It is easy to believe that every city, county and state government in the country is deeply in debt and in need of higher taxes and budget cuts. This even extends to the federal government, which is wrestling with austerity measures that are so great that they threaten Medicare and military spending.  New taxes are under consideration to help close the US deficit and slow the rise of America’s national debt.

However, not every state or local government  in the US has spent the period since the start of the recession lowering its expenses and worker base. Some have been on the rise.

24/7 Wall St. reviewed the Brookings Institution’s MetroMonitor Report for 1st Quarter 2011 to identify the regions which have added the most government workers since hitting their recession lows. 24/7 looked at the health of local governments because they are a good proxy for the economic vitality of an area. In addition to government employment, we considered overall unemployment according to the Brookings’ report, which looks at the 100 largest metropolitan areas in America. We also considered how much overall employment improved from the worst quarter during the recession compared with the first quarter of 2011. This allowed us to compare the economic and employment cycle of each city with employment trends in the local governments. In addition to the MetroMonitor, data from Bureau of Labor Statistics was also used.

24/7’s review of the cities which have added the most government workers shows two things. The first is that in the very few municipalities that did relatively well during the recession, local government was able to maintain and often increase its workforce. There were some notable exceptions, the most obvious of which was New Orleans. The percent increase in public employees was because of Hurricane Katrina. The city lost such a large part of its population that the local government could not afford to maintain its employment base. New Orleans still is a mess financially and needs to close a his leaves an estimated $28.6 million deficit for 2010. “Because we passed a balanced, responsible budget for 2011, we have some flexibility,” said Mayor Mitch Landrieu in a press release. “We do not anticipate furloughs or mass layoffs.”

These are the Cities Where Government Employment Is On The Rise.

10. Houston-Sugar Land-Baytown, TX
> Change in local gov’t employment: 2%
> Employment trough: 2009Q4
> Unemployment: 8%
> Change in total employment, trough to 2011Q1: 2.3%

Houston has made a strong comeback from the recession, though it was not hit as badly as other areas of the country. According to Bill Gilmer, a senior economist at the Federal Reserve Bank of Dallas, at a recent Association for Corporate Growth meeting, Houston is the only area in Texas to reach pre-recession economic levels. According to the Greater Houston Partnership, the sectors responsible for the greatest levels of job growth in the region are natural resources and mining, professional and business services, and educational and health services. The city’s housing market is still weak, but it is expected to improve by the year’s end.

9. Dallas-Fort Worth-Arlington, TX
> Change in local gov’t employment: 2.5%
> Employment trough: 2009Q4
> Unemployment: 7.7%
> Change in total employment, trough to 2011Q1: 2.4%

Dallas is undergoing a strong economic recovery due to its stable housing market — a result of the city’s diverse economy, robust job market, and extensive supply of land, giving it the ability to keep up with housing demand. According to a report from the US Conference of Mayors, total employment for the Dallas metropolitan area is expected to return to its peak, pre-recession level by the first quarter of 2012. The Dallas city government spent much of 2010 laying off public workers, enacting hiring freezes, and requiring city employees take an involuntary day off to save the city money. That the Dallas metro area’s local government employment has increased 2.5% as of the first quarter of 2011 is a clear sign that the area’s financial situation is improving.

8. Knoxville, TN
> Change in local gov’t employment: 2.8%
> Employment trough: 2009Q3
> Unemployment: 7.9%
> Change in total employment, trough to 2011Q1: 2.4%

Knoxville fared better than much of Tennessee through the recession, keeping its unemployment level two percentage points lower than the state’s trough of 10.8%. The recession also did little to slow down the Knoxville city government. At the end of 2010, the city had a surplus of $8.1 million, some of which was distributed as bonuses to approximately 1,000 city employees, according to the Knoxville News Sentinel. A report from the same paper states that five of the top ten largest employers in the city are government entities, including schools and hospitals. As of January 2011, these institutions employed 58% of all workers in Knoxville.

7. Austin-Round Rock-San Marcos, TX
> Change in local gov’t employment: 3.1%
> Employment trough: 2009Q3
> Unemployment: 6.5%
> Change in total employment, trough to 2011Q1: 2.4%

Austin is another big Texas city that emerged from the recession in exceptionally good economic shape. According to a report released by the Brookings Institution at the end of 2010, “Austin’s continued attraction and retention of high-skilled human capital, its diverse set of export-based industries and its avoidance of the worst U.S. housing market excesses of the 2000s help explain its stronger-than-national performance.” This strong economy is likely the reason the city government feels comfortable hiring workers, despite facing a $9.8 million budget shortfall for 2012, as is reported by the Texas Public Policy Foundation. Additionally, Austin is looking to hire 47 new police officers for 2012.

