Today’s employment figure came in at 135.637 million, an increase of 175K over the prior month. With another 175K jobs added during the month of May, total employment growth has been consistently positive since October 2010 (32 months), with total employment growth since the beginning of 2010 at 6.624 million according to BLS data.
Some analysts and labor market observers, probably the majority, classify this recovery as moderate. In terms of explaining why we’re seeing such a slow recovery, one of the major reasons, perhaps the main reason, given by professional analysts is that government is not taking part in the recovery.
Here’s the chart analysts generally give to back up their assertion that government is at the center of the moderate recovery explanation.
Government Employment Growth
The chart shows the growth in government employment from 2000 to May 2013 (the most recent count). As is shown, government employment growth was fairly steady up until about April of 2009 (the one-time bump up is the Census hiring), after which government employment growth has steadily declined to about 21.848 million in May 2013.
The decline from April 2009 to May 2013 is about 831K.
The question is: would employment growth be higher if government was taking part in the labor market recovery? The answer to this question from pretty much all herd analysts is: yes.
It’s simple mathematics, right? Instead of subtracting 831K jobs, one simply adds 831K jobs instead (or some positive jobs figure).
The “government as the center of the universe” explanation for the slowly recovery employment market is probably not right, though. And here’s one simple reason why (people that think deeply about these types of issues could certainly come up with many others).
In looking at what government does, it’s generally not productive work. Essentially, a large portion of the time government employees act as detriment to private sector job growth rather than acting as a boost.
For instance, individuals at the Environmental Protection Agency (EPA) are currently taking furloughs to ensure the federal government cost savings materialize. Does anyone really think that private sector job growth is helped by having an EPA employee bother private businesses? The answer is no.
A similar reasoning holds true for IRS income tax auditors or chemical plant inspectors or government statisticians or a lot of other generally unproductive activities.
The bottom line: government bureaucracies do not improve private sector business activities, including private sector employment growth. This statement is certainly true over medium and longer term horizons, and becoming truer in the short term as well.
Overall, today’s employment growth figure came in at 175K, an encouraging continuation of 32 straight months of positive employment growth. Additionally, professional analysts are making a mistake assuming that employment growth would be higher if government were growing as well.