Over the past year, specifically, state and local government employment has grown modestly but still lags private-sector job growth. Between December 2021 and December 2022, total nonfarm employment grew by 3.0%, driven mainly by employment gains in the leisure and hospitality (6.3%) and education and health (4.0%) industries. However, state and local government employment grew by only 1.6% over that period.
Figure A illustrates year-over-year job growth across all 50 states and D.C., with special attention paid to professional and business services, leisure and hospitality, and state and local government. In leisure and hospitality, employment grew by more than 10% in D.C. (14.0%), Texas (11.3%), Hawaii (11.0%), and New Jersey (10.4%), but shrank by 0.5% in Alabama and Rhode Island.
The South and West regions experienced the largest employment gains in 2022. Texas (5.0%), Florida (4.8%), Oregon (4.2%), and North Carolina (4.1%) saw the largest increases in total nonfarm employment over the year. In Texas, Florida, and North Carolina, employment growth was highest in leisure and hospitality, while in Oregon, leisure and hospitality growth was second only to construction.
Oregon was the lone standout for state and local government employment growth in 2022 (5.3%)—no other state surpassed 4% growth and two states saw declines (Mississippi and Montana).
State and local policymakers should use available relief funds to rebuild the public sector
The American Rescue Plan Act (ARPA) earmarked $350 billion for the State and Local Fiscal Recovery Fund (SLFRF), which can be invested in critical public services (including schools and care infrastructure) that benefit workers and employers alike, strengthen communities, and enable families to thrive. Yet, as of October 2022, state and local governments have spent less than 40% of dollars made available through ARPA, with $150 billion remaining unspent.
Public-sector workers provide vital health, safety, and education functions, but persistent low pay has created staffing shortages that have led to shortened school weeks, long waits for public benefits, delays for affordable housing development, and many other impacts that threaten the long-term welfare of communities across the country. State and local lawmakers should prioritize investing their remaining ARPA funds in restoring critical public-sector jobs and bolstering the public services that are essential for communities to thrive.
