Chart of the day, government payrolls edition

By Felix Salmon
July 6, 2012

payrolls.jpg

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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Comments
16 comments so far

“Those lost government jobs are good ones: well paid, with solid benefits.”

I.e. they cost closer to $100k each than $50k each.

But that’s the political environment these days. There is no will for any kind of spending.

Posted by TFF | Report as abusive

Why can’t the government stop firing people? Really? The answers are so obvious.

Republicans and corporate Democrats have used this recession/depression to gut government spending at state and local levels. Among other benefits, like helping your voting base demonize union workers with putatively “fat” pensions and other perks, gutting state government also reduces the need to raise federal and state taxes on extreme wealth. This has been the public policy script for a generation, since Reagan.

This phenomenon is what you get when the economy is rigged to benefit a very small group of people at the expense of everyone else. FWIW, all economies are rigged. The question is who benefits the most. In the US, it’s extremely wealthy people like hedge fund managers, trust fund babies like the Koch Brothers and Walmart kids, and senior managers at publicly traded companies like GE, Goldman Sachs, Apple, name your company here.

What’s required is a transition back to an economy that benefits everyone. Re-taxation of extreme wealth and using the funds to rebuild infrastructure would be an ideal place to start. Ending pointless wars also would help. However, that won’t happen. And certainly it won’t happen soon or without a revolution. The average person knows Wall Street is corrupt, certainly, with all the corruption cases, but they’ve not made the connection between how the economy works and their stagnant wages, depressed home price, and all the rest.

We also have two Presidential candidates who publicly push similar policies that reinforce the status quo: wage suppression (through mergers, offshoring, union busting), de-taxation of extreme wealth, and de-regulation. It’s no accident Obama, Holder, and Geithner have (deliberately?) run out the statute of limitations clock on any financial crimes that caused our recession/depression.

So good on you, Felix, for pointing out the obvious. But we should not expect anything to change, sadly.

Posted by FredFlintstone | Report as abusive

Felix, do the BLS Government payroll numbers include local, state, and federal — or just federal?

Posted by JRThomas | Report as abusive

Fred makes some good points. Particularly, ” Re-taxation of extreme wealth and using the funds to rebuild infrastructure would be an ideal place to start. Ending pointless wars also would help.” However, I don’t think decreasing government payrolls is all bad, although I do agree it is less desireable at the state and local levels. I know this sound a little ring wing, and I am shame faced about that, but the Federal Government could be downsized and reorganized to address more modern concerns. The GOP can’t do it correctly because for them there is always the traditional idealogical hatreds that get manifested in their proposals. It needs to be done rationally. The elimination or reduction or demotion of redundancy and outdated agencies and departments can be done. Education and energy are important and need to remain however. We’d all be sick or dead without the EPA. I would suggest Agriculture, Interior and the Justice department. It would be nice to at least have real debate on the issue anyway. I too don’t expect any thing to change though.

Posted by brotherkenny4 | Report as abusive

“this chart must surely put the lie to anybody who claims that Obama is on any kind of spending spree.”

What you call a lie is what Republicans call the truth.

Posted by KenG_CA | Report as abusive

I forgot defense. Our defense is more offense for business puposes than a true defense.

Posted by brotherkenny4 | Report as abusive

Louis Uchitelle’s analysis 4 years ago — and its taunting headline — proved to be prescient:

“Think the Economy Is Bad? Wait Till the States Cut Back”

http://www.nytimes.com/2008/06/01/weekin review/01uchitelle.html

Posted by dedalus | Report as abusive

“this chart must surely put the lie to anybody who claims that Obama is on any kind of spending spree”

This chart says nothing about that. The appropriate comparison is federal / total government spending as a percent of GDP over a long period of time. And since there’s a whole lot of repetition of the administration’s misleading or massaged data, I’ll pre-empt the false view that government spending has increased only slowly under the current administration. Before quoting stats, make sure that the starting point has appropriately adjusted TARP down to a net number, since it was recorded upfront as a $700+ billion expenditure with the reduction to the dramatically lower net number occurring later as it was paid back.

