The so-called recovery from the ongoing Great Recession has been a boon for corporate profits but a huge drag for employment, particularly in the government sector.
For all of the attacks on the government, statistics are clear that there is an ongoing great deleveraging in the government sector with jobs being slashed on all levels.
Noting this in the graph below, The Economic Policy Institute (EPI) says that the loss of the 627,000 public sector jobs since June 2009 is a deceptive figure because, accounting for the population growth and services that such population expects to get for their tax dollars, public sector jobs are down well over 1 million jobs.
“Over this same period the overall population grew by 6.9 million. In June 2009 there were 7.3 public-sector workers for every 100 people in the US; to keep that ratio constant given population growth, the public sector should have added roughly 505,000 jobs in the last three years. This means that, relative to a much more economically relevant trend, the public sector is now down more than 1.1 million jobs. And even against this more-realistic trend, these public-sector losses are dominated by austerity at the state and local level, with federal employment contributing only around 6% of this entire gap,” write EPI bloggers Heidi Shierholz and Josh Bivens.
Stated another way: “having 1.1 million more public-sector workers, which would put us back at 7.3 public-sector workers per 100 people, would simply restore our economy to a normal level of government employment.”
EPI notes that lack of government jobs cuts into private sector gains.
“First, public-sector workers need to use inputs into their work that are sourced by the private sector… Second, the economic “multiplier” of state and local spending (not including transfer payments) is large – around 1.24… This means that for every dollar cut in salary and supplies of public-sector workers, another $0.24 is lost in purchasing power throughout the rest of the economy.,” write Shierholz and Bivens.
Based on the multiplier, public sector loss of “1.1 million jobs has likely cost the private sector 1.1 million*0.67 = 751,000 jobs.”
Then there are job losses due to cuts in transfer payments.
“[T]his implies that the 1.1 million in state and local job losses is likely matched by 275,000 jobs lost due to reduced transfers as well. Applying a standard multiplier to this number (the 1.52 multiplier for unemployment insurance benefits, for example), yields another 412,500 jobs likely lost as states cut back on transfer payments as well as direct jobs,” say authors.
Add it all up … more then a 9.8 million jobs gap.