Friday, July 6, 2012

The Most Secure Employment Sector In America

I found this interesting little article on the American Enterprise Institute website entitled "Only the public sector is 'doing fine',", referring, of course, to President Obama's June 2012 comment about job creation and the private sector as shown on this video:

The President noted that the biggest unemployment problems stemmed from cutbacks in employment at the state and local government levels and that Congress needed to step up and help out because these levels of government had fewer revenues coming in.  Is that true?  Is high unemployment related to state and local government cuts?

Here is a screen capture from the Bureau of Labor Statistics website showing the non-seasonally adjusted unemployment rates for various industries, including government, for May 2012, comparing rates from one year earlier:

Hmmm.  Notice that government workers have the lowest unemployment rate by a very wide margin if we exclude workers involved in mining, quarrying and oil and gas extraction and those employed in the financial sector.  The 4.2 percent unemployment rate is up slightly from the rate one year earlier, however, it is less than one-third of the unemployment rate of construction workers and less than half the unemployment rate of agricultural workers, those employed in leisure and hospitality and those employed in professional and business services.

From the FRED website, here is a graph showing the total number of government employees at all   levels since the 1940s:

In May 2012, there were 21.969 million government employees, down very marginally from its peak of 22.997 million in May 2010 and down only 2.4 percent from the end of the Great Recession.  Just so that we can put this number into perspective, in May 2012, there were a total of 133.009 million non-farm employees in the United States.  This means that one in six employed Americans worked for some level of government.

Here is a graph showing the number of Federal government employees since the 1940s:

Other than the one-month blip to 3.4 million in May 2010, the number of Federal government employees has been stable at between 2.7 and 2.9 million since the late-1990s.

Here is a graph showing the number of state government employees since the mid-1950s:

The number of state government employees has been stable at between 5.0 and 5.2 million since the beginning of 2005 and, dropped by a tiny 1.3 percent since the end of the Great Recession.

Lastly, here is a graph showing the number of local government employees:

The number of local government employees has dropped from its all-time peak of 14.605 million to its current level, a drop of just over 500,000 employees or 3.6 percent, not an insubstantial number but out of the 13 to 15 million unemployed in the past two years, unemployed local government workers contribute a rather small fraction.  Just so we can put the small number of local job losses into context, here is a graph showing the job losses in the American construction sector since the beginning of the new millennium:

That single private sector has seen job losses of  28.6 percent or 2.21 million workers since construction employment peaked in the spring of 2006.

Now, let's look at a graph that gives us a historical perspective on public sector vs. private sector unemployment between 2000 and 2011:

It looks to me like the public sector has "suffered" from far lower unemployment rates for the last decade than the private sector when the data is adjusted for education and experience levels, doesn't it?  Over the past 11 years, the unemployment difference between the private and public sectors has averaged 3.3 percentage points, suggesting that, as many of us suspect, working in government is far more secure than the private sector despite the President's protestations to the contrary.

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