Chart of the day, government payrolls edition

July 6, 2012


Today’s payrolls report was a relatively dull one, showing the same story we’ve seen for the past couple of months: job growth which is barely positive, and certainly isn’t big enough to bring down the unemployment rate or even keep up with population growth.

Go one level down, and you can see the way that the payrolls number is split, between the private sector and the government. This month, the headline growth of 80,000 jobs represented 84,000 new jobs in the private sector, and 4,000 jobs lost in the public sector. And that story — jobs in the private sector growing, while jobs in the public sector are shrinking — turns out to have been in effect basically as long as the recovery has been in place.

The chart above shows the period of the recovery: the years from 2010 onwards when we stopped losing jobs and started gaining them. Or, at least, when the private sector stopped firing people and started hiring people. The government gets the credit, or the blame, for all that job creation. But really, the only job creation that the government can directly control is its own. And since the beginning of 2010, net government job creation is massively negative: we have 536,000 fewer government jobs today than we did in January 2010. (That red spike you see in May 2010 is the census; all those jobs and then some were lost in the following months.) During the same period, the private sector created 4.3 million jobs.

Those lost government jobs are good ones: well paid, with solid benefits. They’re one of the key areas of middle-class employment. And there’s no sign that they’re coming back.

Meanwhile, if you look at the unemployment data, most of the unemployment rates are unchanged this month, with the headline unemployment rate remaining at a woeful 8.2%. But there’s one datapoint which jumps out: the unemployment rate for African Americans soared to 14.4% in June, from 13.6% in May. That’s a number which won’t be lost on Barack Obama, who knows full well that the government is a hugely important source of employment for African-Americans.

In any event, this chart must surely put the lie to anybody who claims that Obama is on any kind of spending spree. Government employment naturally trends upwards, as the population grows and the act of governing becomes increasingly complex. But since January 2009, when Obama took office, total government employment has plunged by 612,000 people. If those people were earning $50,000 each, on average, then that’s more than $30 billion a year in government wages which have been cut.

There’s lots of talk, these days, about how it’s fiscal policy rather than monetary policy which is needed to create jobs and bring down the unemployment rate. That’s true. If the government spent more on important things like infrastructure, that would help create jobs across the economy. But never mind that: the easiest and simplest way for the government to create jobs is simply for the government to stop firing people. The private sector did that more than two years ago. Why can’t the government follow suit?


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