Public Sector’s Job Insecurity
Laid off from a bank during the early-1990s recession, Pasadena real estate appraiser James Lyons latched on to a state government job and held on tight.
His post with the Office of Emergency Services provided a steady paycheck, good medical benefits, the prospect of a tidy pension and the knowledge that government payrolls generally move in only one direction -- up.
“The most attractive thing was the job security,” said Lyons, 54, who earns $49,000 a year providing disaster assistance to homeowners and businesses. “You’re more insulated from the boom and bust.”
No longer. Lyons is slated for layoff this month, part of a decline in government payrolls that has public servants making a rare appearance in the unemployment line.
Figures from the state Employment Development Department show that California’s government sector has shed nearly 28,000 federal, state and local agency jobs since January, a 1.1% drop that was three times faster than that of the overall labor market.
Proponents of smaller government say it’s high time that these workers take their lumps along with the rest of California, where more than 1 million people are unemployed.
But in the short run, analysts say, the cutbacks in government hiring triggered by the state’s $38-billion budget gap will be one more drag -- and a potentially big one at that -- on California’s struggling economy.
Love it or hate it, the public sector is a huge economic engine in the Golden State, employing more than one in six California workers in jobs that tend to pay much better than average wages.
Government employees in California average $950 a week, compared with $753 for workers across all industries.
The loss of more good-paying jobs will hamper California’s income and spending growth, which have suffered disproportionately from the meltdown in Silicon Valley.
Take Mike Ibold. Recently laid off from his job as a librarian with the state Office of Administrative Law, he has deferred his dream of homeownership. The 57-year-old says he’ll sit tight in his Sacramento apartment and keep a lid on spending.
Such consumer restraint will ripple through the economy, to restaurants, shops and even thrift stores.
In San Francisco, where as many as 350 city workers might lose their jobs and the rest have agreed to $80 million in salary cuts, Goodwill Industries already has seen a noticeable drop in traffic at the retail outlet near City Hall.
“Many of the government workers that used to shop there aren’t coming around anymore,” said Mary Edington, president of Goodwill Industries of San Francisco, San Mateo and Marin counties. “We’ve held 50%-off sales and $2 promotion days, but people are watching their pennies.”
Eroding Job Protections
Historically, government employment has been one of California’s most dependable employment sectors, typically growing more slowly than the private sector in boom times but rarely shrinking, in part because services such as education, health care and public safety keep expanding along with the population.
Civil service unions also have proved adept at preserving jobs for their members.
That stability has been evident in the last couple of years, when government was among the few sources of job creation in the state, helping to prop up the labor market after steep declines in high technology and manufacturing. Most of that growth came at the local level, particularly in public education.
Now the emphasis has shifted to firing, not hiring, as communities struggle to plug their budget holes.
Other states are grappling with similar problems. But the public-sector slowdown will hit California harder because it is slightly more dependent on government employment than the nation as a whole and its budget gap is by far the country’s largest, said Mark Zandi, chief economist with research firm Economy.com. He estimates that cuts in government jobs and programs will trim as much as $6 billion from California’s economic output this year and $13 billion next year, slowing the state’s recovery.
States such as California “rely on government to be a source of stability when times are tough,” Zandi said. They “can’t look to government this time around.”
California’s government job cuts have been minuscule compared with the losses in the private sector, which shed nearly 300,000 positions at the depths of the downturn in 2001 and 2002.
And so far, officials have trimmed payrolls mostly through attrition, early retirements, hiring freezes and the elimination of vacant positions.
But with a new fiscal year just begun and California’s budget picture looking bleak, agencies are sharpening the layoff ax.
Most of the pain will be felt by local governments, which account for 70% of public-sector employment in California. Schoolteachers have gotten pink slips in San Diego. County doctors are getting their walking papers in Los Angeles. City auto mechanic jobs are on the chopping block in Oakland.
Shock and Disbelief
The recent reductions are an unexpected jolt to laid-off municipal workers such as Raja Khan, who became a public servant expressly to avoid the turbulence in the larger economy.
Weary of putting in 15-hour days as a supervisor in the highly cyclical construction industry, Khan took a lower-paying job as a public works inspector with the Northern California city of Richmond in 1990. The $64,000-a-year position offered him a comfortable living, though nothing to compare with the riches of nearby Silicon Valley. Still, Khan considered himself lucky to have a steady paycheck when the tech bubble burst. That is, until he lost his job in April as part of Richmond’s belt-tightening moves.
Now drawing $370 a week in unemployment benefits, Khan can barely make his $1,200 monthly rent, much less tuition for his college-age kids or medication for his weak heart. The job market in Northern California is so dismal that he is thinking of returning to his native Pakistan.
“I’m in shock,” said Khan, 50. “Over the years you get used to that security blanket around you.”
Sharing the Pain
That cocoon mentality is part of the problem in the eyes of Assemblyman John Campbell (R-Irvine), who argues that government employers shouldn’t be allowed to defy the laws of gravity when there isn’t enough tax revenue to support them. Critics note that government payrolls in California kept climbing well after the rest of the economy fell into recession, hitting record levels as recently as January before starting to slide.
“The public sector is just now beginning to feel what the private sector has been suffering through for the last two years,” Campbell said. “Welcome to the real world.”
A fan of outsourcing and smaller government, Campbell said he doubts that state payrolls will shrink much even in the face of an unprecedented budget gap. Civil service rules allow state employees who are cut from one agency to get first crack at openings in another, a practice that has almost guaranteed them employment in previous downturns.
For example, during the brutal recession of the early 1990s, when nearly half a million jobs vanished from California, fewer than 200 state workers were let go, said Ted Gibson, former chief economist with the California Department of Finance.
“It’s very rare that anybody in state government ever loses a job,” Gibson said. “The whole system is set up to protect against it.”
State government head counts continued to grow even after Gov. Gray Davis imposed a hiring freeze in October 2001. Still, the most recent data show those payrolls, not including California’s higher education system, have declined modestly over the last year, down 0.9%, or 2,400.
Davis recently extended the hiring freeze and has ordered a crackdown on vacant positions, a move that could make it more difficult for workers targeted for layoffs to find jobs elsewhere in state government.
Changing Times
“The pickings have definitely gotten slimmer,” said Pamela Gavin-Watts of Los Angeles, who is slated to lose her job with the California Film Commission by the end of the month and is growing nervous about landing another state post. “Every agency I’ve interviewed with has been told to reduce.”
Already a 10-year government employee at age 31, Gavin-Watts started studying for the civil service exam when she was a teenager. Her mother, also a state government worker, had encouraged her from an early age to pursue the steady pay, good benefits and -- perhaps most important -- job security that accompany public service.
“Times have changed,” Gavin-Watts said. “Now we have this budget deficit crisis.... I just never thought it would hit me.”
The federal government won’t be of much help, either.
At just over 250,000 jobs, California’s federal sector is still one-third smaller than it was in 1990, before deep defense cuts took their toll.
The recent weak economy is bedeviling other U.S. employers as well. Declining mail and package volume has the Postal Service looking to trim its ranks through early retirement, spokeswoman Terri Bouffiou said. The agency employs about 100,000 workers in California.
“If we want to control our costs, we have to control the number of people” on the payroll, Bouffiou said. “The same forces that are affecting everyone else apply to us.”
