WSJ: Unemployment rate would be 7.1% without government cuts

From the Wall Street Journal’s Unemployment Rate Without Government Cuts: 7.1% (rather than the current 8.1%):

The Labor Department’s establishment survey of employers — the jobs count that it bases its payroll figures on — shows that the government has been steadily shedding workers since the crisis struck, with 586,000 fewer jobs than in December 2008. Friday’s employment report showed the cuts continued in April, with 15,000 government jobs lost.

Interestingly, the Labor Department’s survey of households suggests that even more government jobs have been lost, which suggests that some working for private contractors doing government work are reporting themselves as government employees when they aren’t.

A few points about this:

  • Federal employment is essentially flat since 2008.
  • The losses we’re talking about here have come at the local and state level, with a significant number in education.
  • State governments are largely reliant on income and sales taxes, both of which nosedived during the recession.
  • The federal stimulus package of 2009 filled in some of the state budget holes, but not nearly all. Without that money, states would have had to make even deeper cuts or to raise taxes.
  • Local governments are largely dependent on property taxes. There’s sometimes a considerable lag in the process of assessment and collection, so those revenues held up pretty well for the first year or so of the recession.

There’s really no precedent for the kind of government job losses we’ve seen in the last couple of years. The 2001 recession didn’t even make  a blip in overall government employment. Take a look at Calculated Risk’s comparison of government employment in the first 3 years of Obama’s and George W. Bush’s presidencies:

Bush’s first term actually saw a net loss of private sector jobs, whereas Obama’s first term will see a net gain of private sector jobs.

Like it or not, government jobs have traditionally been good, stable ones, and we have been used to those jobs expanding in number as the population grows.

What do these cuts look like in the real world? Last month, almost 1600 people showed up for a city government job fair in Savannah, although the city only had 22 openings.