6. Chattanooga, TN-GA
> Change in local gov’t employment: 3.2%
> Employment trough: 2009Q3
> Unemployment: 8.5%
> Change in total employment, trough to 2011Q1: 2.4%

Chattanooga has been in recovery mode since early 2010, according to Moody’s. By the end of last year, the city reported that it had hired 40 additional workers, adding to the 3.2% increase over the third quarter of 2009’s employment levels. This trend may soon end, however. Hamilton County, which is included in the Chattanooga metropolitan statistical area, will soon lay off 38 government workers because of budget cuts, according to Mayor Jim Coppinger. The budget decrease is mostly due to the end of a sales tax agreement between the county and the city of Chattanooga, reports a local news station.

5. Nashville-Davidson–Murfreesboro–Franklin, TN
> Change in local gov’t employment: 4.6%
> Employment trough: 2009Q3
> Unemployment: 8.7%
> Change in total employment, trough to 2011Q1: 2.9%

Nashville has just recently begun to recover from the recession. And even better, it won’t take much time to do so. As recently as last year, the city was still deeply entrenched in the economic effects of recession, with an exceptionally high rate of joblessness.  According to a study released this month by the US Conference of Mayors, Nashville will return to its pre-recession jobs peak by the end of 2012, one of the earliest dates for any metropolitan area. This is due to the city’s diverse economy and growing population. From pre-recession peak to its lowest level, total employment fell 6.2%. Local government employment has already increased 4.6% since that trough.

4. McAllen-Edinburg-Mission, TX
> Change in local gov’t employment: 5.6%
> Employment trough: 2009Q2
> Unemployment: 11.4%
> Change in total employment, trough to 2011Q1: 3.4%

The McAllen-Edinburg-Mission, TX metropolitan area had the lowest median household income in the country in 2000 — $24,863. As of 2010, that amount had increased by more than $10,000. Although it remains the lowest amount in the country, it shows that there is growth. The area has fared extremely well throughout the recession, with total employment actually increasing 2.2% from its prior peak. The 5.6% in local government employment, therefore, represents growth that is more than a mere return to form. McAllen’s economy has begun to thrive over the last few years. The city’s primary sectors for job growth are government, education, and health care. McAllen has also been featured on a number of “best real estate market” lists.

3. Milwaukee-Waukesha-West Allis, WI
> Change in local gov’t employment: 6%
> Employment trough: 2009Q4
> Unemployment: 7.6%
> Change in total employment, trough to 2011Q1: 2.7%

Governor Scott Walker pushed through a law that restricts the collective bargaining rights of state workers, which not surprisingly sparked a wave of early retirements.  Nonetheless, local government employment has increased significantly in the Milwaukee metropolitan area. This increase is largely the result of the local economy’s strong emergence from the recession. Milwaukee is one of only twenty metropolitan areas to have positive job growth in all four quarters from the second quarter of 2010 through the first quarter of 2011, according to the Brookings Institute. Milwaukee and its surrounding area is home to 12 Fortune 1,000 companies, including Harley Davidson, Johnson Controls, Kohl’s and Northwestern Mutual. The largest employer in the area is the health care industry.

2. El Paso, TX
> Change in local gov’t employment: 6.4%
> Employment trough: 2009Q3
> Unemployment: 9.7%
> Change in total employment, trough to 2011Q1: 3.2%

El Paso, like McAllen, is a city on the Texas-Mexico border which made it through the recession only to go on a public employee hiring binge. The percentage of people living below the poverty line was 11.5 percent as recently as 2009, the highest it had been since 2004. Additionally, the number of families receiving food assistance increased 72 percent from 2008 to 2009, according to the Colorado Springs Gazette. Since 2009, however, conditions have improved dramatically. The recent expansion of military base, Fort Bliss, which is now one of the largest installations in the country, has caused a real estate boom in the area. Now, as Fortune reports, “the area is undergoing some of its fastest population growth in recent history.” This growth has helped the economy, allowing for the addition of government jobs.

1. New Orleans-Metairie-Kenner, LA
> Change in local gov’t employment: 12.1%
> Employment trough: 2005Q4
> Unemployment: 7.2%
> Change in total employment, trough to 2011Q1: 19%

Employment was at its lowest point in the New Orleans metropolitan area roughly four years earlier than the other cities on this list. This is because of Hurricane Katrina, which caused an estimated 400,000 jobs to be lost in the city, according to the Associated Press. As a result, an estimated 13,000 government workers were laid-off. After the disaster, employment had nowhere to go but up. New Orleans, therefore, has had by far the greatest increase in local government employment among US cities, despite a number of hiring freezes over the last few years.

Douglas A. McIntyre and Charles B. Stockdale

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