Government Is Missing in Job Creation

Popular Economics Weekly

We know now why job creation has been so weak in the recovery from the Great Recession, or Lesser Depression, as some have called it. Governments have lost too many jobs, and that mostly includes public safety and healthcare workers, as well as some 300,000 teaching jobs lost due to the Great Recession.

Those wanting smaller government sometimes forget that these jobs enhance present and future productivity—creating a safer and healthier work environment, as well as better educational opportunities. The 175,000 net nonfarm payroll jobs created in February included some of those workers, but only a net 13,000 public sector jobs were created, whereas 16,000 public sector jobs were lost in January.

Graph: Calculated Risk

This shouldn’t be a partisan problem. In fact, public sector job creation has been apolitical until the Obama administration with Republican presidents adding as many or more public-sector jobs than the Democrats since 1980.

Graph: Calculated Risk

This Calculated Risk graph shows public sector job creation since President Carter, with Carter and HGW Bush leading the way, and Presidents Clinton and GW Bush close behind.

But some 728,000 government jobs have been lost during President Obama’s administration to date. And this has had a very noticeable affect on the unemployment rate, needless to say, as state governments in particular are mandated to balance their budgets annually.

States are beginning to hire back those teachers and public safety workers (i.e., police, fire, health care workers). California, for example, has hired back 70 percent of the 1.3 million public sector employees lost during the Great Recession, though its unemployment rate of 8.5 percent is in 47^th place among state unemployment rates.

We can hope that continued overall employment growth in the private sector will increase tax revenues to the states, and so enable them to rehire more of their laid off employees so necessary to protect their own citizens’ interests.

Harlan Green © 2014

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