Are teachers a protected class?
State and local employees have not been as hard hit as the general economy. At 19 million strong, this workforce comprises about 14.6 percent of total U.S. non-farm employment. It looks as if education workers are particularly being shielded from job cuts.
Chris Mauro, Head of U.S. Municipals Strategy at RBC Capital Markets wrote today in a privately circulated research note (emphasis mine):
[O]n a percentage basis, the state general government (non-education) sector has seen the largest decline in employment since December 2007. As of October 2011, it is down almost 6% from its recent peak.
Similarly, local education employment is currently down about 3% from the peak and has now also declined by a greater percentage than in any of the prior three recessions.
State education employment, which has historically been very recession resistant, has been growing at a moderate rate since December 2007 but, here again, the growth rate has been slower than in any of the previous three recessions.
I’m fine with this as long as student performance increases and America turns out high school and college graduates who are ready to meet the 21st century with good reading and comprehension skills. It would be a sad thing, though, to devote increasing amounts of precious tax revenues to school systems and universities that are graduating barely literate students. If America is making a bet on education, it really needs to pay off.
The tax collections that support education workers have bifurcated recently. State revenues have returned to pre-recession levels thanks to strong sales and income tax collections, while local revenues have been lagging due to lackluster property tax collections. Though teacher salaries are mainly funded by local taxes, states do pass through significant revenues to local school districts, and higher education receives big cash flows via state funding and loans that students take out to attend college.
Outside of teachers, local governments employ a lot of firefighters, police officers and health and hospital workers. If education workers remain a protected class, then the layoffs will have to come from these areas. RBC’s Mauro comments on non-education local employment:
The Connecticut business laboratory
Connecticut Governor Dannel Malloy is not waiting for the U.S. Congress to pass jobs legislation. Rather, he is moving on his own to get growth happening in his state. Although Connecticut’s output is running on par with national trends he has sent a package of growth proposals to the legislature. It’s an interesting blend of tax cuts, targeted programs for small business and skill upgrades for employees in the manufacturing sector. The Connecticut Mirror recently described the highlights:
$516 million in bonding for business and infrastructure investments, a new tax break aimed at small businesses, and a plan to streamline state regulations.
The single-largest investment in the plan involves adding $340 million to the Manufacturers’ Assistance Account, which provides various low-interest loans and grants to businesses.
The administration also is seeking to double enrollment in the Manufacturing Reinvestment Account, a program that allows manufacturers to invest pre-tax profits for a number of years — after which they must be reinvested into the company. The program currently accepts up to 50 businesses, and that would climb to 100.
Another key component of the plan has been dubbed the “Small Business Express Package,” and involves up to $50 million for loans and matching grants to help small companies create jobs.
A proposed change that requires little fiscal outlay would be making the state’s permitting process more efficient. Getting permits can be especially daunting for start-up firms with few resources. Again from the Connecticut Mirror:
Perhaps the largest area of bipartisan consensus since Malloy first announced plans in June for an October session on job growth was a need to improve what is perceived by businesses as Connecticut’s oppressive regulatory environment.
The new legislative package calls for state government to hire a consultant to streamline regulations, particularly with a focus on four large permitting departments: Administrative Services, Energy and Environmental Protection, Transportation, and Economic and Community Development.
My own personal belief is that economic stimulus efforts at the state level can be much more finely tailored and targeted than federal efforts, and efforts at the state level are likely to be more permanent. A criticism of federal efforts has been that they are aimed at temporary measures and don’t give certainty to business owners who must make long-term commitments of capital and infrastructure.
The only shortcoming of the project is that it would be paid for through a bond issue of about $500 million. The state’s budget director thinks other municipal projects can be defered and annual bond issuance can stay steady. The best solution would be to pay with current revenues.
Part-time employment up in muniland
Incredible shrinking workforces
I’ve read in a few places that state and local governments were reducing the number of full-time employees and hiring more part-time workers. There is a story in the Dayton Daily News that nicely details the trend:
The data show that both the state and local Ohio governments attempted to get the work done by hiring more part-time employees. While local governments shed a little more than 11,000 full-time employees, they added almost 6,000 part-timers, a 4.6 percent increase. The state, meanwhile chopped close to 1,400 full-time workers and added 386 part-timers, a half-percent increase, according to Census data.
Ohio’s government job-shedding put it in the top third of the 50 states, although margins of error from the Census survey data make exact rankings impossible.
“This has been going on for years,” said Stanley Earley, Dayton deputy city manager.
In Dayton, the number of general fund employees, which includes police officers and firefighters, has shrunk from 1,898 people in 2001 to 1,313 people in March 2010, Earley said.
From March 2009 to March 2010 — the period covered by the recent Census survey — general fund employees shrunk from 1,436 to 1,313, he said.
“And we’re continuing to go down,” Earley said.
>> U.S. census data for state government employment
>> U.S. census data for local government employment
Rush to issue municipal bonds as rates go lower
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Resident Muniland expert
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Teachers should not avoid the layoffs, especially if they do not achieve better results.
@Acetracy, I also have many relatives in education, my husband is in tech (at a university). He does work very long hours, both at work, and at home, for his job (salaried). He also is required to do his job with a much more then 50% success rate. In fact, in most other jobs, the employee would be gone with the failure rate of schools