The Citizens Research Council of Michigan recently published Michigan’s Single-State Recession and its Effects on Public Employment, an in-depth analysis of private and public sector employment levels since 2001. In particular, the report examines employment changes since the end of the 2008-09 Great Recession. A key finding about recent job activity is that while private sector employment has enjoyed a moderate rebound from the trough of the Great Recession in June 2009 (nearly 9 percent increase), public sector employment has declined by nearly six percent over the same period. The slide in public sector employment has been fueled by job losses in the local government sub-sector, which has been shedding jobs continuously since early 2002, with the job losses accelerating prior to the onset of the Great Recession. These losses show few signs of abating. On the other hand, state government, which is about one-third the size of the local government sector, experienced an upsurge in employment coinciding with the beginning of the Great Recession and has seen additional job gains in the time since (see Chart below).
The public sector is not a monolith, as evidenced by the differences observed in state and local government employment. Further disaggregating public sector employment by category reveals even more contrasts in the data. Specifically, the CRC report segregates the employment data by various education categories, breaking it down into two broad categories across both levels of government; K-12 and higher education. The results are presented in the chart below, which tells two very different stories.
Employment in higher education, which includes staff at Michigan’s 15 public universities and 28 community colleges, increased by almost 23 percent since March 2001. The story for K-12 education is completely the opposite; employment in this sector fell by 27 percent over the same period.
The CRC report offers three factors to account for the differences. First, enrollments at Michigan community colleges and universities ballooned during this period causing institutions to grow with the increased demand. In contrast, statewide K-12 enrollments have declined each year since 2003. Second, higher education institutions have access to revenue sources (e.g., dedicated property tax for community colleges and tuition for both colleges and universities) that K-12 districts don’t. These sources helped higher education institutions shore up their budgets (i.e., maintain or increase personnel levels) when state aid was rolled back or held constant. Finally, data from the Integrated Postsecondary Education Data System points to a change in employment composition over this period; a shift from full-time to part-time employees at both the college and university level. Because the Bureau of Labor Statistics data counts the number of jobs and not full-time equivalents, the shift away from full- to more part-time workers drove overall growth in the sub-sector.
The CRC report clearly shows that employment levels in all sectors of the state’s economy do not move in lockstep with the ups and downs of the business cycle. Private sector employment has seen marked improvement since the end of the Great Recession in June 2009, increasing by nearly nine percent. Over the same period, overall public sector employment has experienced a decline, led by huge losses in the local government arena, particularly the large sub-sectors of K-12 education (55 percent of local government sector) and public safety (11 percent of local government sector). Within the public sector, wide variations exist, such as the education sector generally. At the same time that the K-12 education sub-sector shed jobs, the higher education sub-sector (both the local and state government components) bucked the overall public sector trend and increased after the 2001 recession and again, much more significantly, during the Great Recession.