Public sector hit despite US jobs recovery

WASHINGTON, March 31, 2011 (AFP) - US public sector workers, insulated from the worst throws of the "Great Recession," are facing a fresh round of job losses -- even as the broader economy improves.

In the last three years, as unemployment rocketed above 10 percent and nearly nine million Americans lost their jobs, nurses, teachers, firemen and government office workers were largely spared.

But ahead of a key Labor Department report Friday -- expected to show companies are hiring apace -- things look bleak for government staff.

Federal stimulus spending is fading out and tax short-falls sparked by the crisis are finally catching up with state and local governments, forcing deep budget and staff cuts.

This week Doug Otto, superintendent of schools for Plano, Texas -- a wealthy Dallas suburb -- was among those who felt the force of states' fiscal woes when he was forced to sack 344 staff, including 222 teachers.

With Texas facing a budget shortfall of up to $27 billion over the next two years, he was told to cut around six percent of his budget, with the prospect of similar cuts for the next two years.

"It's unprecedented," said Otto, who has been in the post for 16 years. "The state's economic problems are at a level -- I don't think anyone remembers it ever being this bad."

The loss of teachers will soon be felt through larger class sizes, but Otto worries further cuts will have a lasting and irreversible impact on the education system.

"If we have to go through this again next year or even a third year, then we are talking about changing the landscape of what education looks like. With more cuts I don't think the quality of education will be as good."

"We always say the future of our kids and their education is of paramount importance, but we never really put our money where our mouth is."

But with at least 44 states predicting budget shortfalls this year, the impact of cuts are not limited to the education sector, or to Texas.

Marc Hoover, 41, a former contracts officer for Ohio's family services department, was laid off along with hundreds of colleagues last August, after more than a decade working for the government.

The father of four has struggled for months in a job market that has many more applicants than new posts, promoting his dating book and website while he looks for work.

Echoing many Americans who worry about the country's soaring deficit, Hoover is philosophical about the reasons for his redundancy.

"I think some government jobs are necessary, and I think some probably aren't. I don't really have a problem with layoffs, they have to do what they have to do to reduce their deficits," he said.

What angers Hoover is that the cuts do not appear to be based on ability.

"They just go by tenure. Some people are just there, waiting to get their pensions. I think they should lay you off based on your performance."

While the scope of government cuts and their long-term impact is not yet clear, in the short-term economists expect layoffs to drag private sector gains, slowing down the recovery.

Economists say private firms created a robust 203,000 jobs in March, while the government lost an estimated 20,000 posts.

That trend is likely to be seen in the unemployment rate, which is predicted to stay put at 8.9 percent.

"The fiscal problems in the state and local governments will restrain total payroll increases and limit the downward movement in the unemployment rate," said Joel Naroff of Naroff Economic Advisors.

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