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Pain in the public sector
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Teacher Joe Mish with his co-music director at church. Mish says the church job used to provide 'fun' money. Now he depends on the extra income to make ends meet. (MPR Photo/Bill Catlin)
The nation's economic recovery officially began almost three years ago. But judging from job numbers, government workers in Minnesota, especially those in local government, are in more of a recession than a recovery. City and county governments and public schools in Minnesota have lost thousands of jobs in the last year. Wages fell behind inflation as well. Minnesota Public Radio's Bill Catlin has the next in our series of reports, "Whose Recovery Is It?"

St. Paul, Minn. — Minnesota's nearly 400,000 government workers don't often get a lot of sympathy. But their work includes keeping drinking water safe, stocking lakes with fish, and educating most children. Over the year ending in August, the number of jobs in Minnesota's government sector shrank far more than the national average, nearly 3 percent compared to a mere 0.1 percent nationally. Despite the recovery, job and wage stastics indicate most public employees in Minnesota are not faring as well economically as the state's private sector workers or government employees nationwide.

For Joe Mish the First Unitarian Universalist Church in Rochester is both his place of worship and his second workplace. He shares the church's part-time music director job. In his day job, he's a public employee: the orchestra teacher in the Pine Island schools, northwest of Rochester.

"It would have been tough, the past couple of years, without the extra job," says Mish.

Mish and his wife both have full-time jobs. The church work brought in some fun money.

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Image Local government has seen a "very large job loss"

"It allowed us to do some things like buy a new car, buy a camper. Probably allowed us to do some fun things, like we took our children to Disney World. We've never been to Disney World before. That was kind of a fun trip to do," says Mish.

Lately, though, Mish says costs are rising--health care, in particular, but other bills too. Their full-time jobs aren't keeping pace. According to union officials, the Pine Island teachers saw a pay increase of less than 1.5 percent this year, lower than the rate of inflation. In fact, Mish got a bigger raise from his part-time church job, than he got from school.

"Less than $500, and here at church this year, it's more than $1,000," says Mish.

Mish says the church raise was bigger, even when counting the $400 the district put in a medical savings account this year. Mish says the district tries to treat people fairly, but he still needs the "fun" money to make ends meet.

"Probably not every month, but like the month that the car insurance is due, I probably take my paycheck from church and that pays the car insurance that month. Or when I have to pay my union dues at school that's a month where it comes up," says Mish. "So, it probably allows us to do some fun things, but it doesn't allow us to do as many fun things as it did probably four years ago."

Mish is not alone. The recession officially ended in late 2001, but two and three years later, tight budgets have kept wages for many government workers behind inflation, and thousands of jobs have disappeared. State and local budget cycles played a role in delaying some of the recession's impact on government workers.

You can see a delay by looking at wages following the recession. State labor market expert Steve Hine says in 2002, total wages paid to government workers grew at a much faster pace than private sector wages.

It's so hard when you're laid off. There isn't anything you can do to make it right, or make yourself whole, other than get another job.
- Laid-off government worker Marianne Peterson

"By 2003, the tables had turned," says Hine. "As the economy did begin to rebound, albeit a bit sluggishly, or slower than expected, total wages paid to the private sector have increased nearly 3 percent while government wages have only increased around 2 percent."

Total pay for state and local government workers also fell behind inflation last year, eating into their buying power. In the first part of this year total wages for state government workers grew faster than both inflation and private sector pay. That was due largely to increases at state higher education institutions. For local government employees, who represent most of the state's public sector, total wage growth fell further behind inflation in the first three months of this year.

You can also see a delay in government job losses. During the recession, government actually added jobs, but reversed course amid the recovery. Over the past year, government has had the biggest job losses of any sector of the economy, with most of those jobs disappearing from local government. Lately Cities, counties and schools have cut deeper in percentage terms than the private sector did during the recession. Steve Hine says local government shed 12,000 jobs over the past year, almost 5 percent.

"It's a very large job loss," says Hine."

The impact on workers can be large as well.

"I was laid off after 35 years last year. This year I'm 60 years old. I was 59," says Marianne Peterson, a former purchasing specialist for the Minneapolis Public Housing Authority. She was laid off as the agency tried to cope with rising costs and declining federal funding.

"It's still hard to talk about it. Once in a while I can get angry about it. It's so hard when you're laid off. There isn't anything you can do to make it right, or make yourself whole, other than get another job," Peterson says.

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Image Thought government jobs were stable

But so far, she hasn't been able to find another job.

Peterson and her self-employed husband are now shouldering a big health insurance payment and living off money they'd been saving for a place to retire.

"So, I hate to see the savings go, but what can you do? Our income, the money coming in is just not keeping pace with a $700 bill every month," Peterson says.

Many school districts, cities and counties face a problem similar to Peterson's. Jim Mulder with the Association of Minnesota Counties says funding from the state, and in some cases the federal government, is either declining or not keeping pace with costs. Last year, state lawmakers cut funding to cities and counties as part of an effort to erase a huge budget shortfall without raising taxes.

"The state had between a $4 billion and a $5 billion problem to deal with in '03. We believe that $400 million to $500 million of that problem was directly passed on to counties," says Mulder.

Combined, cities, counties and public schools in Minnesota lost nearly $1 billion in state funding over the biennium, according to figures supplied by Mulder's organization, the League of Minnesota Cities and the state Education Department.

"This is a conscious choice being made by policy makers," says David Strom, president of the Taxpayers League of Minnesota, a driving force behind the decision to cut more than $4 billion from the state budget.

Strom says government employment has grown at a faster pace than the state's total population over the years. He says the private sector cut jobs as technology made employees more productive, but "you really haven't seen that yet in the public sector, and this is just the beginning of that," says Strom. "And what I'm certainly hoping to see is actually, over the next 10 or 20 years, a dramatic reduction in the number of public employees, with an increase in the services out there."

Strom says workers moving from the public to the private sector in the long run generate more wealth for the community.

But some local governments have been hiring.

In Northfield, "they're turning the cornfields into housing," says city planner Dan Olson, a recent addition to the city's staff.

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Image Expects more public sector job cuts

Olson was laid off from a similar job in the Twin Cities last year after lawmakers cut funding for local government aid, or LGA. Olson says he didn't see the layoff coming because of the public sector's reputation for job security.

"'Government jobs are real stable. There's no layoffs there.' And I definitely had that mentality. I never thought I would be laid off. When the LGA cuts were going through, when the governor was announcing them and that sort of thing, I remember thinking, well at least they won't lay off people," says Olson.

Olson feels the economic recovery has helped him recover. Initially devastated, he found a position 7 months later in a city that's growing.

"Without that development, this position may not be necessary. We have lots of developers that want to build a lot of housing here, a lot of businesses that want to move here, especially to our historic downtown, and I would say that that would not be happening if it wasn't for some sort of recovery," says Olson.

But it looks unlikely there will soon be a broad recovery in the job market for public sector workers. The state appears headed for a billion dollar budget shortfall in the next biennium, and Gov. Tim Pawlenty remains on the list of politicians pledging no new taxes.

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