July | August 2017

Bracing for Federal Cuts

When a business closes in Alaska, Ohio or Mississippi and more than a thousand jobs are lost, it makes headlines. When the federal government workforce in those states shrinks by thousands of workers, it largely goes unnoticed—although the economic consequences of those job losses are just as real.
Nationally, the federal workforce has shrunk by 43,000 jobs since December 2007. In September 2013, the number of federal government employees was at the lowest level in more than 47 years. The Budget Control Act of 2011—also known as sequestration—could further exacerbate that downward trend.
When state governments look at sequestration, they may see the potential loss of federal funds for programs like education and law enforcement, but the picture is much bigger than that. Many states have a significant number of federal employees who live within their borders, and any cuts to federal employment would likely affect state economies as well.
Federal employment cuts could have a larger effect on states like Hawaii, Maryland or Virginia, where federal employees make up a larger percentage of total employment than in other states.
California is home to the most federal employees of any state; 245,000 Californians work for the federal government. Texas ranks second with 193,500 federal employees, and Virginia is third with 172,500 federal employees. States like Vermont and Delaware each have fewer than 6,500 federal employees.
Since the recession began, New Jersey and New York have each lost more than 10,000 federal employees, while Pennsylvania federal employment has dropped by 8,700.