While Bay Area governments have announced plans to slash local public services in response to the COVID-19 recession, new research reveals that these agencies have yet to fully restore cuts enacted in response to the 2008 financial crisis while building up billions of dollars in financial reserves.
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“Local government agencies are among the largest employers in every single bay area county,” said report co-author and IFPTE Local 21 Research Specialist Timothy Mathews. “As such, these agencies through their policy and budget decisions can help drive a recovery or prolong a recession, all while they face increased demands due to this current economic disruption. Before anyone goes dusting off the same austerity playbook used in response to the 2008 recession, it’s important to understand whether that playbook worked, and if not, if there are better alternatives.”
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Bay area local governments alone shed 17,500 workers in response to the 2008 financial crisis and continue to lag pre-2008 staffing to population ratios by nearly 7%. Prior research has shown state and local government workers represent 13% of total employment and their budgets contribute to 9% of the nation’s GDP. Ultimately, it has been found that the 2008-era cuts to local government services, cost the American economy 2.3 million jobs — half of which would have been created in the private sector as a result of increased aggregate demand.
Among other things, the report links deep austerity cuts— in terms of both staff and employee benefits — from the ’08 recession to continued challenges related to service delivery, recruitment and retention of public service workers across the bay area. It notes the City of San Jose, which suffered California’s first known COVID 19 fatality, currently has the lowest staff to population rate of any major California city. At least one regional government has seen staff vacancy rates as high as 20%, and in Contra Costa County, there were nearly 1,000 vacancies in health services in 2018 alone.
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