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Manhattan Institute

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Guaranteed Volatility: Pension Costs and State and Local Staffing Levels

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Guaranteed Volatility: Pension Costs and State and Local Staffing Levels

April 12, 2016
Urban PolicyTax & BudgetPublic Sector Reform
Public SectorPension Reform

Abstract

Since the end of the Great Recession in June 2009, U.S. state and local governments have faced pension costs that are rising at a rate above revenues; state and local governments have also faced diminished staffing levels. By 2016, U.S. private-sector job levels had long returned to pre-financial-crisis totals; yet state and local government staffing remains lower than it was in 2008.

Key Findings

  • Private payrolls began growing in March 2010; in February 2014, they surpassed their prerecession peak and have since grown by 5 million.
  • State and local payrolls only stopped declining in 2013; state and local governments currently employ over 500,000 fewer workers than they did in 2008.
  • Because of pension debt—the costs of the past—reduced staffing does not necessarily connote smaller government; the cost of state and local government, a more useful measure of size than staffing, will have to remain high for as long as governments must grapple with massive pension debt burdens.

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