Government vs. Private Covid Layoffs

The data show that public workers have been hurt the least

WSJ editorial.

"Democrats continue to demand a bailout for the states as part of another Covid-19 relief package, claiming that government layoffs are hampering the recovery. They must have missed the August jobs report, which shows that government workers have suffered least amid the pandemic.

Government added 344,000 jobs for the month, and 238,000 of those were temporary Census workers. But dig into the bowels of the Labor Department report, and the numbers are striking even accounting for the Census. Labor tracks 16 categories of the jobless by industry and class of worker, and in August nearly all of the categories in the private economy had a higher jobless rate than the government rate of 5.7% (not seasonally adjusted).

The exceptions were finance (4.2%) and agricultural wage and salary workers (5.6%). The total for all workers was 8.5%, not seasonably adjusted, but for mining it was 12.4%, transportation and utilities 11.3%, and leisure and hospitality an astounding 21.3%. The self-employed had a 6.8% jobless rate.

In other words, it’s far better during a government-ordered shutdown to work for the government, which can call on taxpayers at will or deficit spend at the federal level. Private employers have little recourse but to lay off workers when government shuts them down.

Since February the overall government workforce has shrunk by a mere 4.7% after discounting for temporary Census hires. Private payrolls have fallen 8.3%. State employment has decreased 4.2%, but 94% of these job losses are in education. While 6.2% of local government workers have been laid off, more than half are in schools. States that haven’t allowed or pushed schools to reopen are at fault.

States and cities are threatening huge cuts to public services if they don’t get more federal relief. Yet the $2.2 trillion Cares Act in March included $150 billion for states plus $90 billion for schools, public transit and Medicaid. To put these numbers in context: All state and local income, sales, gross receipts and property tax revenue totalled $401.8 billion in the first three months of this year—$14 billion more than the same period last year.

Tax revenue in most states is exceeding early forecasts thanks to a rebounding stock market and retail sales. Texas’s sales tax revenue was 3.2% higher and its business franchise tax revenue was up 3.1% in the fiscal year that ended Aug. 31 versus a year ago. Total tax revenue declined 2% due largely to lower oil-and-gas excise taxes.

States that maintained longer and stricter lockdowns are doing worse, but that was true before the pandemic. They also refuse to cut spending. New Jersey Gov. Phil Murphy last month proposed a $40 billion budget that is $1.3 billion more than last year. Connecticut gave union state workers a 5.5% raise this summer. Illinois union state workers received an average $1,343 pay increase on July 1. Some states like New York have delayed scheduled pay increases for workers, but they haven’t cancelled them because they are counting on a federal bailout.

Senate Republicans on Tuesday introduced a slimmed-down relief bill of $500 billion that excludes money for states, and that’s the right policy and political call. State and local governments have ample liquidity thanks to the Federal Reserve’s municipal lending facility and low interest rates that have held down borrowing costs. Why should taxpayers in Racine or Tuscaloosa pay for rich public-worker pensions in Illinois and New Jersey?"