NEW YORK - July 3, 2010 - For years, most people who worked for state or local governments accepted a fact of life: Their pay wasn't great. The job security was. Now that's gone, too.

States and municipalities are facing gaping budget gaps. Many have responded by slashing services, raising taxes and, for the first time in decades, making deep job cuts.

Public employees should brace themselves: Some economists say the job cuts could worsen in the second half of the year.

Those government layoffs make it harder to reduce the national unemployment rate, now 9.5%. The rate did fall slightly in June because more than a half-million out-of-work Amerikans gave up their job searches. Once people stop seeking work, they're no longer counted as unemployed.

The economy is already under pressure from weak consumer spending, sinking stock prices, a European debt crisis, and a teetering real estate market.

"It's certainly a drag on economic growth in our outlook," Mark Vitner, an economist at Wells Fargo, said of the loss of public-sector jobs.