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Cities Across America Begin Hiring Again

Source: WSJ - Mark Peters

Posted on 30 Jul 2013 by Neilson

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TeachersCities across the U.S. are starting to hire new teachers, firefighters and police officers as a deep and prolonged slide in local-government employment appears to have bottomed out four years after the recession ended.

Municipal police academies in Massachusetts are running at capacity as communities train new officers, while Minneapolis recently added nearly two dozen firefighters, ending a five-year hiring freeze. The school district for Clark County, Nev., which includes Las Vegas, is hiring 700 new teachers this year, the first sizable boost in its workforce in five years.

Monthly jobs data from the Labor Department show local governments, which make up about 65% of the overall government workforce, added workers in seven of the past eight months, the longest such streak in five years. So far this year, 46,000 new jobs have been created on a seasonally adjusted basis. Local-government employment through June stood at 14.08 million, the highest level in more than a year and a half, though still well below a peak of 14.61 million in mid-2008.

In previous recoveries, the overall government sector started adding jobs much sooner. Even now, federal agencies and state governments continue to shed jobs amid budget cuts and a broader debate over the proper size of public-sector workforces.

In local governments, rebounding tax revenue, voter-approved tax hikes in some communities and a recovery in the broader U.S. economy are fueling hiring.

"Things are looking brighter," said Mike Chamberlain, principal of Westview High School in the Beaverton School District near Portland, Ore., who is filling five new teaching positions.

The district plans to add 150 teachers for the coming school year, after shedding 17% of its teachers and other certified staff since 2010.

Local governments often can find more public support for hiring because of their close connection to taxpayers through schools, parks and police presence.

But many obstacles could block a further pickup in hiring as some municipalities have lingering fiscal challenges.

Chicago, for example, recently laid off 2,100 teachers and staff as its school district wrestles with a pension system that is underfunded by about $8 billion. Towns and cities also face escalating employee health-care costs and federal spending cuts. And while the broader economy is helping some municipalities see a recovery in property taxes, the gains aren't universal and remain at risk if the economy softens.

It isn't clear whether municipalities will repeat a boom-and-bust cycle that led them to expand the workforce before the recession as tax revenue rose, and then make deep cuts as collections fell and residents resisted further tax increases following it.

"Those decisions were very painful," said Joseph Seneca, a professor of economics and public policy at Rutgers University. "Whether it was an enduring lesson remains to be seen."

One city that doesn't plan to follow the old cycle is Phoenix. The nation's sixth-largest city, with nearly 1.5 million people, has seen its full-time workforce decline by 6.7% over the past three years. In recent weeks, the city hired its first new police officers since 2009, but City Manager David Cavazos expects employment to continue shrinking even as property-tax revenue rebounds. He ticked through a series of cost-saving steps taken, from having civilians do arrest bookings to free up police officers to requiring trash and recycling be picked up on the same day. The result is the number of employees per resident is at a 40-year low.

"Innovation and efficiency, doing better with less-that's the trend going forward nationally, state, local," Mr. Cavazos said.

Some municipal jobs eliminated during the economic downturn aren't ever likely to return, even as tax revenue rebounds.

The towns of Springfield and Eugene, Ore., merged fire departments in 2010 and now save $1.3 million annually, according to Fire Chief Randall Groves. The cities trimmed about 15 positions, including a fire chief, a fire marshal and a training chief, but did not cut the number of firefighters.

"The beauty of this," Mr. Groves said, "is that we are saving money and providing enhanced services."

Still, after several years of belt-tightening, many local governments are now benefiting from the recovery.

Rising home values, which boost the property taxes that many municipalities rely on, is one driver of the renewed hiring. Population growth in states like Nevada is also fueling hiring.

Moody's Analytics is forecasting a continued rise in hiring, with local government adding a total of 90,000 jobs this year and 300,000 jobs in 2014. The firm, however, doesn't expect local-government payrolls to reach their all-time peak until late 2015 at the earliest.

In Mankato, Minn., a city of 40,000 that markets itself as a small version of the state's Twin Cities, a rebound in property values and an uptick in construction activity paved the way to hire five new police officers-the first since the recession forced a reduction of the force, city officials said.

Experts say education spending on kindergarten through grade 12, which saw a per-pupil decline in 2011 for the first time in three decades, might be turning around and could propel hiring, or at least stave off layoffs. Several state legislatures, from Oregon to Oklahoma to Rhode Island, adopted budgets recently that increase spending for elementary and high schools.

In Oregon, renewed hiring of teachers in some school districts was spurred in part by state lawmakers' adoption of a budget earlier this month that increased state education spending by 15% for the 2013 to 2015 fiscal years. That came after Oregon school districts spent the past few years balancing budgets by cutting art, music and language programs, shrinking the length of the school year and increasing class sizes.

The state's teaching workforce shrank by 11% in the four years since 2009, and the share of elementary-school classrooms with more than 30 students ballooned to 11% last year from 2.5% in 2009.

In Beaverton, just west of Portland and home to Nike Inc., the new state money plus a recent voter-approved tax increase paved the way for the district to hire 150 new teachers for next school year.

"Even with the new hires," said district spokeswoman Maureen Wheeler, "we are still not where we used to be and must continue digging out from the past painful cuts."