Press Releases | Budget, Taxes, and Public Investment

News from EPI Unless Congress takes action, local governments could lose another 222,500 jobs in the next two year

A new Economic Policy Institute issue brief finds that in the absence of federal action, budget shortfalls could force local governments to lay off an estimated 225,000 employees between now and June 2012, including teachers, police officers, and firefighters.  Depressed tax revenues and increasingly strained social safety nets have forced local governments, most of which must balance their budgets each year, to cut jobs.  According to the Bureau of Labor Statistics, local governments have already laid off 180,000 public servants.  Thus, over half of local government job losses have yet to hit the economy. 

Furthermore, these job losses will ripple through the economy—every 100 layoffs in the public sector causes roughly 30 private sector layoffs, since layoffs reduce demand for the goods and services that private businesses provide.  In other words, the total jobs lost as a result of the recession’s impact on local budgets will approach half a million by 2012. 

Issue Brief: