June 10, 2023

DS Duke

Global Business In World

The American Rescue Plan clears a path to recovery for state and local governments and the communities they serve

15 min read
The passage of the American Rescue Plan (ARP) is a watershed moment for state and...

The passage of the American Rescue Plan (ARP) is a watershed moment for state and local governments. It is an opportunity to undo much of the damage caused by the COVID-19 pandemic and begin to address some of the long-standing inadequacies and inequities caused by decades of disinvestment in public services. As our colleague Josh Bivens notes, the bill’s $350 billion in aid to state and local governments will critically help many localities fill in for revenue losses, stem budget cuts, and respond—with important flexibility over the next few years—to massively increased fiscal demands caused by the pandemic.

Although revenue losses in some states were not as dire as predicted early in the pandemic, state and local governments across the country have, nevertheless, already made massive cuts to their budgets and staffs. These cuts have serious implications for the health of local economies and the quality of life in those communities. In this piece, we document the losses that have already occurred in state and local government workforces and take a closer look at who these workers are and what they do. We also discuss the opportunity that policymakers now have to truly “build back better” and what that could mean for communities throughout the country that were struggling long before the coronavirus appeared. In particular, we show that:

  • State and local job cuts during the COVID-19 pandemic have been unprecedented and widespread.
  • Most state and local government employees work in education (50.4{e5fab30bc1af2ab9862fe5c16f5be581fd243b6ad78468b48e940aadfb2b849d}). This workforce also provides public services that keep communities healthy and safe.
  • Women and Black workers are disproportionately represented in state and local government jobs. Women make up 59.6{e5fab30bc1af2ab9862fe5c16f5be581fd243b6ad78468b48e940aadfb2b849d} of this workforce, compared with 46.6{e5fab30bc1af2ab9862fe5c16f5be581fd243b6ad78468b48e940aadfb2b849d} of the private sector. Black women account for 8.7{e5fab30bc1af2ab9862fe5c16f5be581fd243b6ad78468b48e940aadfb2b849d} of state and local government workers, compared with 6.4{e5fab30bc1af2ab9862fe5c16f5be581fd243b6ad78468b48e940aadfb2b849d} of private-sector workers.
  • The American Rescue Plan provides an opportunity for state and local governments to work toward addressing racial inequities and expanding public supports in their communities.

Cuts to the state and local public-sector workforce have been enormous and unprecedented

During the COVID-19 pandemic, state and local governments have cut an unprecedented number of jobs. Within the first four months of the crisis, state and local public-sector employment fell by over 1.5 million. As of February 2021, state and local government employment is still 1.4 million jobs (or nearly 7{e5fab30bc1af2ab9862fe5c16f5be581fd243b6ad78468b48e940aadfb2b849d}) below its February 2020 levels, with the vast majority of losses concentrated in education.

Figure A

This is a massive blow to the public sector—nearly three times the job losses that occurred in state and local government employment after the Great Recession. As shown in Figure A, state and local governments initially added jobs at the onset of the Great Recession. However, by 2010 when the recession had official ended, inadequate federal aid forced many cash-strapped states and localities to roll back public services and cut a total of 566,000 jobs between January 2008 and July 2013. This was a costly mistake that delayed the recovery by over four years and stifled private-sector job growth in the states that made cuts.

Fortunately, the funding provided in the ARP means state and local governments will not need to make the same mistakes in this recovery, but they will have to make up over a decade of lost ground. Figure A also shows that private-sector employment was 11.8{e5fab30bc1af2ab9862fe5c16f5be581fd243b6ad78468b48e940aadfb2b849d} above December 2007 levels by February 2020, while state and local government employment had barely recovered when the COVID-19 pandemic hit. It took over 10 years for the state and local government workforce to reach its pre-recession level—during which time public schools, health centers, and other agencies should have been adding staff simply to keep up with a growing population.

Now, in the wake of the pandemic, staffing demands will be even greater. Schools will need to make adjustments that allow greater social distancing (e.g., smaller class sizes and reduced bus capacities). Making up for a year of distance or hybrid learning will require more specialized instruction. Many schools may need more counselors and mental health professionals. Public health agencies will need expanded capacity to support vaccine distribution, continued testing and tracing, and expanded access to preventative care. Nursing and long-term care facilities—many of which are funded through Medicare and Medicaid—will need to undo the low pay, inadequate staffing, and high turnover rates that made COVID so deadly in these facilities. Public agencies may need additional capacity to support millions of people and families still without jobs, lacking adequate food, struggling to pay rents and mortgages—as well as businesses figuring out how to access relief programs and reopen safely.

