Sunday, April 17, 2011

State and Local Government Workers Have Fallen to 2006-07 Levels, Thanks to the Great Recession


In a recent WSJ editorial "We've Become a Nation of Takers, Not Makers" Steve Moore points a rather depressing statistic:

"Today in America there are nearly twice as many people working for the government (22.5 million) than in all of manufacturing (11.5 million, see chart above). This is an almost exact reversal of the situation in 1960, when there were 15 million workers in manufacturing and 8.7 million collecting a paycheck from the government."

But what's far less depressing is to notice the trends in employment:  The manufacturing sector has added almost 200,000 jobs over the last year, while total government employment has decreased by more 350,000 jobs over the last year.  Most of that reduction in government workforce has taken place at the local level, which has shed 259,000 jobs since March of 2010, bringing the total number of local government job in March (14.195 million) down to the lowest level since August 2006, more than four and-a-half years ago (see bottom chart above).

Similarly, the number of public-sector employees at the state level was the lowest in March (5.119 million) since August 2007, slightly more than three and-a-half years ago.  Although the federal government's workforce has fallen by 74,000 over the last year to 2.852 million, that's above the pre-recession level by 95,000.  That's understandable given the fact that states and local governments are burdened with greater fiscal constraints (like having to balance their budgets) than the federal government.  Fiscal belt-tightening and reductions in government employees happened only at the local and state, and not so much at the federal level. 

Overall, the reduction in state and local government employment levels to their 2006-2007 levels is hopefully part of a trend that will continue, and won't reverse. The reduction in the government workforce at the local and state level by almost 500,000 from their peaks in the summer of 2008 through March 2010 is the largest reduction in modern U.S. history, and greater (in absolute values) than the 333,000 decrease in state and local public employees over a comparable period in the early 1980s following the back-to-back recession of 1980 and 1981-1982.  We can thank the Great Recession for 2007-2009 for what is possibly the largest reduction in state and public employees ever before in history. 

37 Comments:

At 4/17/2011 1:35 PM, Blogger PeakTrader said...

It's more accurate to say we can thank Obama for creating the Great Recession:

The Obama Growth Discount
APRIL 15, 2011

If we had matched the 1982 recovery rate, today annual per-capita income would be $4,154 higher than before the recession—that's an extra $16,600 for a family of four—and some 15.7 million more Americans would have jobs.

Had the U.S. economy recovered from the current recession the way it bounced back from the other 10 recessions since World War II, our per-capita gross domestic product (GDP) would be $3,553 higher than it is today, and 11.9 million more Americans would be employed.

Those startling figures are based on the average recovery rate of real GDP and jobs three years after the beginning of each postwar recession. Some apologists suggest that the current recovery is so weak because the recession was so deep. But the totality of our experience in the postwar period is exactly the opposite—the bigger the bust, the bigger the boom that follows.

On average, three years after the four deepest previous recessions started, real GDP was 7.6% higher than the pre-recession level. During the Obama recovery, real GDP is up only 0.1%.

 
At 4/17/2011 1:46 PM, Blogger Buddy R Pacifico said...

Indiana now has fewer state state employees than in 1978. There are currently four job openings for Indiana on CareerBuilder.com.

If the citizens of the U.S. want to hire the proven government CEO, than Indiana Gov. Mitch Daniels is probably that guy.

 
At 4/17/2011 2:00 PM, Blogger juandos said...

Hey Peak, thanks for the Phil Gramm commentary amigo...

 
At 4/17/2011 2:04 PM, Blogger PeakTrader said...

Buddy, your article states:

“Indiana is one of the few states that hasn’t raised taxes since the beginning of the recession,” Daniels said. “This has been the core of our economic development strategy.”

If Obama cut taxes $750 billion in early 2009, i.e. $5,000 per worker for the 150 million workers at the time, whether a worker earned $10,000 a year or $100,000 a year, we would've had a V-shaped recovery.

Large tax cuts worked under Kennedy in '61, Reagan in '81, and Bush in '01. Deregulation would've also facilitated growth.

Households would've paid-down or paid-off high interest rate debt to strengthen their balance sheets, and strengthen the banking system, and increase monthly spending.

 
At 4/17/2011 2:27 PM, Blogger Rufus II said...

How are you going to grow when the government punishes corporations for Not keeping their profits, ie. investment capital, Overseas?

 
At 4/17/2011 2:28 PM, Blogger Rufus II said...

How are you going to grow when the government punishes corporations for Not keeping their profits, ie. investment capital, Overseas?

