The price of austerity has begun to hurt local and state government employment again. The trend is the continuation of one that started three years ago as a sharp drop in tax receipts decimated local budgets and caused unheard of deficit levels from California to New York State. Several cities and counties has either become insolvent or have come close to bankruptcy. Several towns in Michigan can no longer pay their bills or the salaries of critical public employees.

The second wave of austerity has less do to emergency circumstances than it does to an acknowledgement that government deficits cannot be sustained long term. That is true at the federal government level, even though it has the opportunity to raise money in the global capital markets. States and municipalities do not.

The ten largest layoffs announced in June include three municipal entities. The Philadelphia School District said it will cut 1,360 people. “Although the Philadelphia School District has already shed more than 3,000 workers from its payroll, more pink slips are coming,” an official told Philly.com on July 1.

The Florida Department of Juvenile Justice announced it would cut 1,229 people. According to MiamiHerald.com, about 1,300 workers in Florida lost their jobs after the state’s governor Rick Scott signed a budget plan for reducing the size of the state government bureaucracy.

The State of New Hampshire said it would fire 1,100 people, as the state struggles with a deficit.

The government cuts may seem relatively small in June, but the figures will get much higher as the year passes.

Date	Company	State	Reason	Industry	Number
6/16/2011	Perkins & Marie Callender’s Inc.	IA	restructuring	Entertainment/Leisure	2,500
6/23/2011	Philadelphia School District	PA	cost-cutting	Government/Non-Profit	1,360
6/2/2011	Florida Department of Juvenile Justice	FL	cost-cutting	Government/Non-Profit	1,229
6/23/2011	Lockheed Martin	MD	restructuring	Aerospace/Defense	1,200
6/23/2011	State of New Hampshire	NH	cost-cutting	Government/Non-Profit	1,100
6/14/2011	Monaco Coach Corp.	OR	restructuring	Automotive	1,050
6/16/2011	Cordis Corp (J&J Stent maker)	NJ	closing	Health Care/Products	1,000
6/1/2011	HJ Heinz Co.	NY	restructuring	Food	1,000
6/11/2011	United Continental Holdings	TX	acquisition/merger	Transportation	1,000
6/29/2011	Campbell Soup Co.	NJ	restructuring	Food	770

Among private sector jobs, the largest single announced layoff was by Perkins & Marie Callender’s. The restaurant chain filed for Chapter 11.

The nation’s largest defense contractor, Lockheed Martin (NYSE: LMT) said it plans to fire 1,200 people. The firm said there will be reductions in employment across its Aeronautics business area as part of a plan to improve the affordability of its products and increase operational efficiency.

Unemployment figures are out on Friday. Most economists believe that non-farm payrolls moved higher by 100,000 for June. Based on jobs news over the last several weeks, that number is optimistic.

Douglas A. McIntyre

 

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