Posted by realist50 | Report as abusive

To my point on cherry-picking data, why does Felix’s chart begin with January 2010? A better comparison is to show growth both during and after the recession, or to compare to maximum employment levels.

Doing just that with seasonally-adjusted BLS total employment data (located here – http://www.bls.gov/webapps/legacy/cesbta b1.htm )

- June 2012 total private sector employment is 96.1% of the maximum ever reported (111.1 million compared to 115.6 million in July 2007);

- June 2012 total government employment is 95.4% of the maximum ever reported (21.9 million compared to 23.0 million in May 2010). The May 2010 number included temporary Census employees, as Felix noted above. My understanding is that the BLS’s seasonal adjustment doesn’t account for that impact, because it adjusts for annual seasonality, not a once per decade event. Tossing out 2010, the max government employment ever was 22.7 million in April 2009 (June 2012 is 96.8% of that number). July 2007 government employment – per above, that month was the pre-recession peak for private sector employment – was 22.2 million (June 2012 is 98.8% of that number).

Basically, current government and private sector employment are both roughly equivalent as a percent of the total maximum for each number and government employment is higher than private sector relative to pre-recession. Simple conclusion: private sector employment is recovering faster because it shrank far more during the recession.

Posted by realist50 | Report as abusive

Thanks so much for posting this chart Felix. It gives me hope. Sanity is returing to America. Within a few years my state may lower it’s income tax rate from 8% down to 7% narrowing the gap with our neighboor NH at zero.

Brunsiwck ME is perhaps the safest place to live on Earth. We’ve decided to review building an indoor firing range for our police force which has thankfully not fired a shot in the line of duty in 7 years.

Our town is part of the graph. We let go our natural resources planner. Our natural resources still seem avalible to the citizenry. We also let go our town arborist. The trees are now growing on their own with out any supervision. They have yet to get into any serious trouble.

Property taxes are still rising… but much more slowly than before. Brunswick continues to be the most wonderful place I can even imagine to live and raise a family dispite the goverment cutbacks.

Posted by y2kurtus | Report as abusive

In my opinion, the federal government could downsize its employment by 30% without any noticeable loss to the average citizen. State and local is another matter. Felix is careful not to break this down for us, which makes his article a little bit less than worthless. I very much doubt that Obama has cut the federal sector at all. After all, these are the votes that will help keep him in office.

Posted by nikacat | Report as abusive

There’s a huge difference in force reduction by attrition versus firing Felix. Following your logic we should keep a huge standing military even as we wind down actions in multiple theaters.

Government can’t provide all the jobs no matter how much you wish it. Someone has to actually work and produce something to pay the taxes that fund the government jobs.

Keeping bloated government bloated is not the road to salvation. A little fiscal prudence and letting expiring tax cuts expire would serve us well right now.

Posted by CaptnCrunch | Report as abusive

“In any event, this chart must surely put the lie to anybody who claims that Obama is on any kind of spending spree.”

What portion of federal spending is on employee salaries and benefits and what portion is either direct transfers, interest on debt, and purchases from major vendors such as defense contractors, healthcare providers, and consulting firms? I don’t know the answer but it seems to me federal spending could be going way up even if employment were down.

Posted by right | Report as abusive

Good point, right. You might try to winkle it out from this chart?

http://www.federalbudget.com/chartinfo.h tml

Social Security (transfer payments) is up $150B over four years
Health and Human Services (Medicaid and Welfare?) is up $200B
Department of Defense (largely contractors and supplies) is up $150B
Treasury Dept is up only slightly, as the interest rates have fallen
Dept. of Agriculture (crop subsidies?) has doubled
Veterans Affairs is up $50B
Dept. of Labor (unemployment?) is up dramatically

Most others level-funded. So this would seem to support your thesis that spending has been increased through transfer programs rather than hiring.

Posted by TFF | Report as abusive

Lost government jobs and the performance is still the same

Posted by whyknot | Report as abusive

“Lost government jobs and the performance is still the same”

Huh? Maybe it is different in your town, but class sizes here are pushing 30. The performance is NOT the same.

Posted by TFF | Report as abusive
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