 
At 4/17/2011 2:28 PM, Blogger PeakTrader said...

Anytime Juandos.

Phil Gramm:

Right-wing Democratic politician who switched parties and became a Republican Senator from Texas.

B.B.A. from University of Georgia (1964), Ph.D. from University of Georgia (1967).

Economics Professor, Texas A&M University (1967-78).

 
At 4/17/2011 2:32 PM, Blogger Benjamin said...

Time to out the kibosh on all public civilian and military pensions. They just become time bombs for taxpayers.


Check out these stats: By employment, largest federal departments:

Defense: 3,000,000
Veterans Affairs 235,000
Homeland Security 208,000
Treasury 115,000
Justice 112,000
Energy 109,000
USDA 109,000

We also have

HUD 10,000
Labor 17,000
HHS 67,000

By eliminating the USDA, converting the VA to a voucher system (and eliminating all those employees), and sunsetting Homeland Security, we could eliminate more than 500,000 workers from federal payrolls, without the slightest change in lifestyle or risk to ourselves--except to help our economy grow, as those workers instead found employment not as tax-eaters, but taxpayers.

A problem: Between Department of Defense, VA and Homeland Security, you have 3.5 million voters. Who would dare propose cuts in federal employment, or shrinking federal pensions?

The Tea Party?

Is this why the "right-wing" (read Republican cronies and the related mau-mau pundit class) are proposing not cuts in federal employment, but cuts in Social Security?

They can't get their grubby paws on Social Security outlays, but they can sure shovel lard into their pockets through DoD, VA and Homeland Security.

 
At 4/17/2011 4:42 PM, Blogger juandos said...

"ime to out the kibosh on all public civilian and military pensions. They just become time bombs for taxpayers"...

Well pseudo benny still proving that he can peg the meter...

Obviously the realities get short shrift in pseudo benny world...

 
At 4/17/2011 5:09 PM, Blogger Benjamin said...

Juanditos--

So often you have denigrated government stats as lies. Now you are sourcing a government agency?

And do you think a government agency would say that it was agency spending, or spending directly on the people (ala Social Security) that is the real problem?

 
At 4/17/2011 5:15 PM, Blogger Rufus II said...

From the 2010 Medicare Trustees Report:


Each year the Trustees of the Social Security and Medicare trust funds report on the current and projected financial status of the two programs. This message summarizes our 2010 Annual Reports.

The outlook for Medicare has improved substantially because of program changes made in the Patient Protection and Affordable Care Act as amended by the Health Care and Education Reconciliation Act of 2010 (the "Affordable Care Act" or ACA). Despite lower near-term revenues resulting from the economic recession, the Hospital Insurance (HI) Trust Fund is now expected to remain solvent until 2029, 12 years longer than was projected last year, and the 75-year HI financial shortfall has been reduced to 0.66 percent of taxable payroll from 3.88 percent in last year’s report. Nearly all of this improvement in HI finances is due to the ACA. The ACA is also expected to substantially reduce costs for the Medicare Supplementary Medical Insurance (SMI) program; projected program costs as a share of GDP over the next 75 years are down 23 percent relative to the costs projected for the 2009 report.


Trustees Report


So, what IS the problem?

 
At 4/17/2011 5:19 PM, Blogger Rufus II said...

Meanwhile, Social Security runs a Surplus virtually every year (including this year,) and the Soc Sec Trust Fund is up to $2.6 Trillion Dollars.

 
At 4/17/2011 6:05 PM, Blogger PeakTrader said...

Rufus II, the new health care law generates more taxes and provides fewer benefits to keep Medicare solvent.

And Social Security:

It is instructive to note that the $2.5 Trillion Social Security Trust Fund has value, not as a tangible economic asset, but because it is a claim on behalf of beneficiaries on the goods and services produced by the working population. This claim will be enforced by the United States Government although the precise monetary mechanism of enforcement is yet to be determined. In order to repay the Trust Fund, the United States government has three options, which may all be pursued to varying degrees.

(1) The government may issue debt by selling treasuries. Thus $1 in debt to the Social Security Trust fund is replaced with $1 in debt to a different lender. This scenario would increase the tax burden on future generations if the interest rate is higher on the new debt.

(2) The government may raise taxes. If taxes are raised across the board, ironically, by reducing take home pay for workers, the government could make it harder for the younger, working generations to invest and save for retirement.

(3) The government may monetize trust fund obligations...This scenario would likely lead to increased inflation, as it would inflate the money supply without directly increasing the amount of goods and services produced by the economy as a whole.

