Positions in the government appear to be more resilient to economic downturns than jobs in other businesses. During the Great Recession, federal, state, and local government employees had the lowest unemployment rate of all of the recession-proof jobs on this list. In a prospective recession, the estimated unemployment rate of 3.7 percent is the lowest on the list. However, keep in mind that certain government jobs pay more than others.
Is the recession affecting government jobs?
California started the epidemic in better economic position than it had been since the Great Recession, with enough reserves to endure a minor recession in 2019. Governor Newsom presented a $153 billion budget in January 2020, in anticipation of continued income and economic development, that raised both one-time and ongoing expenditure on education, housing, and health care, as well as new programs to address homelessness and much-needed education investment. Then came the epidemic.
When the pandemic’s effects became apparent in spring 2020, the Governor’s May Revision became a “workload budget,” freezing most spending at 2019-20 levels except for COVID-related spending. In the end, the state passed an austerity budget that included only $133 billion in general fund spending. The budget imposed significant cuts to K-12 and higher education, postponed a crucial Medi-Cal expansion, and cancelled anticipated housing and infrastructure funding.
It now appears that the revenue forecasts for 2020-21 were unduly pessimistic. Revenues are expected to plummet by about $15 billion in 2019-20, according to the enacted budget. Instead, revenues are expected to exceed those of 2019-20, coming close to matching those forecast in the Governor’s January 2020 budget. Some of the cuts made in 2020-21 have already been restored, but they don’t address the magnitude of revenue losses and expense increases.
California officials estimated in December 2020 that this “windfall” might be worth $26 billion, thanks to higher-income Californians’ increased wealth and stable employment. Despite the predicted surplus for 2021-22, the budget projects deficits for the next three fiscal years, from 2024-25. The Governor also predicts that state job losses will last a half-decade, while the Congressional Budget Office (CBO) predicts that the US economy would not fully recover from job losses in 2020 until 2024. The Great Recession’s fiscal effects were most severe in the first few years after it began. To avoid long-term damage to our economy and California families, we must prepare ahead.
It’s crucial to note that California is not benefiting from a “windfall”; we’re on course to match non-pandemic revenues in 2020-21, and revenues are expected to decline thereafter. This is not the time to be complacent about our income base’s inability for long-term recovery.
During the Great Recession, California was one of the hardest hit states. California localities have been identified as having a high risk of municipal bankruptcy by credit rating firms. California, like most states, has seen unprecedented public-sector employment losses, failing public infrastructure and services, and years of compromising on the state’s commitment to an egalitarian economy. As we reported in October, the state’s economy had scarcely recovered by 2019, and numerous indicators (such as job quality and public sector employment) indicated that the economy was more fragile in 2019 than in 2007.
Studies of the Great Recession’s effects underlined the need of avoiding austerity policies in order to avert long-term economic harm. Short-term labor markets have a bigger impact on long-term results than previously thought, according to research from the Great Recession. According to a study of job recovery in 50 states from 2008 to 2013, states that reduced their public-sector employees had greater total and private-sector job losses. In 2009, EPI discovered that for every dollar of budget cuts, the private sector will lose more than half of the jobs and economic activity.
The Labor Center estimated in 2010 that eliminating 261,000 employment in health and human services would cost $21 billion in lost economic production and $1.3 billion in lost state and local tax income. Due to the loss of economic activity, about a quarter of the savings from job layoffs would be wiped out.
In 2018 dollars, the loss of 100,000 state and local jobs, which corresponds to the distribution of real job losses from 2008 to 2013, has an economic multiplier effect of 1.51: that is, for every state or local job loss, there is an additional job loss.
In the rest of the economy, 51 jobs are lost. This equates to a direct income loss of $10.4 billion and a net income loss of more than $3 million due to lower consumer spending.
California has already seen significant public job loss
California lost approximately 200,000 state and local government positions between February and December 2020, including nearly 170,000 local government employment. The early-fall recovery has plainly halted; in December, for the first time since April, we saw a net loss of private-sector employment in both the United States and California (Figure 2).
These layoffs follow years of job cutbacks in the state and local government. State and local employment levels were well below pre-Great Recession levels heading into 2020 when compared to population growth (Figure 3). After a brief pause in job losses in February, the share of state and local government positions in California has continued the decreasing trend that began in 2008.
