One likely consequence of the failure by the political sector to agree on an additional round of fiscal aid will be further job losses. In our estimation, the hole blown in state and local balance sheets demands a $500 billion aid package to avoid laying off public sector workers including teachers, fire personnel and peace officers.
Over the past six months, state and local government employment averaged 720,000 fewer education positions and 390,000 fewer non-education positions than last year. That’s 1.1 million total government job losses.
The Bureau of Labor Statistics reported additional job losses by state and local government employees. Jobs in local government education and state government education fell by 231,000 and 49,000, respectively, from August through September, according to the BLS Establishment Survey.
This is at a time when school employees would be expected to increase as bus drivers, lunchroom staff, nurses and teachers return to their normal activities.
And what can we expect if financial positions of state and local governments were to continue to deteriorate along with the breakdown of negotiations for increased federal aid? A further decline in state and local tax revenues that fund essential services will have a negative impact on everything from the frequency of garbage collection to the hours at highway rest areas to staffing at the hospitals needed for the next onslaught of the coronavirus.
For more information on how the coronavirus is affecting midsize businesses, please visit the RSM Coronavirus Resource Center.