Every state has lost state and local government jobs, with some cutting more than 10{e5fab30bc1af2ab9862fe5c16f5be581fd243b6ad78468b48e940aadfb2b849d} of their public-sector workforce

As shown in Figure B, state and local government employment is still below pre-pandemic levels in every state. While the severity of job loss varies, employment in this sector has declined by more than 5{e5fab30bc1af2ab9862fe5c16f5be581fd243b6ad78468b48e940aadfb2b849d} in a majority of states and by more than 10{e5fab30bc1af2ab9862fe5c16f5be581fd243b6ad78468b48e940aadfb2b849d} in three states: New Hampshire (-13.7{e5fab30bc1af2ab9862fe5c16f5be581fd243b6ad78468b48e940aadfb2b849d}), Nevada (-10.4{e5fab30bc1af2ab9862fe5c16f5be581fd243b6ad78468b48e940aadfb2b849d}), and Maine (-10.4{e5fab30bc1af2ab9862fe5c16f5be581fd243b6ad78468b48e940aadfb2b849d}).

Figure B

Figure B

Figure B also allows for a closer look at the severity of losses in the state and local government sectors separately. In 27 states, cuts to state government jobs were more severe than local cuts, as a percentage of pre-pandemic employment. Ten state governments cut jobs by more than 10{e5fab30bc1af2ab9862fe5c16f5be581fd243b6ad78468b48e940aadfb2b849d}: New Hampshire (-27.9{e5fab30bc1af2ab9862fe5c16f5be581fd243b6ad78468b48e940aadfb2b849d}), Colorado (-13.7{e5fab30bc1af2ab9862fe5c16f5be581fd243b6ad78468b48e940aadfb2b849d}), Wisconsin (-13.0{e5fab30bc1af2ab9862fe5c16f5be581fd243b6ad78468b48e940aadfb2b849d}), Ohio (-12.2{e5fab30bc1af2ab9862fe5c16f5be581fd243b6ad78468b48e940aadfb2b849d}), Kentucky (12.1{e5fab30bc1af2ab9862fe5c16f5be581fd243b6ad78468b48e940aadfb2b849d}), Michigan (-11.7{e5fab30bc1af2ab9862fe5c16f5be581fd243b6ad78468b48e940aadfb2b849d}), Maine (-11.3{e5fab30bc1af2ab9862fe5c16f5be581fd243b6ad78468b48e940aadfb2b849d}), Hawaii (-10.3{e5fab30bc1af2ab9862fe5c16f5be581fd243b6ad78468b48e940aadfb2b849d}), Maryland (-10.2{e5fab30bc1af2ab9862fe5c16f5be581fd243b6ad78468b48e940aadfb2b849d}), and Massachusetts (-10.0{e5fab30bc1af2ab9862fe5c16f5be581fd243b6ad78468b48e940aadfb2b849d}).

While a handful of states (Iowa, Alaska, Oregon, Montana, and New Mexico) added some state government jobs over the course of the pandemic, no state saw an increase in local government employment. In eight states, local governments cut more than one in 12 jobs: Nevada (-13.5{e5fab30bc1af2ab9862fe5c16f5be581fd243b6ad78468b48e940aadfb2b849d}), Oregon (-11.1{e5fab30bc1af2ab9862fe5c16f5be581fd243b6ad78468b48e940aadfb2b849d}), Washington (-10.3{e5fab30bc1af2ab9862fe5c16f5be581fd243b6ad78468b48e940aadfb2b849d}), Minnesota (-10.0{e5fab30bc1af2ab9862fe5c16f5be581fd243b6ad78468b48e940aadfb2b849d}), Maine (10.0{e5fab30bc1af2ab9862fe5c16f5be581fd243b6ad78468b48e940aadfb2b849d}), California (-9.2{e5fab30bc1af2ab9862fe5c16f5be581fd243b6ad78468b48e940aadfb2b849d}), Connecticut (-9.2{e5fab30bc1af2ab9862fe5c16f5be581fd243b6ad78468b48e940aadfb2b849d}), and Kentucky (-8.7{e5fab30bc1af2ab9862fe5c16f5be581fd243b6ad78468b48e940aadfb2b849d}).

State and local government workers provide vital public services

When state and local governments cut jobs, they are rolling back public services that are essential to the functioning of every community. Figures C and D show the most common industries and occupations, respectively, for state and local government employees. These figures, and the demographic profile later in this post, use pre-pandemic data to show the services state and local government employees typically provide.

Public education is the core of the state and local government workforce. Most state and local government employees work in elementary, secondary, or postsecondary education (50.4{e5fab30bc1af2ab9862fe5c16f5be581fd243b6ad78468b48e940aadfb2b849d}). As shown in Figure C, 47.4{e5fab30bc1af2ab9862fe5c16f5be581fd243b6ad78468b48e940aadfb2b849d} of local government employees work in elementary and secondary schools, while state governments have about a quarter of their workforce in elementary and secondary schools (28.3{e5fab30bc1af2ab9862fe5c16f5be581fd243b6ad78468b48e940aadfb2b849d}) and in postsecondary education (23.7{e5fab30bc1af2ab9862fe5c16f5be581fd243b6ad78468b48e940aadfb2b849d}). As noted earlier, public education has taken the brunt of job losses in the pandemic and will require significant investment to keep schools safe and help America’s children bounce back from a year of exceptionally difficult learning conditions.

