May 24, 2020 - Economy & Business

Public employees brace for layoffs

Workers ready to clean the New York subway.

Metropolitan Transit Authority workers arrive to clean a New York subway station. Photo: Eduardo Munoz Alvarez/Getty Images

State and local governments across the country — which together employ nearly 20 million workers — are bracing for layoffs as they deal with the economic ramifications of the coronavirus.

The big picture: Stay-at-home orders have forced businesses to close and cut jobs, tanking state revenue from sales, personal income taxes and fees. Meanwhile, states have paid steep costs for emergency relief and for increases in social safety net programs like unemployment insurance on top of their usual services like police, mass transit and water.

  • The nonpartisan Center on Budget and Policy Priorities (CBPP) estimates that states could rack up more than $765 billion in budget deficits over the next three years.
  • 88% of local leaders say they're preparing for painful reductions in revenue this year because of the pandemic, according to a National League of Cities survey.
  • Nearly a third of them anticipate furloughing employees, while a quarter expects layoffs.

Why it matters: Nearly two-thirds of state spending goes to education, health care and transportation, per the CBPP.

  • Localities and states shed 3% of their workforce as a result of the 2008 financial crisis, according to census data. Half of them were teachers.
  • Those public sector jobs returned slowly and still haven't rebounded to the levels they were before the recession.
  • "[W]e should expect, among other effects, to see fewer teachers in classrooms, higher tuition at public colleges and universities, stingier coverage for Medicaid enrollees and forgone infrastructure improvements," wrote former Obama administration economic adviser Matthew Fiedler in a New York Times op-ed.

The state of play: Dayton, Ohio, has already furloughed nearly 25% of its workforce, and the city is planning to cut more.

Go deeper: States face economic death spiral from coronavirus

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