 
At 4/17/2011 6:10 PM, Blogger Rufus II said...

PT, there's not a chance in Hades that the U.S. Government is going to allow Soc Sec outflows to exceed Inflows into the "trust fund" for more than a year, or two.

I just thought I'd throw it out there; you and I both know that that money will Never be "paid out."

 
At 4/17/2011 6:16 PM, Blogger Rufus II said...

And, as far as "Great Recession" goes: This CRISIS is much more than Any Recession could dream of being. We came within an inch of our lives of being Depression, with Total Collapse of the Worldwide Banking System, The End of Trade Between Nations as we know it, for decades, and unemployment/poverty that can only be guessed at.


And, we still might not be out of the woods. I AM pretty sure we'll double-dip before December.

 
At 4/17/2011 6:48 PM, Blogger Bernie Ecch said...

Of course the real takers in the American economy are the CEOs of major corporations. Their base pay went up 30% last year. And that does not include their bonuses and other perks. Do you think the workers had similar pay raises last year? Of course not. Better to divert the masses by complaining about government workers who at least have some unions to protect them.

Maybe Dr Perry should write about the wage inflation of the corporate elite.

 
At 4/17/2011 8:21 PM, Blogger PeakTrader said...

Workers at major corporations are typically compensated more than workers at small businesses.

The real problem is the rising cost of living, which is not the fault of CEOs.

CEOs help lower the cost of living, e.g. through efficiencies, innovation, invention, etc.

 
At 4/17/2011 9:15 PM, Blogger Hydra said...

If we had matched the 1982 recovery rate

=============================

We did not have the 1982 recession, or the 1982 recovery rate.

I suppose we can thank obama for not having the 1982 recession and not having the recovery either.

 
At 4/17/2011 9:18 PM, Blogger Hydra said...

On average, three years after the four deepest previous recessions started, real GDP was 7.6% higher than the pre-recession level. During the Obama recovery, real GDP is up only 0.1%.

=================================

Post hoc, Propter hoc.


In this entire freaking economomy with everything going on in it, you don't think there is ANY other cause other than Obama?

 
At 4/17/2011 9:21 PM, Blogger Hydra said...

If the citizens of the U.S. want to hire the proven government CEO, than Indiana Gov. Mitch Daniels is probably that guy.

================================

Is that all it takes to be a CEO?
Get rid of people?

 
At 4/17/2011 9:26 PM, Blogger juandos said...

"So often you have denigrated government stats as lies. Now you are sourcing a government agency?"...

Well pseudo benny I figured a liar would always appreciate something from another liar...

 
At 4/17/2011 9:27 PM, Blogger Hydra said...

.... as those workers instead found employment not as tax-eaters, but taxpayers.

==============================

That's a pretty big assumption.

First you assume they will find a job, and then you assume it willpay enough that they will pay at least some taxes.

If those federal workers are as bad as some claim, then the last thing we want is them working for us.

If they do find minimum wage employment, how much will that grow the economy?

 
At 4/17/2011 9:29 PM, Blogger Hydra said...

CEOs help lower the cost of living, e.g. through efficiencies, innovation, invention, etc.


=============================
And the really good CEOs do it by gettng rid of workers.

 
At 4/17/2011 9:38 PM, Blogger Hydra said...

"... generates more taxes [fees] and provides fewer benefits to keep ........ solvent."

================================

Pretty much the same as private insurors.

 
At 4/17/2011 10:08 PM, Blogger Buddy R Pacifico said...

Hydra states:

"Is that all it takes to be a CEO?
Get rid of people?"


No, it is managing the taxpayers money efficiently and effectively, to provide government services.

 
At 4/17/2011 11:25 PM, Blogger Benjamin said...

Obama did not only inherit the Great Recession--he also inherited a complete financial collapse of our major banking and insurance institutions.

The economy was dying faster than Jimmy Hoffa in cement shoes when Obama got to town.

Now, we are growing again.

Overall economics job: B+

 
At 4/18/2011 1:12 AM, Blogger Ron H. said...

Bernie Ecch

"Of course the real takers in the American economy are the CEOs of major corporations. Their base pay went up 30% last year. And that does not include their bonuses and other perks. Do you think the workers had similar pay raises last year? Of course not. Better to divert the masses by complaining about government workers who at least have some unions to protect them."

I can't believe you're seriously concerned with this subject. Talk about diverting the masses! Politicians have found handy scapegoats to blame for any conceivable economic ill, and have redirected the justifiable anger their constituents feel, away from themselves, and their own failures. "Blame those greedy CEOs."