This gap indicates the loss of teaching staff, school support staff, child protective services employees, preschool teachers, parolee counselors, public hospital nurses, transport operators, and a variety of other positions that help Californians move up the economic ladder. Over the last year, two areas of underinvestment have come to light: education and health care.
What jobs will survive a downturn?
8 industries with the best job security during a downturn
- Health-care services. People get sick and require medical care regardless of the state of the economy, thus the demand for health-care occupations is fairly stable, even during a downturn.
During a recession, what does the federal government do?
- To impact economic performance, the US government employs two types of policies: monetary policy and fiscal policy. Both have the same goal in mind: to assist the economy in achieving full employment and price stability.
- It is carried out by the Federal Reserve System (“the Fed”), an independent government institution with the authority to control the money supply and interest rates.
- When the Fed believes inflation is a problem, it will employ contractionary policy, which involves reducing the money supply and raising interest rates. It will utilize expansionary policies to boost the money supply and lower interest rates in order to combat a recession.
- When the economy is in a slump, the government will either raise spending, lower taxes, or do both to stimulate the economy.
- When inflation occurs, the government will either cut spending or raise taxes, or both.
- A surplus occurs when the government collects more money (via taxes) than it spends in a given year.
- When the government spends more money than it receives, we have a budget deficit.
- The national debtthe total amount of money owed by the federal governmentis the sum of all deficits.
During a recession, what jobs are at risk?
The advent of artificial intelligence and automation will coincide with the next recession, putting all occupations that a computer or robot can do faster and better in jeopardy. “If organizations can utilize cheaper software and robotics to complete tasks faster and more correctly, it will surely effect people’s job security,” says Yaniv Masjedi, chief marketing officer of corporate communications provider Nextiva. Jobs in manufacturing plants, secretarial functions, inventory management, and responsibilities in the food preparation and service business are among the most susceptible, according to Masjedi. “Because these tasks are highly repetitious,” Masjedi says, “automation can replace such a workforce with robots that can duplicate the movements with 99 percent accuracy, greatly lowering the danger of failures and error.” “Health crises like as pandemics have no effect on robots or software programs, making it an even more realistic alternative for corporations that wish to maintain operations without endangering anyone’s health.”
What is included in the public sector?
It’s difficult to describe the public sector, because different people see it differently depending on their point of view. In his book The Public Sector: Concepts, Models, and Approaches, Jan-Erik Lane notes that the public sector can be described in a variety of ways, some of which are and can be classified as:
What is the public sector?
The public sector is typically made up of government-owned and operated businesses that provide services to the general public. The public sector often provides services such as health care, national defense, public education, water management, and other such services. Organizations in the public sector, like those in the volunteer sector, do not strive to make a profit.
Public services are typically funded through a variety of sources, including taxes, fees, and financial transfers from other levels of government (e.g. from a federal to a provincial or state government).
Various governments around the world may use their own distinct approach of supporting public services.
A Crown corporation, for example, is a company owned by the Crown (or Queen) but with the freedom to operate as a private company in Canada. The BC Lottery Business is a provincial Crown corporation that generated $1.17 billion in net revenue in 2013/14, which it was able to reinvest directly into BC’s economy.
A public-private partnership is formed when the public sector joins forces with a private-sector enterprise. These hybrid organizations (also known as P3s) collaborate to provide a service or a business venture to a community (see examples).
Public sector entities frequently employ private firms to offer goods and services to their citizens through the outsourcing process.
How many people work for the city government?
The statistics on the local government workforce covers around 1.5 million of the 2.24 million employees, or about two-thirds of the directly employed workforce.
Which industry is recession-resistant?
Healthcare, food, consumer staples, and basic transportation are examples of generally inelastic industries that can thrive during economic downturns. During a public health emergency, they may also benefit from being classified as critical industries.
How does the government maintain economic stability?
Governments may focus on macroeconomic stabilization in the near term, such as increasing spending or reducing taxes to stimulate a struggling economy, or cutting expenditure or raising taxes to counteract rising inflation or minimize external vulnerabilities.