The Government's a Drag on Employment

It's the big reason this recovery is different.

There's been a lot of this.

Photographer: David McNew/Getty Images

The jobs recovery of the past five years looks a lot like the early and middle stages of the recoveries from the previous two recessions, I wrote Friday. Here's the chart that inspired this observation:


The employment rebound that began in 2003 ended early, and the one that began in 1991 went on and on, but in terms of the rate of increase those two recoveries and the current one look quite similar, especially in comparison with earlier, stronger recoveries. This set Aaron Pressman of Yahoo Finance to wondering. Maybe, he mused on Twitter, I should separate government employment from private-sector employment and see what the chart looked like then. So I did.

When you just look at private-sector jobs, which accounted for 85 percent of total nonfarm jobs in July, the story isn't all that different.


The main difference between this and the first chart is that the current recovery looks a even more like the long 1990s recovery and less like the short-lived 2000s rebound. 

The government-jobs picture is another matter entirely.


One interesting thing here is that with each successive recovery, government-employment growth has been a little slower. And of course the really interesting thing is that, over the course of the current recovery, government employment has actually declined. Yes, it has been inching up again since the beginning of last year, but overall there were 553,000 fewer people working in government jobs in July than there were in February 2010. Most of the decline was in state and local government employment, although federal government employment is down a little, too. Also, in case you're wondering about that big spike in government employment in 2010, that was a bunch of temporary Census workers.

The Bureau of Labor Statistics's payroll employment numbers don't include uniformed military. And yes,

Employees of the Central Intelligence Agency, the National Security Agency, the National Imagery and Mapping Agency, and the Defense Intelligence Agency also are excluded.  

Hmmm, don't know if I can get my hands on those numbers. For uniformed military there is at least an annual accounting from the Department of Defense. It shows declines since 2010 but modest ones -- there were 1.34 million men and women in uniform in September 2014 and 1.43 million in September 2010. Over the course of the 1990s, by comparison, the number of uniformed military fell from 2 million to just under 1.4 million. Factor that in, and government employment actually grew much more slowly during the 1990s recovery than during the 2000s one.

It didn't shrink, though. The fiscal policy choices made during the current recovery have been unique in modern American experience. There were reasons for these choices -- the worst recession in 75 years left governments at all levels dealing with huge budget shortfalls. But they've definitely been a drag on overall employment growth.

This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.

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