Do you feel the same outrage toward high profile sports figures, movie actors, and musicians who often make more than most CEO,s could ever hope?

I every case, a major private corporation has determined that the enormous salary paid to those people, including CEOs, is justified by the even larger contribution they make to the company's bottom line. What business is it of yours or mine how much they pay their employees?

Do you know how much the top 100 CEOs in this country make combined? The number is less than $3 billion. Compare that to the 3.7 trillion being spent by government this year, and you may begin to see why this amount doesn't matter in the grand scheme of things.

Gregory B. Maffei, CEO of Liberty Media Corp, made $87 million, $30 million more than 2nd place Larry Ellison of Oracle.

In comparison, Tiger Woods made $74 million without winning a single event. Johnny Depp made $75 million. Does that make your blood boil? Do you write angry comments at economics blogs about them? If not, then why not?

Take a couple of steps back, and get some perspective.

 
At 4/18/2011 1:24 AM, Blogger PeakTrader said...

If Hydra was a CEO, he'd hire four people to screw a light bulb and another four people to write the instruction manual.

And when his customers complain about the ridiculously high prices of his goods, at least Hydra can say he created jobs.

Also, when Hydra's $200,000 house burns down, he'll complain that he needs $400,000 to rebuild his house from the insurance company.

Obviously, the President of the U.S. is a powerful position, especially with the support of Congress. Look how much damage Obama has done.

 
At 4/18/2011 6:37 AM, Blogger juandos said...

"Obama did not only inherit the Great Recession--he also inherited a complete financial collapse of our major banking and insurance institutions"...

Well pseudo benny did you thank your fellow travelers for that situation?

 
At 4/18/2011 8:25 AM, Blogger Paul said...

Benji,

"The Tea Party?

Is this why the "right-wing" (read Republican cronies and the related mau-mau pundit class) are proposing not cuts in federal employment, but cuts in Social Security?"

Uh, Paul Ryan's plan does cut into federal departments like USDA and Defense. You think some jobs might be part of the cuts? His plan exempts Social Security so far. I figured you knew this since you're such a huge supporter and all...

You're on the edge of becoming just another greedy geezer, Benji. Worried you won't get every penny of social security you were promised, the hell with the rest of us.

 
At 4/18/2011 8:29 AM, Blogger Paul said...

"Overall economics job: B+"

And here we have Mau Mau Benji already gearing up to pull the lever for his boyfriend again in 2012. His B+ is really for being dreamy.

 
At 4/18/2011 4:39 PM, Blogger Hydra said...

If Hydra was a CEO,......

================================

I am a CEO (of the most minor sort), and my itty bitty company actually made a profit last year. And I didn't fire anyone to do it.

I understand the conundrum, but it does seem odd to hear people claim that free market captialism creates all these wonderful opportunities by outsourcing and downsizing at every opportunity.

 
At 4/18/2011 4:49 PM, Blogger Hydra said...

Large tax cuts worked under Kennedy in '61, Reagan in '81,

=========================

Worked in what respect?
Which taxes are we talking about, general income taxes, or social security taxes?

Seems to me you are making a big assumption in how people would have used the additional money. For a lot of people, buying more toys is a higher priority than paying down debt.

 
At 4/18/2011 4:55 PM, Blogger Hydra said...

No, it is managing the taxpayers money efficiently and effectively, to provide government services.

================================

That seems straightforward. Most people would agree with it, I think. (Some people would disagre entirely about providing government services.)

Now, what metric do we use, that both parties can agree on? What are the benchmarks we would use, and where are the agreed upon procedures for measuring them?

 
At 4/18/2011 6:18 PM, Blogger PeakTrader said...

Hydra says: "For a lot of people, buying more toys is a higher priority than paying down debt." (etc.).

That's why we need big government to babysit us and when we misbehave, like Sarah Palin, we need to be punished harshly.

 
At 4/18/2011 10:02 PM, Blogger Hydra said...

PT:

I don't see the connection. Do you believe I am in favor of nanny state?

 
At 4/19/2011 2:52 PM, Blogger VangelV said...

It's more accurate to say we can thank Obama for creating the Great Recession...

Obama may be a fool and one of the worst presidents ever but Bush was not much better. He grew the size of government and let the Fed destroy the USD and the economy because he preferred reelection to doing the right thing.

Both parties are out of control and unless some grownups are elected to make real cuts the currency and real economy are doomed.

 

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