Public Sector Job Cuts Threaten Recovery

Since peaking in 2008, local governments have shed almost 500,000 jobs.

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While this is bad news for government employees worried about keeping their jobs, Howard Wial, a fellow for the Metropolitan Policy Program at the Brookings Institution in New York, says it also doesn't bode well for the economic recovery. Even while total employment has grown during the economic recovery, 60 of the largest 100 metropolitan areas have lost government jobs since the recession began in 2007, according to a recent Brookings report. The metro areas that gained government jobs have generally fared better economically since the beginning of the recession than cities that lost government jobs. Of the 20 metro areas with the strongest overall economic performance since the start of the recession, 17 of them, including Boston, Atlanta, and Pittsburgh, have gained government jobs since their periods of peak total employment. Fourteen of the 20 metro areas with the weakest overall performance, including Los Angeles, New Orleans, and Orlando, lost government jobs since hitting peak total employment, according to the Brookings report.

Wial worries that ongoing negotiations on Capitol Hill could lead to drastic cuts, which could be a huge drag on the economy. "Depending upon how big those cuts are, it could slow economic growth down," Wial says. "It could even push us back into another recession, if the cuts are big enough and fast enough."

Alexis Grant contributed to this report.