Jim Gibbons of Green Oak Township, Mich., hopes he has a job next month. He works for the Michigan Unemployment Insurance Agency, which just pink-slipped 177 temporary workers and plans to dismiss as many as 225 more.

"We were told about 12 noon this last Monday by our department manager and it just hit every one of us like a ton of bricks," he said. The next day at the office, he said, "It was like we were in a funeral home. Solemn, quiet, very little banter."

Gibbons, 61, said he only landed the job two years ago after a six-month unemployment spell. He assumes that his lack of seniority at the unemployment office means he'll be canned. A former auto mechanic and a member of the UAW Local 6000, Gibbons had hoped to retire from Ford, but he'd do any type of work rather than be unemployed.

"A job is better than no job," Gibbons said.

The layoffs at Michigan's workforce agency come not because the economy's bad, but because it's supposedly getting better: The state's unemployment rate has fallen to 8.6 percent, down from 10.6 percent just one year ago. The agency says fewer Michiganders are filing for unemployment, so it needs fewer workers to process the claims.

"In June 2009, the number of claims peaked at 537,000," department spokeswoman Chawn Greene-Farmer said in an email. "As of July 30, 2012, the UIA provided unemployment services to 187,000 claimants."

At the same time, Gibbons is caught up in a familiar recessionary tale of government layoffs. As the private sector has added jobs since the recession technically ended halfway through 2009, state and local governments have bogged down the recovery by continuing to shed workers in an effort to close budget deficits. The public sector is down by more than half a million workers since 2009, and government jobs declined by 9,000 from June to July.