Overall public sector employment has dropped significantly over the last three years.

Reuters: "The last three years of job losses at the state and local government level has been the most dramatic since Labor Department records began in 1955"

http://www.reuters.com/article/2012/04/08/usa-states-employe...

From what I heard, if we had retained existing public-sector jobs through the recession, we'd be back at net job-gain by now. Our apparent "job losses", at this point, are solely due to cutting state and local government jobs.

Interesting - this looks like a huge missed opportunity.

According to Keynesians, job losses in recessions are caused by sticky nominal wages and insufficient inflation. But in the case of government, nominal wages can be reduced by fiat.

So why didn't we simply reduce the pay of government employees rather than reducing their number?

I assure you that - virtually always - layoffs are a last resort.

Furloughs, pay cuts, and reducing headcount through attrition have become almost ubiquitous on the state and local level over the past few years.

Um, no.

http://research.stlouisfed.org/fred2/series/ECIGVTWAG

What has this got to do with anything?