State and local governments are struggling with budget gaps. Stimulus funds are drying up. Public pension shortfalls are making mainstream media headlines. To the casual observer, it would seem that qualified job candidates would be heading for the hills – or, in this case, to the private sector.

But insiders say such is not necessarily the case.

Interest among qualified candidates remains stable

Paul Dietl, Chief Human Resources Officer for the Commonwealth of Massachusetts says he has not seen any evidence of waning interest in state employment by qualified professionals. “Overall interest in state employment remains manageable, however we have seen increased competition for talent in certain areas such as IT, finance, and certain health care positions.”

“Government as an employer remains strong and desirable, particularly relative to the rate of corporate failures and small business dissolutions,” according to Corey Hurwitz, Chief Operating Officer at Careers in Government (CIG), a website that brings together public sector employers and job seekers. “Although a new reality has replaced government’s cloak of invulnerability, it is still broadly viewed as a venerable and safe shelter in the storm.”

“At CIG we have observed that for those who are naturally attracted to public service for its potential to make a difference, the appeal of government employment has seldom been stronger,” she said.

Data shows only incremental decline

Despite the fiscal challenges facing state and local governments around the U.S., the number of employees working in state and local government decreased by just 1.4 percent in March 2011 compared to the prior year, according to newly released estimates by the U.S. Census Bureau in its 2011 Annual Survey of Public Employment & Payroll, released earlier this month. According to the report, in March 2011, 16.4 million full-time-equivalent (FTE) employees worked for state and local governments.

… for those who are naturally attracted to public service for its potential to make a difference, the appeal of government employment has seldom been stronger.” – Corey Hurwitz, Careers in Government

Local governments, including counties, cities, townships, special districts, and school districts, employed 12.0 million FTE employees, while state governments employed 4.4 million FTE employees.

Education jobs comprise a large part of the public sector employment pie

Education accounted for the largest percentage (58.7 percent) of local government employment in the U.S., with 7.0 million full-time equivalent employees as of March 2011. Likewise, education jobs comprised the largest percentage (42.4 percent) of state government employment.

Full-time equivalent employment in elementary and secondary education (including instructional and non-instructional positions) at the state and local government level declined by 1.4 percent – a rate that mirrors the overall decrease in total state and local government employment.

This parallel is not surprising, says Michael Ross, managing director at Raymond James Morgan Keegan. “When states cut their budgets and spending, they have less to give to local entities, like schools. Schools, in turn, need to find ways to reduce their own budgets, often in resulting in reduction of full-time staff.”

Will a hybrid sector emerge?

As CareersinGovernment’s Corey Hurwitz explains, “Restructuring and emergence can result in shrinking workforces and more outsourcing; however essential services must still be performed.”

Census Bureau’s Annual Public Employment data backs up that notion. After education, hospitals, police protection, and corrections jobs rounded out the top four public employment sectors.

Peter Fugiel, who holds a Ph.D. in government and is a frequent contributor to, says he expects to see a third sector emerge, one he calls a “hybrid” between the private and public sectors. “Government layoffs are a reality in today’s economy, but as public sector payrolls shrink, the need for consulting services – particularly in areas such as public accounting and healthcare cost planning – are on the rise.” Private sector consulting firms that service the public sector may be the answer.

Hurwitz does not deny that public sector employment is ripe for change, but remains optimistic for its prospects. “A broader choice of service delivery models is likely to alter the government workforce silhouette going forward, as will pension and compensation reforms. However, these changes are only expected to make public service a more reliable, satisfying and enduring employment sector.”