Tuesday, August 12, 2014

State and Local Government Job Growth 2000 to 2013

By Jim Robson, Senior Economist

Over the past 13 years, the Utah economy has grown by 20.1 percent—a period that included two recessions. Over this same period, state and local government payrolls increased by 26.2 percent. In spite of two recessions, state and local governments recorded job increases in each of the 13 years. How do we account for a 13 year job growth rate for state and local government of 26.2 percent when overall payroll jobs in Utah grew at a lesser amount of 20.1 percent? The key is understanding that most education in Utah is provided by government entities, and with Utah’s continually growing youthful population and expanding education needs, education accelerates the government job growth.

Education is a dominating proportion of both state and local governments. Most of the state’s K-12 school districts are local government entities. Also, most of the state’s higher education facilities are state government-owned. Therefore, education is a large part of the state and local government employment makeup.

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The figure at left profiles the major components of state government. State government comprises around 5.5 percent of all Utah employment, and over half of this is in higher education. This includes state colleges, universities and applied technology centers. These education institutions, while receiving state government revenue support, obtain a majority of their funding from tuition and fees. Since 2010, state higher education employment has been moving up, with its highest level in 2013 of 3.27 percent.

In the next figure, education (grades K through 12) is also the largest employment proportion in local governments. Local governments account for around 9.5 percent of all Utah jobs, and well over half of these are education jobs.

One major factor for faster state and local government job growth compared to overall job growth has been the effect of two recessions in a relatively short period of time. Recessions reduce the demand

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for most goods and services, but generally not education. Population growth is the determiner of education demand, and even while the recession’s loomed, Utah’s youthful population continued to grow.

As the current recession rebound develops, a rebalancing of private sector to state and local government employment will naturally occur. The remaining figure shows the proportion of total jobs that state and local governments comprise. The government proportion ranges from a low of 13.7 percent in 2007 (when the private sector was booming) to a high of 15.2 percent in 2011 (when the effects of the Great Recession were in full bloom). The proportion of government jobs increases in conjunction with each recession, and this proportion falls during higher growth periods of private sector expansion.

Government jobs have proportionally grown faster over the past 13 years than has non-government jobs. But the need to educate more and more Utahns is the driving factor behind this aggressive state and local government employment growth.
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