Private Sector and Public Sector Job Trends, 1982-2012

Here's a couple of charts I generated at the Bureau of Labor Statistics' website. The first one is total private employment from 1982 through the latest numbers for 2012.

You can see dips from the early '80s, '90s, '00s, and then the big collapse in late 2008 with an uptick kicking in around late 2009 and 2010. As it stands, the number of private-sector employees is about equal to what it was in 2005. And in 2000, which is really appalling.

The second chart covers public employees over the same timespan and shows what Barack Obama was doubtless trying to reference in his ill-fated press conference last week (he's already walked back whatever he was trying to say when he claimed that "the private sector is fine). That is to say, that where the private sector trend is upwards, the public sector trend is downward (and that's not counting the sharp spike around 2010 which reflects Census workers). The current number of government workers is about what it was in 2006.

So what are we to make of these divergent trends? The basic Keynesian argument is that governments at all levels should keep hiring so that more people stay employed and aggregate demand increases. From this perspective, any cut in expenditures - even when those outlays are made by governments using borrowed money or taxes - decreases GDP or economic output, which is bad. The opposing view - pushed by folks dubbed "Austerians" by Paul Krugman and others - roughly holds that sustainable economic growth is more likely to come from trimming government spending and either keeping taxes level or even cutting them (therefore putting more money in the hands of private actors, who are considered to be in a better position to spend it wisely and productively).

Presumptive GOP presidential candidate Mitt Romney created a mini-firestorm for himself when he responded to Obama's miscue by saying:

"He wants another stimulus. He wants to hire more government workers," Romney said. "He says we need more firemen, more policemen, more teachers. Did he not get the message of Wisconsin? The American people did. It's time for us to cut back on government and help the American people."

More here. 

Democrats pounced, saying the Romney is against cops and firemen and teachers (note: the number of instructional faculty at K-12 schools per student is at an all-time high). But Romney is right in this instance: The economy can withstand further declines in the 15 percent of the work force that is in the public sector. In fact, it has to. States are as or even more broke than the federal government and every dollar spent now has to come from either taxes or borrowing, neither of which is going to jack the economy any time soon. Federal stimulus dollars helped pad public-sector payrolls, especially in education, for a while but it also destroyed or forestalled jobs too.Sadly, though, Romney's new message is muddled by his recent praise for government spending as a way to jumpstart the economy. As Peter Suderman noted here a while back, Romney praised George W. Bush's various stimuli in his 2010 book No Apology. Indeed, the former Massachusetts governor went so far as to say that Obama's "'all-Democrat' stimulus that was passed in early 2009 will accelerate the timing of the start of the recovery." 

It's an appalling thing when there's not as much daylight between the major party candidates as there should be. Obama is pushing a budget plan that would increase spending in a decade from the current $3.8 trillion to roughly $5.9 trillion annually. Romney prefers a plan that would spend about $4.9 trillion. You want somebody who would keep spending constant, much less actually reduce the size and scope of government year over year? You gotta go elsewhere. Which ain't a bad place to be, actually, when the options include folks such as former New Mexico Gov. Gary Johnson, who's running on the Libertarian ticket.

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  • robc||

    How many cops and firemen and teachers are federal employees?

    Sure the FBI and etc, but not many right? It rounds to zero, correct?

  • Drake||

    If you exclude the military and Park Service you are correct.

  • sarcasmic||

    Now if only someone would write a book about how libertarian politics can fix what's wrong with America.

  • The Other Kevin||

    I heard Ron Paul has some ideas about reducing the size and scope of government. Someone might want to write a book about him, too.

  • T o n y||

    sustainable economic growth is more likely to come from trimming government spending and either keeping taxes level or even cutting them (therefore putting more money in the hands of private actors, who are considered to be in a better position to spend it wisely and productively).

    I'm glad you juxtaposed the two positions so that we might see just how shaky this one is by comparison to an aggregate demand–based theory. The claim that private actors better spend their money than government at all times is not at all obvious and certainly not proven, and is in truth just empty tautology.

