While overall U.S. nonfarm payroll employment went up by 201,000 in August, according to the Sept. 7 jobs report from the Bureau of Labor Statistics, government employment fell by 3,000, to 22.3 million. That put government’s share of employment at 14.97 percent, the lowest it’s been since 1957.
This does not include uniformed military. If it did, the drop since the mid-1970s would be even more pronounced, given there were 2.1 million military personnel on active duty in 1975 and just 1.3 million as of this June.
Federal government employment has been shrinking as a share of total employment since 1952. State and local governments kept adding workers at a faster pace than the economy as a whole through the mid-1970s, and their shares of total employment held relatively steady for decades after that, but they have dropped over the past couple of years to levels last seen in the mid- to late-1960s.
Federal government employment has been shrinking as a share of total employment since 1952.
I wrote a column two years ago on declining government employment that was headlined “Big Government Keeps Getting Smaller,” and I heard from a lot of readers who thought that interpretation was nonsense because (1) there are other ways in which government can be big (spending, regulatory reach) than just head count, and (2) that head count doesn’t include government contractors.
It still doesn’t, because the BLS doesn’t sort employment that way. New York University public-service professor Paul Light did make some estimates of government contract and grant employment in a report published last September, and they showed it going from 4.9 million (2.4 times the official civilian federal workforce) in 1984 to 7.2 million (3.4 times) in 2010 before dropping back to 5.3 million (2.6 times) in 2015. So that doesn’t change the picture that government’s share of total employment has dropped since the 1980s, and it indicates an even sharper overall drop over the course of the current economic expansion than the BLS numbers show.
Early in this expansion, the contraction of government employment was not exactly great for economic growth, as state and local governments shed 255,000 jobs in 2010 and 278,000 in 2011 (federal employment held relatively steady). More recently, though, the decline in government’s share of total employment has been mostly a sign of the health of the private sector.
As for the longer-run decline in government employment, I can think of a couple of things to say about that. One is that it might also be mainly a sign of the health of the private sector and the U.S. economy as a whole. But having just written about how government investment in infrastructure, research and development, and other things is now lower as a share of gross domestic product than at any time since the 1940s, I do wonder at least a little whether we’re reaching a point where key tasks that the private sector isn’t great at performing are being neglected.
The government jobs numbers may help explain a political landscape in which government workers have been losing clout. President Donald Trump’s recent announcement that he was canceling a planned 2019 pay hike for federal civilian employees may matter in a few congressional districts, but nationwide there just aren’t enough federal workers to have much election impact. And state and local government workers’ shrinking share of overall employment has probably been a factor in such defeats as Wisconsin’s 2011 legislation limiting collective bargaining for most public employees.
Justin Fox is a Bloomberg Opinion columnist covering business.