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."
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.