Overall, the U.S. job market ended 2022 at a near record for growth but one area, in particular, underscores how some parts of the economy still lag far behind pre-pandemic levels.
State and city payrolls have only recovered 70% of the jobs lost during the pandemic in December, trailing the broader economic rebound. The slow crawl is largely due to one industry – education – making up more than half of the jobs lost. As K-12 teachers grapple with post-Covid burnout and low pay, a mass exodus of educators has left school districts with mounting vacancies to fill.
“Some can’t find enough willing bodies to take the jobs,” Mikhail Foux, head of the municipal strategy at Barclays, said. “For this sector, these people are not coming back.”
According to the Bureau of Labor Statistics data, local education payrolls are down 3% since February 2020, while total U.S. payrolls saw a 0.8% gain. Currently, local non-farm education payrolls sit at around 7.8 million, below the roughly 8 million seen before Covid-19 was declared a national emergency. The industry is down about 247,700 jobs, hovering around 2014 levels.
According to Teryn Zmuda, chief economist at the National Association of Counties, higher-paying is especially vulnerable because teachers have left the industry for higher paying private sector jobs.
“Many of the individuals in education and education-adjacent professions are tired and overworked,” said Zmuda, referring to not just teachers, but also other workers like school-bus drivers, who are retiring or seeking better pay. They all cited heightened levels of “profession fatigue,” she added.
The talent drain could have serious ramifications for the country and its economic future. The U.S. has already seen a significant decline in children academically amid the pandemic due to remote learning. According to data from the National Assessment of Educational Progress, nine-year-olds have already lost the equivalent of two decades of progress in math and reading levels, while eighth-graders also saw extensive declines. In math, eighth-graders scores fell in 49 of the 50 states.
“The main outcome is fewer teachers so the quality of education will suffer,” said Foux.
For the public sector workforce to fully recover, local governments have to be vigilant when it comes to their hiring efforts. The key is to make sure once jobs are added back, they are not removed a few years down the road, said Zmuda.
“Funds are not lasting,” she said. “The demand for local government services is higher than before. The demand is still outpacing the resources available.”
Foux believes municipalities should consider increasing salaries. But pay hikes are not a foolproof plan since some school districts that have boosted teacher salaries are still struggling to fill positions.
Also, municipalities face other pressing priorities. State and local governments are “focused much more on addressing their funded pension liabilities and that would not have been the case before. At least, not to the same degree,” Foux said.
Top state and local retirement systems are expected to be 77.3% funded, down from 83.9% during fiscal 2021 mostly due to poor investment returns last year, according to nonprofit research firm Equable Institute.
Emily Mandel, an economist at Moody’s Analytics, recently said it may take state and local payrolls until 2026 to recoup pandemic losses.
“You assume the economy will be bigger in 2026, you’ll have more schools and a stronger economy,” said Foux. “Realistically, it will take a very long time. I would not be surprised if it’s later.”
Bloomberg’s Reade Pickert contributed to this report.
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