Stimulus can't ease job pain for U.S. states and cities

Fri Oct 2, 2009 6:24pm EDT
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By Lisa Lambert

WASHINGTON (Reuters) - The fiscal crisis hitting most U.S. states and cities is now adding to the country's workforce woes, with more than 20 percent of the jobs the country lost last month coming from the government sector, according to Labor Department data released on Friday.

Government lost 53,000 jobs out of the 263,000 shed in September.

Even after receiving billions of dollars of stimulus funds, state governments lost 10,000 jobs -- all in education -- and the trend may get worse in coming months.

"I don't believe that states have bottomed out yet," said Raymond Scheppach, executive director of the National Governors Association. "This fiscal year 2010 will be the worst year."

Since May, states have shed 49,000 jobs. In September, they lost 15,600 education positions while gaining 5,500 jobs in other areas, in an indicator of how stretched states' finances are, Scheppach said. States usually work to shield their schools from harm caused by economic recessions, and will use reserves or cut spending to preserve education jobs.

"States won't come back to the 2007 revenues until 2014 or 2015. This is long and deep and it's going to be a slow recovery in terms of jobs," he said.

State revenues dropped 12 percent in the first quarter of the calendar year from the same period in 2008 and fell another 18 percent in the second quarter, Scheppach said.


<p>A man carrying a stack of job listings listens to a discussion at the One Stop employment center in San Francisco, California, August 12, 2009. REUTERS/Robert Galbraith</p>