Providing safe, enriching, and accessible schools and other child care centers is critical for working parents, too. Child care and other learning centers account for a little less than 1{e5fab30bc1af2ab9862fe5c16f5be581fd243b6ad78468b48e940aadfb2b849d} of state and local employment, but the importance of this workforce was made abundantly clear in the pandemic. State and local governments need to consider whether past resources provided for early child care education are really meeting the needs of working families in their communities.

Public investments also provide education and enrichment for the entire community, not just students, with libraries, museums, and historical sites accounting for 2.7{e5fab30bc1af2ab9862fe5c16f5be581fd243b6ad78468b48e940aadfb2b849d} of local government employment—as well as other amusement and recreational facilities (rec centers, youth sports, day camps, etc.) which account for about 1{e5fab30bc1af2ab9862fe5c16f5be581fd243b6ad78468b48e940aadfb2b849d} of local government employment.

The pandemic has also underscored the importance of public health services and caregiving as well as programs that provide community members with economic security. Public hospitals and outpatient centers employ 5.4{e5fab30bc1af2ab9862fe5c16f5be581fd243b6ad78468b48e940aadfb2b849d} of state and 2.2{e5fab30bc1af2ab9862fe5c16f5be581fd243b6ad78468b48e940aadfb2b849d} of local government workers with smaller percentages working in home health care services and nursing and residential care facilities. More than one in 13 state government employees (7.8{e5fab30bc1af2ab9862fe5c16f5be581fd243b6ad78468b48e940aadfb2b849d}) works administering programs that have been a lifeline for so many during the pandemic, including unemployment insurance, Medicare, and Medicaid. A key lesson from the pandemic is that these public services need the resources to be able to respond quickly and effectively to public health crises and periods of economic insecurity.

Many state and local government employees are also quite literally building better communities by improving and maintaining infrastructure, whether it is the roads we drive on, the sewers and waste collection that we take for granted, or the utilities that power our homes. Public transit accounts for 1.0{e5fab30bc1af2ab9862fe5c16f5be581fd243b6ad78468b48e940aadfb2b849d} of state and 1.7{e5fab30bc1af2ab9862fe5c16f5be581fd243b6ad78468b48e940aadfb2b849d} of local government employment, while power, gas, water, waste management, sewage treatment, and other remediation services make up a combined 0.7{e5fab30bc1af2ab9862fe5c16f5be581fd243b6ad78468b48e940aadfb2b849d} of state and 2.97{e5fab30bc1af2ab9862fe5c16f5be581fd243b6ad78468b48e940aadfb2b849d} of local public employment.

Figure C

Figure C

While the top industries give a sense of where state and local government employees work, the top occupations, displayed in Figure D, describe what they do. The public education system obviously has many teachers (26.5{e5fab30bc1af2ab9862fe5c16f5be581fd243b6ad78468b48e940aadfb2b849d} of employment), but there are also a myriad of other employees who keep schools open and flourishing, including teaching assistants (3.8{e5fab30bc1af2ab9862fe5c16f5be581fd243b6ad78468b48e940aadfb2b849d}), counselors (1.8{e5fab30bc1af2ab9862fe5c16f5be581fd243b6ad78468b48e940aadfb2b849d}), administrators (2.5{e5fab30bc1af2ab9862fe5c16f5be581fd243b6ad78468b48e940aadfb2b849d}), and bus drivers (1.6{e5fab30bc1af2ab9862fe5c16f5be581fd243b6ad78468b48e940aadfb2b849d}). In schools and elsewhere, these public-sector workers are also doing the vital work of keeping our communities clean (janitors and building cleaners: 2.5{e5fab30bc1af2ab9862fe5c16f5be581fd243b6ad78468b48e940aadfb2b849d}), healthy (registered nurses and personal and home care aides: 3.1{e5fab30bc1af2ab9862fe5c16f5be581fd243b6ad78468b48e940aadfb2b849d}; social workers and counselors: 3.6{e5fab30bc1af2ab9862fe5c16f5be581fd243b6ad78468b48e940aadfb2b849d}), and safe (firefighters, EMTs, paramedics, and dispatchers: 2.6{e5fab30bc1af2ab9862fe5c16f5be581fd243b6ad78468b48e940aadfb2b849d}).

