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Jobs Report: Is the Gov’t Sector Still a Drag on Employment?

Is this the month the government sector stops being a drag on employment? As we've noted, for much of the last two years, the private sector has consistently added jobs, while state, city, and federal government entities have cut them.

With tax revenues falling off a cliff in 2009, austerity became the prevailing trend. With states and cities unable to run deficits, they compensated for lower revenues by reducing spending and cutting employment. Many states and cities are still facing economic crises. But on the whole, after nearly three years of expansion, revenues from sales and income taxes are generally rising across the board. The Rockefeller Institute in January reported that in the third quarter of 2011, overall state tax collections for the seventh straight quarter. Federal revenue collections are also up so far this fiscal year.

And that means there's less pressure to cut employment. Check out the numbers from the Bureau of Labor Statistics. (Go here and click on "government" in the right column to see the data.) Since April 2009, the government sector has cut more than 700,000 jobs. That's an average of 21,000 per month for the past 33 months. But over the past six months, government job cuts have really dwindled: 13,000 in November, 17,000 in December, 14,000 in January. In the six months between July 2011 and January 2012, the government sector cut only 60,000 positions, or 10,000 per month.

Meanwhile, Challenger Gray and Christmas, which issues monthly reports on layoffs, notes that the trend is slowing, too. At this time last year, government was the top job-cutting sector. In the first two months of 2011, government "announced 22,830 planned layoffs; more than a quarter (26 percent of the 89,221 jobs cuts recorded in the first two months of the year." But in the first two months of 2011, announced job cuts in the government are off 84 percent to 3,654.

This morning's employment report will let us know whether the government sector is no longer a drag on employment.

Daniel Gross is economics editor at Yahoo! Finance
Follow him on twitter @grossdm; email him at grossdaniel11@yahoo.com