Historic job growth in 2022 reflects strong but uneven economic recovery: State and local lawmakers must prioritize rebuilding the public sector in 2023

On Tuesday, the Bureau of Labor Statistics released state employment and unemployment data for December 2022, giving us a complete picture of changes in employment in the past year.

On a national level, the US economy added 4.5 million jobs in 2022, the second-strongest year for job growth in the past 40 years (after 2021), and a testament to the success of pandemic relief and recovery measures. Although the private sector has recovered quickly, public sector employment – particularly in state and local government – remains weak. With billions of dollars in unspent statewide relief money and local recovery, this is a once-in-a-generation opportunity to reimagine and rebuild the public sector. State and local legislators should grab it.

Economic recovery since 2020

Private sector employment has largely returned to pre-pandemic levels across the country, with the exception of the leisure and hospitality sector, which faced significant job losses and remains 5.5% below February 2020 employment levels. The professional and business services industry—which includes professions such as accounting, research, and legal services—has outpaced pre-pandemic employment across all regions, with exceptional growth in states such as New Hampshire (16.9%), Montana (14.0%), North Carolina (12.7%), and Colorado. (11.5%), Texas (10.8%).

Meanwhile, the public sector has seen much slower progress. State and local government employment remains 2.3% below pre-pandemic levels as state agencies, school districts, and local governments have struggled to fill job vacancies — a result of lower wages, benefits cuts, increased demands, and other factors. More than half of the remaining job shortfalls are in general education jobs, a long-running shortage exacerbated by the pandemic.

Since February 2020, only four states and the city of Washington have fully returned employees to state and local government jobs – Idaho (+2.1%), D.C. (+1.7%), North Dakota (+0.7%), Oregon (+0.2%) , and Maryland (+0.2%) Meanwhile, significant public sector job losses occurred in several states, with New Hampshire (-8.3%), West Virginia (-7.2%), Hawaii (-6.9%), and Louisiana (-6.9%). -6.9%), and Ohio (-5.8%) had the largest percentage drop.

Employment in state and local government experienced very slow growth in 2022

Over the past year, specifically, state and local government employment grew modestly but still lagged private sector job growth. Between December 2021 and December 2022, total non-farm employment grew by 3.0%, mainly driven by employment gains in the leisure and hospitality sectors (6.3%) and education and health (4.0%). However, state and local government employment only grew by 1.6% over that period.

Figure A Demonstrates year-over-year job growth across all 50 states and D.C. with special attention to professional and business services, leisure and hospitality, and state and local government. In leisure and hospitality, employment grew more than 10% in D.C. (14%), Texas (11.3%), Hawaii (11.0%) and New Jersey (10.4%), but contracted by 0.5% in Alabama and Rhode Island.

The Southern and Western regions saw the largest employment gains in 2022. Texas (5.0%), Florida (4.8%), Oregon (4.2%), and North Carolina (4.1%) saw the largest increases in total non-farm employment over the year. In Texas, Florida and North Carolina, employment growth was highest in leisure and hospitality, while in Oregon, leisure and hospitality growth was second only to construction.

The lone leader for state and local government employment growth in 2022 was Oregon (5.3%) — no other state exceeded 4% growth and two states saw a decline (Mississippi and Montana).

Job growth in states, by industry, from December 2021 to December 2022

state Total non-agricultural Professional bus services leisure hospitality State and local government
United State 3.0% 2.8% 6.3% 1.6%
Alabama 2.7% 4.8% -0.5% 2.1%
Alaska 2.2% 7.9% 2.5% 1.3%
Arizona 3.1% 1.3% 6.1% 0.7%
Arkansas 1.4% -2.3% 3.4% 0.2%
California 3.6% 3.6% 7.7% 2.1%
Colorado 3.7% 6.8% 6.1% 2.7%
Connecticut 2.0% 1.2% 6.4% 0.6%
Delaware 1.8% -1.0% 7.4% 0.2%
Washington, DC 1.3% 1.8% 14.0% 2.6%
fl 4.8% 3.6% 7.4% 1.3%
Georgia 3.5% 4.6% 7.2% 3.2%
Hawaii 3.8% 4.9% 11.0% 1.6%
Idaho 2.8% 1.5% 4.8% 3.0%
Illinois 2.7% 2.2% 7.8% 0.8%
Indiana 1.7% -1.1% 1.3% 0.3%
yeah 2.2% 0.4% 9.6% 1.8%
Kansas 3.1% 2.3% 5.4% 1.7%
Kentucky 2.4% 0.9% 3.8% 3.3%
Louisiana 2.4% 3.3% 6.8% 0.1%
who 2.8% 4.6% 5.0% 1.1%
Maryland 1.6% 0.6% 6.2% 2.1%
Massachusetts 3.7% 4.9% 7.5% 3.2%
Michigan 2.2% 1.6% 3.4% 1.6%
Minnesota 3.2% 3.6% 8.8% 1.5%
Mississippi 0.0% 0.1% 0.1% -0.6%
Missouri 1.6% 3.8% 1.7% 0.9%
Montana 1.3% 4.5% 1.0% -2.1%
Nebraska 3.2% 3.1% 6.6% 2.0%
nv 3.8% -0.1% 5.6% 2.6%
New Hampshire 2.5% 7.5% 7.8% 1.1%
New Jersey 3.6% 1.8% 10.4% 1.4%
New Mexico 2.6% 2.5% 5.7% 2.4%
New York 3.1% 3.8% 8.0% 1.3%
North Carolina 4.1% 6.8% 9.5% 2.3%
North Dakota 1.4% 2.6% 0.3% 1.4%
Ohio 2.0% -1.5% 5.5% 1.8%
Oklahoma 2.9% 0.7% 6.0% 1.3%
Oregon 4.2% 3.8% 8.6% 5.3%
Pennsylvania 3.5% 3.7% 7.6% 0.3%
Rhode Island 1.9% 1.4% -0.5% 1.4%
South Carolina 3.3% 3.7% 7.5% 0.9%
South Dakota 3.4% 9.9% 9.1% 1.0%
Tennessee 3.3% 1.0% 5.1% 2.3%
Texas 5.0% 3.0% 11.3% 1.0%
Utah 2.5% -0.3% 4.2% 1.3%
Vermont 1.5% 0.7% 1.3% 2.6%
Virginia 2.6% 1.3% 6.0% 2.9%
Washington 3.5% 4.3% 9.6% 2.1%
West Virginia 1.9% 2.5% 5.2% 0.1%
Wisconsin 2.1% 3.9% 2.6% 2.1%
Wyoming 1.8% 4.5% 2.6% 1.0%

Source: EPI analysis of Bureau of Local Unemployment Statistics (LAUS) and Current Employment Statistics (CES) data.

State and local policymakers should use available relief funds to rebuild the public sector

The American Rescue Plan Act (ARPA) has set aside $350 billion for the State and Local Financial Recovery Fund (SLFRF), which can be invested in critical public services (including schools and Care infrastructure) that benefits workers and employers alike, strengthens communities and enables families to thrive. However, as of October 2022, state and local governments have spent less than 40% of the dollars available through ARPA, with $150 billion remaining unspent.

Public sector workers provide vital jobs in health, safety and education, but persistent low wages have led to staff shortages that have shortened school weeks, longer waits for public benefits, delays in the development of affordable housing, and many other long-term effects. the long. The welfare of communities across the country. State and local legislators should prioritize investing remaining ARPA funds in restoring critical public sector jobs and strengthening public services essential to communities’ prosperity.

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