Figure D

Figure D

The public sector is a key employer for women and Black workers

During the Civil Rights era of the 1960s and 1970s, the federal government—through executive actions and legislation—adopted various anti-discrimination and affirmative action measures that boosted the employment of women and Black workers in government. Now, decades later, all state and local government jobs are subject to the federal regulations requiring equal opportunity, and some states and localities have additional affirmative action programs. Consequently, Black workers make up a larger share of state and local government workers than private-sector workers. Table 1 provides a demographic comparison of the private-sector and state and local government workforces.

The disproportionate representation of women and Black workers in those jobs means that, all else being equal, they disproportionately feel the pain of any state and local employment and budget cuts. It also means that the funding provided by the ARP is an opportunity to invest in and expand a diverse sector that has historically been a cornerstone of good, middle-class jobs for many communities.

Figure E

Figure E

As shown in Figure E, women make up the vast majority (59.6{e5fab30bc1af2ab9862fe5c16f5be581fd243b6ad78468b48e940aadfb2b849d}) of the state and local government workforce despite accounting for just 46.6{e5fab30bc1af2ab9862fe5c16f5be581fd243b6ad78468b48e940aadfb2b849d} of private-sector employees. One in five state and local government workers is a woman of color (19.9{e5fab30bc1af2ab9862fe5c16f5be581fd243b6ad78468b48e940aadfb2b849d}, compared with 18.2{e5fab30bc1af2ab9862fe5c16f5be581fd243b6ad78468b48e940aadfb2b849d} in the private sector). This trend is driven by Black women, who make up 8.7{e5fab30bc1af2ab9862fe5c16f5be581fd243b6ad78468b48e940aadfb2b849d} of this workforce despite accounting for just 6.4{e5fab30bc1af2ab9862fe5c16f5be581fd243b6ad78468b48e940aadfb2b849d} of the private sector. In fact, Black workers overall account for nearly one in seven state and local government employees, whereas fewer than one in eight private-sector employees are Black (Table 1).

Although Hispanic workers overall are underrepresented in the state and local government jobs sector (12.5{e5fab30bc1af2ab9862fe5c16f5be581fd243b6ad78468b48e940aadfb2b849d}, compared with 18.5{e5fab30bc1af2ab9862fe5c16f5be581fd243b6ad78468b48e940aadfb2b849d}), Hispanic women actually make up similar shares of this workforce and the private sector. We see a similar trend for workers who are Asian American/Pacific Islander (AAPI) or who are in the “other” race/ethnicity category.

Table 1

Table 1

Appendix Table 1 lists the most common industries and occupations for all state and local government workers, as well as for three subsets of the state and local government workforce: women overall, Black women, and Hispanic women. While education, administrative, and office occupations are in the top 10 for all three groups, there is some variation. For example, counselors and bus drivers are among the top occupations for Black women, who are also particularly likely to be social workers. Meanwhile, Hispanic women who work for state and local governments are more likely than women overall in this sector to be personal and home care aides, child care workers, and cleaners.

The opportunity to truly ‘build back better’

The American Rescue Plan provides billions of dollars for state and local governments to fill in budget holes, restore cuts made because of the recession, and respond to ongoing elevated public needs over the next few years. It also provides funds that will allow governments to fix problems brought to light by the pandemic and make investments in key public infrastructure. There are innumerable areas in which expanded state and local investment are eminently needed—and we raise a handful below. But one of the central lessons of the pandemic has to be that unless policymakers proactively work to undo the United States’ profound racial inequities, people and communities of color will continue to disproportionately suffer in times of crisis—as they have throughout the COVID-19 pandemic. State and local tax policy and public investment decisions can and must be used to build more equitable and anti-racist communities.

Some of the other clear needs exposed by the pandemic include: modernizing unemployment insurance systems; expanding public health services and access to preventative care; ensuring schools and other public buildings in every community have proper ventilation and other critical safety infrastructure; providing educators with the resources they need to ensure all students can succeed even in times of disruption; expanding access to paid leave when workers are ill or caring for a sick family member; ensuring nursing and long-term care facilities have adequate staffing; expanding broadband access to enable remote work; investing in public transit systems to make them safe and accessible to workers whose jobs require them to work in person; and considering climate mitigation measures that will help prevent future crises. The funding from the ARP will not be enough to make permanent changes to all of these things, but it will be enough in many cases to lay the groundwork for new programs and reforms for which lawmakers can subsequently establish dedicated funding.

These are just a handful of the needs that we could identify, but the reality is that no one has a clearer sense of the needs of local communities than the people in those communities and the public servants who work to serve them. Policymakers should talk to the people in the communities that have suffered the most; talk to the workers and families who have struggled to access public supports; talk to the parents who have had to juggle caring for and educating children while trying to work; talk to the educators, support staff, and school administrators who were asked to provide an enriching learning experience in near impossible circumstances. Centering the workers and communities most affected by the pandemic is the surest way to ensure that the country rebuilds from the pandemic stronger than we were before.

Appendix Table 1

Appendix Table 1

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