Looking smaller all the time.

Photographer: Chip Somodevilla/Getty Images

Big Government Keeps Getting Smaller

Justin Fox is a Bloomberg View columnist. He was the editorial director of Harvard Business Review and wrote for Time, Fortune and American Banker. He is the author of “The Myth of the Rational Market.”
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Among the many contributors to what was generally a gangbusters employment report Friday was the government sector, which added 38,000 jobs in July (30,000 of them in local government).

That hasn't been the case very often during this recovery. There are almost 15 million more workers on nonfarm payrolls now than there were at the end of 2009, but 300,000 fewer government workers. As a result, government's share of nonfarm employment has dropped to a level (just under 15.4 percent) last seen in 1959.

As you can see from the chart, the federal government's share of overall employment is lower than it has been since the Bureau of Labor Statistics started counting in 1939. As noted, it doesn't include military personnel or employees of the federal intelligence agencies.  The Defense Department does publish data on the number of active-duty military, though, and that shows a decline from 3.3 million in 1954 to 1.3 million in 2015.

QuickTake U.S. Jobs Report

A bigger question mark involves employment at government contractors, which seems to have grown in recent decades. The Congressional Budget Office was asked in 2015 to estimate the size of the federal contract workforce and essentially threw up its hands. It did pass on, though, that the Department of Defense, which is responsible for close to 60 percent of federal contract spending, reported paying for 670,000 full-time-equivalent positions among service contractors in 2012 (July's jobs report counted 2.79 million federal employees total).

So it may be that government-funded employment isn't really at its lowest level, as a share of nonfarm employment, since 1959. And, of course, there are other ways besides employment (spending, regulatory reach) to measure government bigness. Still, this government-jobs data seems like important information that should be more widely known. At least in terms of employment, government hasn't been growing for a while.

  1. It was a tweet from Politico's Dan Diamond that inspired me to look into this.

  2. The Central Intelligence Agency, the National Security Agency, the National Imagery and Mapping Agency and the Defense Intelligence Agency.

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

To contact the author of this story:
Justin Fox at justinfox@bloomberg.net

To contact the editor responsible for this story:
Stacey Shick at sshick@bloomberg.net