Good news on private sector jobs front, but recovery would have been even stronger if it were not for government austerity measures.

March 8, 2013. The New York State Department of Labor (NYSDOL), in its press release yesterday on the latest employment data, emphasized some good news—that New York State has had 17 consecutive months of private sector job growth, and that the state gained an estimated 29,600 private sector jobs in January (on a seasonally adjusted basis.)

Nothing wrong with reporting good news. There was more good news in NYSDOL’s annual payroll employment revision that was also released yesterday. The annual “benchmark” revision showed that the December 2012 private employment level in New York State was 25,000 higher than had been earlier estimated. Adding in the January numbers makes the state’s total private sector job growth over the three years from January 2010 to January 2013 an impressive 421,700, a 6% increase. This news wasn’t in the department’s press release but it will get noticed before long.

On the other hand, the benchmark revisions of data for the past two years pointed to a sharp reversal of employment in New York State’s state and local government sector. While there has been plenty of anecdotal evidence that budget cuts were causing the layoffs of teachers and other school and local government workers around the state, the official NYSDOL payroll employment series showed little change over the past two years. Before yesterday’s revisions, it looked like the net state and local government job change from December 2010 to December 2012 had been a positive 700 jobs. The revisions darken the picture like a twister on a summer day. Now, the NYSDOL shows a net loss of 33,100 jobs over that two year period, with the state government losing 6,100 positions, and local governments, including schools, showing 27,000 fewer jobs.

And because there had been some state and local government job losses suffered in 2010, the three-year New York State state and local government job tally is down by about 59,000 (or 4.2%), with nearly 53,000 of those job losses at the local level.

Over the last three years, total public and private sector job growth has been 4.2% in New York State (Jan. 2010-Jan. 2013). Were it not for the 59,000 drop in state and local government employment, and another 8,700 federal job loss, the state’s total job growth would have been 5% over the past three years, not 4.2%.

The annual benchmark procedure typically revises the job estimates, often following a general pattern of upward revisions during a recovery and downward revisions during a downturn. The sharp downward revision in state and local government in this recovery obviously runs counter to the usual trend.  At some point, the reduced educational and public services that result from fewer state and local government workers and from shrinking government budgets very likely will limit future economic growth. Not only will consumer spending and the jobs associated with that spending decline because of fewer state and local workers, but business and jobs will fall off at the broad range of companies that sell directly to state and local governments.