Public jobs: booming in some cities, but can they drive overall growth?

The public workforce is an important sector of employment in many cities, but communities across the U.S. do not have uniform rates of public employment—there is quite a bit of variation, a new report has found.

The report, “Public Sector Employment and its Role in Local Economic Development,” was released this month from the Urban Institute. It took a close look at the role of the public sector as an employer or direct support of jobs, and tried to illustrate the extent that public sector employment can be a force in creating and inducing economic growth in cities.

“Direct employment is not the only way in which government spending influences local employment,” the report said. “To capture this, we created a publicly driven employment index that includes both direct government jobs (federal, state, local, and military) and jobs in sectors that receive substantial public funding (education, social services, and health care).

Although data constraints may limit how accurately this publicly-driven employment is measured, the report seeks to give a better understanding of how such jobs drive overall job growth, and how it may vary from city to city.

“While they can’t bring prosperity alone, publicly driven sector jobs can be a foundation of growing a city’s economy,” said lead researcher Brett Theodos. “Whether publicly driven jobs serve as a backstop against private disinvestment or as a forward-looking engine of industry creation and business starts, these jobs are an integral part of local economies—but sustaining growth will ultimately require sparking private market activity.”

Bigger states = bigger public job creation

It might not be surprising to find that states with high populations also have a high percentage of publicly driven jobs. California is one example, with four of the top ten cities for those jobs. Sacramento, California has the top share of publicly driven jobs, at 51.6%. St. Paul, Minnesota is second (48.8%); Baltimore, Maryland is third (47.9%); Miami, Florida is fourth (46.7%), and Durham, North Carolina is fifth (45.9%). The rest of the top ten features cities in Virginia and Pennsylvania, as well as three other cities in California.

Still, the variety of publicly driven jobs is clear in the fact that the bottom-ten cities for these jobs includes one of those same states—California. The study found that Paradise, Nevada has the lowest number of publicly driven jobs at 8.6%; following Irving, Texas (10.8%); Fremont, California (12.7%), Louisville, Kentucky (14.7%), and Anaheim, California (17.5%).

“We find a wide variation in the share of the total jobs that are publicly driven across the 100 largest U.S. cities,” the report said. “More than three-quarters of the 100 largest cities have more than 1 in 4 jobs publicly driven.”

Mixed findings for overall job growth

Less clear are overall growth trends for cities with higher rates of publicly-driven jobs. The study found that some cities—Baltimore for example—were similar to other cities with slow, or no growth in overall jobs. The authors note that Baltimore may suffer from a lack of private sector activity, even while showing strength in the publicly driven sector.

Related: Job growth in these 12 states exceeded the national average

On the other hand, some cities with high public sector job rates also saw fast job growth overall. Durham was one example—the city is home to more than a dozen colleges and universities as well as a large health system. “Durham experienced 29% job growth between 2010 and 2019,” the report noted. “As a central component of the Research Triangle—the tri-city area of Durham, Chapel Hill, and Raleigh—Durham has used its base of public investment as a springboard, with its higher education institutions (and those of Chapel Hill and Raleigh) incubating a substantial number of tech and biotech companies.”

The report concludes large publicly driven sectors can be helpful for growth in U.S. cities, but it cannot do the job alone. Private job creation and other factors such as climate, an educated workforce, and innovation play a role. In addition, the authors said it is important to recognize that publicly driven jobs tend to be good jobs in many ways, creating a pathway to the middle class. Racial disparities in wages, while they still exist, are more muted than in the private sector.

“The publicly driven sector is a vital source of jobs,” the report concludes. “Even in the city with the lowest share in our index [Paradise], 1 in 12 workers have publicly driven jobs. Even so, the U.S. has a relatively low degree of public sector employment by international measures. [And] not all publicly driven job sectors are equal, as military and public administration jobs diverge from education, health care, and social service jobs in predicting total job growth.”