In the last couple of years there has been rising political and economic pressure to trim government spending. As we look at the May jobs report released by the St Louis Fed today, we can that government is submitting to the pressure and cutting jobs.It is important to keep in mind as we seek to cut costs in government that the cost of employing people in government is among the most expensive. So as we talk about cutting government spending, it is important to realize that we are also talking about cutting government jobs. The graph below covers just local government but not Federal which is now beginning cuts.
As you look at the graph, it is at first obvious that government spending on employment has been growing for a long time. What is also apparent is the increase in employment has been pretty constant with the exception of the drop in the early eighties.
What may not be quite as apparent is that the number of people employed both in government and in the nation as a whole should be constantly increasing because the population is increasing. Most economists agree that we have to add about 150,000 jobs per month just to keep up with population growth in the United States.
Government employment has been a contributing factor to the overall job picture as a pretty constant rate up until 2010 and 2011. So we shed jobs in the private sector first, and now we are shedding jobs in the public sector. Meanwhile, our population continues to grow at a steady rate.
Discussion Questions:
1. When do you expect private employers to start increasing the number of jobs added beyond the needed 150,000?
2. With government jobs declining, does this put even more pressure on the private sector to create jobs? Will they do it?
3. Nobody wants to even talk about adding more stimulus money, but could that be a mistake?