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CRC Column

The right to criticize government is also an obligation to know what you are talking about. 
-Lent Upson, 1st Executive Director of CRC  

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Michigan's Single-State Recession and its Effects on Public Employment
September 2013
Memo 1124

The significant private sector job losses Michigan experienced during the prolonged state down-turn that began in 2001 and continued through the 2008-09 recession are well documented. What is less widely known is the impact that the economic downturn has had on public sector employment in Michigan. While private sector employment has begun to recover, job losses in some areas of government employment continue.

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Economists have documented the sluggish economic recovery from the 2008-09 recession. This slow recovery is especially wearisome in Michigan, as the state economy did not fully recover from the earlier and less severe 2001 recession. Since the official end of the 2008-09 recession in June 2009, Michigan's total seasonally-adjusted non-farm employment increased by 6.1 per-cent as of May 2013. Despite this improvement, total employment is still down by 11.6 percent since the 2001 recession began in March 2001 and by 13.2 percent since Michigan's employ-ment high water mark in April 2000.

While there has been an upturn in private sector employment in Michigan, the number of public sector jobs continues to steadily decline. Since its trough in July 2009, the private sector work-force has grown by almost nine percent. In contrast, over this same time period, public em-ployment has dropped by almost six percent.

The overall decline in public sector jobs has been driven by the local government sector, which is twice as large as the state government sector. Although there have been losses in some ar-eas of state employment, job losses in local government have been widespread. The contrac-tion of the local government sector is primarily a consequence of the housing market collapse, state policy decisions that impact local government revenue, and to some extent, privatization of local government services. Local government employment losses now exceed private sector losses. From Michigan's employment peak in April of 2000 through May of 2013, private sector employment declined by 13.2 percent, while total government employment fell by 11.1 percent. State government employment, which includes public universities, actually increased by 5.9 percent, while local government employment, which includes K-12 employment, fell by 16.6 percent over this time period.

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