    High unemployment means too-low demand for labor. You don't increase demand for labor by giving money to rich people. It's never worked, and it not clear why it should work, even in theory. It is entirely possible a market will settle on an employment level that's unacceptably high. The market won't magically go to full employment if just left alone. It's entirely (and disturbingly) reasonable to assume that self-interested employers don't want full employment, as that would raise labor costs and worker leverage.

    What level is unacceptable is entirely a matter of society to judge, and that's just one reason among many that an entity that acts on behalf of society needs to exist.

  • Drake||

    Horseshit.

    You increase demand for labor by making the return on investment for labor worthwhile for corporations and small businesses.

  • T o n y||

    And that happens when corporations and small businesses sell more products and services, otherwise known as increasing aggregate demand. What does a tax cut have to do with making labor a better investment?

  • ||

    Don't. Fucking. Respond. To. The. Sockpuppet.

  • T o n y||

    Who the fuck hired you as blog police, you useless windbag?

  • R C Dean||

    Just this once, Epi.

    What does a tax cut have to do with making labor a better investment?

    It decreases your overhead. The less overheard each job has to support, the more margin each job generates. The more margin a job generates, the more people you will hire.

  • T o n y||

    Why would employers hire just because they can afford to if there is no increase in demand for their product or service to warrant the hiring?

    A related question: why aren't we in a labor boom considering tax rates are at historic lows?

  • R C Dean||

    Why would employers hire just because they can afford to if there is no increase in demand for their product or service to warrant the hiring?

    Because, as their overhead goes down, positions that were previously unprofitable become profitable. We're looking at the marginal job, here. A job that is not profitable if it has to carry X dollars of overhead won't be filled, but if it becomes profitable because overhead is reduced, it will be filled.

    Example: I've got a line of business that generates a return of 15% after marginal expenses, but my overhead is 20%. Thus, that line of business costs me 5%. Lower my overhead to 10%, and now it makes me 5%. I start hiring for that line of business.

  • T o n y||

    If we cut every paycheck in the country by half, do you suppose employment would increase or decrease? Might the sudden massive drop in consumer demand not affect the picture more than income tax rates?

  • Rasilio||

    Actually after a fairly short adjustment period where prices of everything fell in half employment would be pretty close to exactly where it is today.

  • Rasilio||

    Because they are not.

    Marginal tax rates at the federal level are at historic lows, however marginal tax rates are meaningless what matters is effective tax rates.

    With effective tax rates you almost have a point, Federal effective tax rates did fall to the bottom end of the long term trend in 2009 but they have largely recovered and are in line with the average.

    Problem is Federal taxes are not the only taxes we pay, there are myriad of others and when you look at the total aggregate effective tax rate is approximately 33% which is about average for the last ~25 years.

    Here is the history of total effective taxes across all levels of government in the US...

    From 1952 - 1968 taxes remained relatively stable at ~27% (+/- 2%)of GDP

    In 1969 they jumped to ~30% (+/- 1%)thanks to the Great society programs of Johnson and stayed there until 1986.

    In 1987 they rose again, this time to 33.5% (+/- 0.5%) and stayed remarkably stable for a while.

    Then in 95 they began to rise to a peak of 36% in 2000 before falling back to 31% in 2002 following which there is no discernable pattern as taxes have varied over a 10% of GDP range within the last 10 years, peaking at just shy of 37% in 2007 and cratering to just over 26% in 2009 however 2011 was back up to the average we held through the late 80's and early 90's at 32% and 2012 is expected to match that.

    The important takeaway is that no matter how you slice it, taxes are not low in any sense of the word

  • WTF||

    Wow. I am in awe of the incandescent stupidity I've just witnessed.

    *golf clap*

  • sarcasmic||

    You don't increase demand for labor by giving money to rich people.

    If every week I demand $100 from you, and at some point demand $80 instead, did I just give you $20?

    No.

    not taking != giving

  • T o n y||

    Which as you well know is an entirely separate discussion, a libertarian moral hangup that serves only to distract from what should be a fact-based comparison of alternatives.

