Guaranteed Volatility: Pension Costs and State and Local Staffing Levels

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.

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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