LANSING – Whether it’s increased demand on government services during hard times or the way tax collections fall that may delay when personnel changes are made, government jobs have been more stable than private sector positions across Michigan since the official start of the national recession, according to a new report by the Citizens Research Council.
Michigan never recovered from the recession earlier this decade, losing 21 percent of its jobs since 2000. Since the new national recession began in December 2007, the state has shed 378,000 jobs.
Private sector employment has fallen 11 percent from its 2007 level.
But public sector employment has remained “fairly stable,” with 8,300 government jobs actually added since the start of the recession, which is a 1.5 percent increase.
Most of that increase, however, has occurred in hospitals and higher education institutions, which saw hikes of 27 percent and 9 percent respectively. Private sector jobs in this area also have increased by 21 percent, making it the only industry with “substantive growth” over the last eight years.
The report found that local units of government have employment levels about the same as they were in December 2007. Jobs at K-12 schools were down by 12 percent, while community college employment was up 11 percent.
State employment levels were 4 percent higher, but that was attributable mostly to higher education, which is included at the state level. Between 2000 and 2004, the state civil service shed 14 percent of its workforce.
The public sector now represents one in every six jobs in Michigan, which is higher than the manufacturing sector, which had long led the state’s employment, particularly in the auto industry.
“Private sector employment levels react almost immediately to a slowdown in economic activity, but state and local governments tend to wait until the next budget year to make such adjustments. This can result in a lag between the onset of a recession and declines in government employment. Personnel adjustments at the local level in response to falling tax receipts may be delayed further by the timing of tax collections.”
The report found that local government tax revenue, which is most reliant on property taxes, has been more stable than state tax revenue. But since locals rely on state tax revenue, they too have been affected by the decline in funding.
“Unlike the private sector where consumer demand for goods and services often diminish with the downturn in the business cycle, citizens continue to demand basic public services from government regardless of the condition of the underlying economic base upon which the services are financed,” the report stated.
CRC expects that in the long run, both public and private sector employment will be tied more to the performance of the state’s economy.
“As with the private sector, it may be some time, if ever, before the public sector employment level regains it high of August 2001,” the report stated.
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