    You're still wrong though. There is no natural distribution of wealth. Wealth gets where it gets because of how society is set up to move it around. Part of it is pure market, but it is also largely a matter of tax code and other policies, which any sane person understands have been more heavily influenced by wealthy interests than poor ones, and so presumably, unless rigorously checked, always tilt to favoring the wealthy.

    It's just that the wealthy take from the middle class in ways that you find morally acceptable, or aren't aware of.

  • sarcasmic||

    It's just that the wealthy take from the middle class in ways that you find morally acceptable

    If someone like, say, Bill Gates, gets wealthy by trading say, computer software for money, how does that constitute wealth taken from the middle class?

    trading != taking

    As I see it, the middle class is better off, just as the rich person is. It's just that the middle class's wealth gain is distributed while the rich person's gain is concentrated.

    That may feel icky to you, but you can't honestly say something was taken.

  • T o n y||

    I appreciate the fact that in a world with no government-directed downward redistribution (social safety net) then wealth would be even more concentrated at the top than it is, so we are perhaps far off from some natural, fair distribution you envision.

    But liberal values (as they inform tax, fiscal, and economic policies) are premised on the idea that in a 'natural' state the market does not just reward hard work and ingenuity, but above all rewards already having wealth or such things as having wealthy parents. Furthermore, people don't become wealthy just by virtue of their own hard work and ingenuity but because a stable, peaceful, educated, and wealthy society exists as a customer base. Maintaining that society requires people to pay for it, a user fee for the opportunity to become successful, if you will.

    Wealthy interests take from the middle class by lobbying for favorable tax policies that advantage them merely for being wealthy interests. One must come to the table assuming that progressive tax policy is fair and more broadly distributed wealth represents a fair outcome. I'm not overly concerned with fitting everything to a strict moral rubric; I just know that a strong middle class makes for a more stable and prosperous economy as a whole, which benefits the wealthy as well long-term.

  • sarcasmic||

    I appreciate the fact that in a world with no government-directed downward redistribution (social safety net) then wealth would be even more concentrated at the top than it is

    No, you make an assumption. And a false one at that.

    Keeping with my Bill Gates example, how much of his wealth has he voluntarily given to charity?
    Lots.
    No force required, and many people have been helped.

    Show me a "robber baron" and I'll show you a foundation that has helped to better society, no force required.

    The only "problem" is that these people don't spend their wealth the way you would have them do it.

    I don't see that as a "problem" because the wealth is theirs, not yours.

    It just makes you a liar and a thief by proxy.

    And a dick.

  • The Hammer||

    "...always tilt to favoring the wealthy."

    And your answer is to give the system that already favors the wealthy more power. Have you ever heard of a useful idiot, Tony?

  • T o n y||

    Government has a monopoly on the legitimate use of force by definition. I'm not interested in adding to or subtracting from that power. I'm interested in it using that power to engineer a distribution of wealth and income that better represents fairness and positive economic outcomes.

  • R C Dean||

    So, you would have no objection to the government driving all the minorities from their homes in the inner cities, where they are demonstrably underperforming economically, in order to generate a "positive economic outcome" by clearing the way for productive businesses to build there?

    I assume you would have no objection to the fairness of removing these unproductive people from productive assets that they are wasting?

  • T o n y||

    In general I'm not in favor of forced relocation.

  • ||

    High unemployment means too-low demand for labor. You don't increase demand for labor by giving money to rich people.

    That is odd. Obama seems to think it will work as that is what he did when he voted yes on TARP and passed his stimulus. Same with Barnake and Krugman. Tony when did you become a scum bag tea pirate?

  • Whahappan?||

    Government has a monopoly on the legitimate use initiation of force by definition.
    FIFY

  • Mumu Bobby||

    The point about private employment being the same today as in 2000 has a highly positive side too. Consider the basket of goods and services the average citizen received in 2000 and compare it to today - the same number of employees are driving far more today.

    Now consider the basket of goods and services provided by the public sector. Did we get the equivalent of a GPS in our car that we didn't have 10 years ago? Or is the basket of services largely the same, with only a higher employee count to drive it?

    Much of the services and goods we received in 2000 you can't purchase anymore but can find in a landfill. What in the public sector has gone to metaphorical landfill to be replaced by something far superior?

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