education.
Since reaching record highs in mid-2008, local government employment has dropped 2.4 percent while those employed in education fell 2.5 percent, according to data compiled by Bloomberg.