Ohio has lost government jobs at a steeper rate than most of the United States since January 2009, and the cratering public sector is having a negative impact on the state's overall economic recovery.

August 26, 2013

Ohio has lost government jobs at a steeper rate than most of the United States since January 2009, and the cratering public sector is having a negative impact on the state's overall economic recovery.

During the past 4 1/2 years, a period that includes the end of a national recession, Ohio has shed 47,900 federal, state and local government jobs for a 6 percent drop, according to the U.S. Bureau of Labor Statistics.

Only California, New York and Florida have lost more government jobs, and Ohio's drop percentage is more than triple the national median rate.

Most of Ohio's public-sector pain has been felt at the local level - think police forces, firehouses, road crews and schools - where 45,100 jobs have been lost, an 8 percent decline.

Ohio has added 10,100 net jobs in that time, counting all nonfarming employment.

"This phenomenon has certainly taken steam out of the recovery," said Karl Kuykendall, an economist with IHS Global Insight, who said employment nationally would be 16 percent higher had the public sector remained at its mid-2010 level, a trend that likely would have played out in Ohio, too.

"Normally I would go along with my professional brethren and say it's time the public sector took it in the shorts," said Edward "Ned" Hill, a conservative Cleveland State University economist, talking about the traditional conservative theory that smaller government is better government.

"But this recession was different. We faced 1932. It's the deepest recession we've faced since 1936, and the recovery's been absolutely, brutally painful."

Public-sector cuts typically lag behind the private sector's in a recession, as businesses are better equipped to react quickly in a downturn with layoffs and spending cuts.

That's one reason public-sector jobs in Ohio have fallen more in Gov. John Kasich's 2 1/2 years (-25,700) than they did under predecessor Ted Strickland's four years (-23,500), even though the entire recession took place during the Democrat's term. Kasich's team says the losses under Strickland would have been greater if not for the $3 billion in federal stimulus money the state received.

While outcries from local-government leaders about the harm caused by state funding cuts persist, Kasich's aides say government is right-sizing. They say Ohio's employees-per-capita in local government is near the national average.

Whenever possible, Kasich touts Ohio's private-sector growth - 174,700 jobs - under his watch, instead of the 149,000 net jobs added once public-sector jobs are subtracted.

"Our focus is to grow the private-sector economy," said Rob Nichols, Kasich's spokesman. "Make no mistake, we were in a deep, deep hole, and we have a lot more work to do and we have never, for a second, said 'mission accomplished' on anything. But things are undoubtedly improving."

Over the past 12 months, Ohio has added 47,500 private-sector jobs but lost 9,800 public-sector jobs. Local public jobs accounted for 8,700 of those losses.

Ohio's overall job growth is a tepid 0.7 percent over that span, half the growth rate of the prior 12 months.

"A job is a job - whether you're working at Ford, Nationwide, the state of Ohio or a municipality, it's still income that spends in the local economy," said Hannah Halbert, policy liaison for Policy Matters Ohio, a labor-backed research group in Cleveland.

During recovery periods after previous recessions, usually there is stability or growth in public jobs that helps get the economy back on track, Halbert said. "We're kind of acting in an opposite way," he said.

"We've taken this austerity approach toward budgeting, both at the federal and state level, and this is the consequence of that," she said. "We're not seeing the kind of private job growth that this kind of policy has promised us."

Public schools have endured significant state cuts over the past few years, and only now are seeing some recovery. Total funding for daily school operations is $7.4 billion this year - $296 million less than what the state spent in 2009. Spending grows to $7.8 billion in 2015, a 1.35 percent increase over 2009.

The state's local government fund is increasing slightly, after seeing a major cut the past two years. But total funding over the new two-year budget that began July 1 remains $200 million less than in the last budget.

Gene Krebs, a former GOP lawmaker who has studied local-government issues and currently serves on the state's Local Government Innovation Council, said the issue is not job-loss totals, but whether the right jobs have been lost.

If jobs losses came as a result of consolidations, for example, it can be a good step toward needed restructuring of local-government operations, he said.

"The question is, what is the right size, what are the right duties and responsibilities?" he said. "Over time, due to the effects of sprawl, some communities simply lack the tax base to support themselves and have become almost entirely dependent on the state."

Government does not employ people just to provide jobs, Krebs said. Rather, the question is whether the current system maximizes taxpayer value, contributes to economic growth and cares for needy citizens.

The cut in government employees is reflected in the decrease of active participants in Ohio's public-pension funds.

For example, the number in the Ohio Police & Fire Pension system - mostly local safety forces - has fallen by more than 5 percent since 2009.

The reduction was a bit less for the state's largest pension fund, the Ohio Public Employees Retirement System, which covers almost 350,000 state and local workers, including a few in law enforcement.

The State Teachers Retirement System has seen a 1 percent drop. The School Employee Retirement System - janitors, cooks, bus drivers and the like - actually has shown a small increase in the past four years.

"I don't see why we value a teacher or a policeman or an emergency responder any less than or more than a banker, a desk clerk at a hotel, someone who works at a retail shop," said Mark Zandi, chief economist at Moody's Analytics and a former adviser to former GOP presidential nominee and U.S. Sen. John McCain of Arizona.

"They're all very important jobs that provide a very important service."

Dispatch Public Affairs Editor Darrel Rowland contributed to this story.