The Great Recession that began December 2007 and ended in June 2009 preceded one of the weakest economic recoveries on record, with both wages and employment stagnating well into the following decade. The public sector in particular—local, state, and federal employment—failed to rebound to pre-recession levels for many years after the recession ended, and in some parts of the country was still below 2007 levels when the COVID-19 pandemic began.
In California, as in the United States as a whole, public sector employment has never recovered when accounting for population growth. Inadequate federal stimulus, significant state budget cuts, restrictions on local revenue options, and overall stagnation of employment and wages throughout the economy, all affected California’s economic recovery.
This persistence of public sector declines after the Great Recession should inform state and local policy responses to the job and revenue losses driven by COVID-19 in order to avoid a weak post-pandemic recovery. Although private sector employment grew strongly after 2009 (12% from peak to peak—December 2007 to February 2020; 18% from the February 2010 trough), economists have characterized the post-recession period as much weaker than previous recoveries. Wages stagnated, precarious (part-time and informal) employment ballooned, and the share of labor force participation lagged well behind previous eras, despite a historically low official unemployment rate. This weak recovery can be attributed to many factors, but the insufficient public sector recovery is an important one.
This brief summarizes the Great Recession’s impact on public employment and the public sector job losses driven by the COVID-19 pandemic in 2020. Our analysis points to the importance of focusing on the public sector as policymakers respond to the COVID-19 crisis. The key takeaways from our analysis include:
- The Great Recession, which was more sharply felt in California than nationally, was followed by a weak recovery. The economic expansion of the past decade was characterized by widening inequality and increasingly precarious economic status for many workers.
- From 2008-2013, 163,500 California public sector workers lost their jobs. These losses were in addition to furloughs and other earnings reductions across state and local governments.
- California’s public sector, although it finally surpassed pre-recession employment at the end of the 2010s, has fallen far behind the state’s population growth.
- Since February 2020, more than 150,000 state and local employees in California have already lost their jobs. As local governments adopt 2020-21 budgets that account for dramatic revenue losses from COVID-19, we expect to see those losses climb significantly.
- The public sector continues to be a path to the middle class for Black workers, who are more likely to work in the public sector than all other racial groups. Data from the Great Recession suggests that public sector budget cuts disproportionately impacted Black women.
Read full brief at the UC Berkeley Labor Center site: