Government Employee Size Revisited

Floyd Norris in the New York Times wrote an article the 6^th of January entitled, Under Obama, A Record Decline in Government Jobs. He says he exceeded Reagan three year into his job in terms of reducing government jobs. Looking at the Labor Department report for December government employment was down 2.6% over the last 3 years which was similar to 2.2% in Reagan’s first 3 years. This was due mainly through shrinking state governments falling 1.2% in 2011 which turns out to be the biggest drop since 1955.

Over the years there were only 6 years when local government employment declined 1981, 1982, 1983 (Reagan) and 2009, 2010, 2011 (Obama.) Declines were a bit more in Reagan years except for education which was down 3% in the Obama years. This not to say whether this is good or bad, it is just what happened. It my opinion it is a bad thing and Obama did not intend it.

The Center of Budget and Policy Priorities have these basic facts on state and local government workers. First they define who are public employees:  By far the largest share of state and local government workers are the nearly 7 million teachers, aides, and support staff working in the nation’s elementary, middle, and high schools.  (See Figure 1).  Other prominent categories of state and local employment are protective services (including police officers, fire fighters, and correctional officers), higher education, health care (including nurses and other workers at public hospitals and clinics), and transportation (including road maintenance workers and bus drivers).

  click on charts to enlarge

Next they deal with changes over time. Over the last 30 years, the number of state and local workers grew modestly relative to the overall population, from about 59 per 1,000 in 1980 to 65 per 1,000 in 2008 before declining to 61 per 1,000 in 2011.  (See Figure 2).  All of that growth has been in education workers and reflects demographic changes and policy initiatives, such as efforts to reduce class sizes and better help children with special needs.  Over the same period the number of non-education workers remained about the same relative to the overall population until declining somewhat after 2008.   Since August 2008, the total number of state and local government employees has declined by 662,000.

They go on to say that public workers are paid 4 to 11% less than private-sector workers with similar education, job tenure etc. Thus the average pay for public employees is greater the in the private sector but they require higher education.

Fig 3

They conclude this about states and localities spending on employees: Because providing services is the primary business of states as well as school districts, cities, counties, and other local governments, labor costs — i.e., wages and benefits — make up a significant share of their annual spending.

§  Wages and salaries.  Wages and salaries make up about one-third of state and local governments’ general spending, on average, according to Census Bureau data.  States spend a considerably smaller share (about 15 percent) than local governments (41 percent).

§  Total compensation.  Spending on benefits such as health insurance and retirement is not reported to the Census but can be estimated using data from the Bureau of Labor Statistics.  Adding these costs brings the total costs of compensation for state and local workers to about 44 percent of state and local spending.  Some 20 percent of state spending is for employee compensation, compared to about 55 percent of local government spending.[6]  

Finally I checked the Nation blog article, Red States See Massive Public Sector Job Losses. They took a good look at Pennsylvania among other states. They said the though Obama gets blamed for great drop in government payrolls it basically takes place at the state level.

11 states account for 40% of total state and local public sector job losses in 2011: Alabama, Indiana, Maine, Michigan, Minnesota, Montana, New Hampshire, North Carolina, Ohio, Pennsylvania and Wisconsin. And then there is Texas which these 12 red states increasing losses over 70% of total losses. For more see http://www.thenation.com/article/167050/red-states-see-massive-public-sector-job-losses

Now some folk see this as a good thing. But job losses public or private is hurting our country. Especially when it comes to education we are damaging our future productivity and competitiveness.

I guess I stand by my original Goldilocks position; we need a size of government that is just right to care for its people. For me, I’m with the Goldilocks who says, “This government is too small.”