Not an April Fools’ Joke…

Stephen Moore has a depressing piece in today’s WSJ. Money quote:

Today in America there are nearly twice as many people working for the government (22.5 million) than in all of manufacturing (11.5 million). This is an almost exact reversal of the situation in 1960, when there were 15 million workers in manufacturing and 8.7 million collecting a paycheck from the government.

It gets worse. More Americans work for the government than work in construction, farming, fishing, forestry, manufacturing, mining and utilities combined. We have moved decisively from a nation of makers to a nation of takers. Nearly half of the $2.2 trillion cost of state and local governments is the $1 trillion-a-year tab for pay and benefits of state and local employees. Is it any wonder that so many states and cities cannot pay their bills?

One only wishes that Moore would have concluded his piece with two words: “April Fools.” Alas, he did not.

7 thoughts on “Not an April Fools’ Joke…

  1. I have a question I would like to pose: is this a reflection of a failure of American Capitalism? I don’t mean that in a way meant to be partisan or elicit being branded a socialist, but I do ask if this is mainly because people tend to clamor loudly to their reps when they can’t find employment, so they would do the only thing they knew how, which is create government jobs.

    Another thing that I think the data miss is almost all of the additional growth is in defense and homeland security. Plus, you can pull data from almost any statistical database and it will show, going all the way back to 1930, average GDP and job growth stalling out and decreasing in every subsequent decade. In addition, for the first time there is no correlation between corporate profits and job growth. The present disconnect is huge and the largest on record.

    Could government have beefed up hiring to compensate for that? In addition, I live in Wichita which is a town very dependent on aircraft manufacturing and the defense budget.

    Long story short, I think the data you proposed is worrisome, but I believe government growth is a symptom of much deeper and complicated issues in America, not easily explained by the simplistic explanations being floated around.

  2. Mr. Moore’s piece badly misuses statistics.
    Assuming his actual numbers are correct, then all government employees as a percentage of the WORKFORCE (not population) have gone from 12.5% in 1960 to about 14.2% today. A small increase, but hardly a sea change. And one which I’d argue has little to do with the decrease in manufacturing jobs, most of which is due to outsourcing and automation.
    I won’t quarrel with Moore’s criticism of the enormous increase in per-pupil education spending, but his comparison with the manufacturing sector seems faintly absurd. Few would argue that education is subject to the same potential for productivity increases as manufacturing, farming, or mining.
    We need the debate about the proper role and size of government, how to improve education, and grow manufacturing. But Moore’s flagship statistic, and his use of it, strike me as an instance of ‘big government’ scaremongering and don’t contribute to that debate at all.
    (Source: http://www.prb.org/pdf08/63.2uslabor.pdf, Table 1)

    1. Well said. For the life of me I don’t understand why we aren’t focusing on government efficiency instead of the government itself. It’s bureacracy that is a threat to America’s economy. The government need not be, assuming it lays the groundwork for a flourishing private sector. In the past this has been the rhetoric, but that usually in action translates into protectionism and subsidies…those of which need to go.

      Government should focus on better incentives for the private sector, such as training assistance assuming a worker goes into a sector that is growing and in with a deficit of skilled workers. Denmark does that. Why can’t we? It’s not enough to just say “we should eliminate this or that.” There are some things which are completely wasteful and ridicolous, but instead of just killing them in a violent and haphazard way, why not offer people in government or dependent on government a choice to either learn this skill and receive assistance or don’t and get nothing?

      Just a thought.

    1. Hm… I would think that income taxes would be more cyclical than property taxes. I suppose it depends on how frequently town governments revalue. In my state (NY) they essentially never do, except at the request of the homeowner. But even then, most towns just change the mill rate if the average value goes down, in order to maintain constant revenue.

      1. Municipalities can’t tax income. On a Federal level this is the case and yes they are more cyclical, but this recession is particular in that a huge portion of lost revenue is due to property and property transaction related taxes. Some states are better insulated than others, like Texas, which one of the real reasons their property market is more stable is that cash-out refinances above (I think) 70% LTV are not allowed, or have massive restrictions. It’s one of the only states, I believe, that is like this.

        A majority of counties and municipalities depend on sales and property taxes. Less homeowners buying refinancing, or building and buying less stuff because they are deleveraging equates to a revenue shock for most counties. Sure, the state can tax income but then they have to redistribute it properly…and we all know how well that works.

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