AMERICAN CONSERVATISM IN 2008 AND BEYOND

Where do you want to cut government spending? Please provide us with some details.

It works for me. What % of the folks who have become unemployed over the past two year came from the public sector? I have no idea, but I doubt it's very high.

The final chart below shows the average unemployment since December 2007 for government workers (3%) and private-sector workers (7.9%), so the private sector has faced a jobless rate more than twice as high as the rate for government workers over the last several years.

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In a normal year, government employment goes up. After all, the population is growing so providing the same quantity of public services requires more personnel. At the same time, the workforce is growing so it’s possible for the economy to support a larger quantity of public sector workers. And you would assume that during a period of allegedly explosive growth in the size and scope of government, that public sector employment would increase by an unusually large amount. Instead, it fell.

Which is to say that conservatives have been getting the kind of economic recovery they say they want. The private sector is growing and the public sector is shrinking.

I say: the net impact of this has been terrible. They say: what? I don’t know. Generally they deny that it’s even happening. But is the conservative line that had we laid off more government workers the private sector would have both picked up all that slack and also created even more extra jobs on top of that? My view is that that’s backwards. The best time to seek to streamline the public sector is when the private economy is humming along. When the economy is growing strongly, if you lay off a janitor at the DMV he can get a job as a janitor at the new office building across the street. When the economy is growing, if the state lays off an accountant then the manufacturing firm across town might hire a new accountant. But when the economy is weak, you lay off the janitor and it takes him 12 months to find a new job. During that time, all the stores he used to shop at have lost a customer. And all those lost customers are a drag on the entire value chain of manufacturing, shipping, and retailing of goods. That, in turn, makes it harder for laid off workers to find new jobs further delaying the pace of transition.

To me, that’s what’s happening here. But what do conservatives think? They don’t even seem able to acknowledge that government is shrinking.

In this chart, I compare seasonally adjusted unemployment rates across segments of the economy, dividing these segments using the super-categories designated by the Bureau of Labor Statistics. The chart compares the unemployment rates in January of 2009 (blue) with the unemployment rates in these same sectors a year later (yellow). (FYI, the difference would be even more dramatic if I had used not seasonally adjusted data)

In both years, the unemployment rate within the government has been small relative to the level of unemployment within the entire economy, and particularly so relative to the private sector. In the course of a year, government employment has decreased by 296,000 jobs to 4.3% unemployment; during the same period, employment in the private, non-agricultural, sector has decreased by 2.3 million jobs to 11.1%. (And if you look at not seasonally adjusted unemployment data, the lose of private jobs reached 3.1 million and the lose of public jobs is roughly 70,000. That’s quite a gap.)

From January 2009 to January 2010, plummeting employment has been concentrated in the private sector. During the time period examined, employment in the private sector decreased by 3.5% while employment within government decreased by 0.5%. Furthermore, employment has consistently decreased more quickly in the private sector than within the government (in addition to decreasing more on net). Since January 2009, employment has decreased in the private sector at an average rate of 0.3% each month; this is 6 times faster than employment has decreased in government.

Not only has unemployment been concentrated in the private sector within the past year, it has been concentrated disproportionately so. When measured as a percentage of GDP, government accounted for roughly a quarter of GDP. Conversely, unemployment in the government sector accounted for 5.9% of the increase in the economy’s total unemployment which has occurred in the past year. In contrast, job losses in the non-agricultural private sector have accounted for 81.3% of the total increase in unemployment.

And how do those compare to the number of total jobs in each sector? How many of those losses were Federal gov't jobs? I know a gain is a gain and a loss is a loss, and we may be seeing public sector unemployment trailing private (similar to unemployment in general trailing an economic recovery), but the idea that gov't would streamline itself when the economy is humming along is ludicrous.

I'm always in favor of cutting Federal gov't jobs.

I'm also in favor of cutting the size of my State government. I have direct input into my local government and how big it gets to grow. I have absolutely no opinion whatsoever what other folks should do at their State and local level.

In this case, I'm in favor of cutting salaries for Federal employees to bring them in line with what is being paid at the private sector.

Where do you want to cut [federal] government spending? Please provide us with some details.