Report: Private sector sees recovery, but government workers feeling pinch

By Dave Berns

Wednesday, March 30, 2011 | 2:24 p.m.

A nationwide reduction in private sector job cutting curtailed the broader economic impact of government layoffs during the first quarter of this year, according to a report released Wednesday by the global consulting firm Challenger, Gray & Christmas.

A total of 130,749 job cuts were announced during the first three months of this year, down from 181,183 during the same period a year ago.

Private sector downsizing was at its lowest first-quarter level since the first quarter of 1995. Yet, budget cutting by state and local governments is expected to deepen during the coming quarter, offsetting some of the optimism generated by the private sector figure.

“It is difficult to be optimistic about the outlook for government workers. Most cities and states have only just begun to address their massive budget deficits, and we have yet to see how budget cutbacks are going to impact workers at the federal level,” said Rick Cobb, executive vice president of Challenger, Gray & Christmas. “The good news is that other areas of the economy appear to have stabilized in terms of downsize activity. The sectors that had the heaviest job losses at this point a year ago have seen significantly fewer layoffs.”

State and local governments as well as nonprofit organizations cut 19,099 jobs in March, generating 46 percent of all layoffs. It was the highest monthly total for the sector since March 2010, when employers announced 67,611 job cuts, according to the firm.

Job cuts in the pharmaceutical, automotive and telecommunications industries were down from the same period last year.

Nevada’s unemployment rate fell to 13.6 percent in February, the second straight month of declines after standing at 14.9 percent in December. The reductions are largely attributed to the thousands of Nevadans who have quit looking for work and are no longer receiving unemployment benefits.

The state’s figures are expected to increase with the loss of state and local government jobs in the coming months. Those losses could have a ripple effect on the broader economy, leading to more private sector cutting.

Nearly 23 percent of the state’s workforce remains unemployed or underemployed, the result of reduced hours, according to Bill Anderson, the chief economist for the Nevada Department of Employment, Training and Rehabilitation.