Thursday, March 31, 2011

A nation of takers not makers?


I post without endorsement to stimulate discussion.

6 comments:

Patrick_L said...

It's hard because you have to control for the business cycle, but the data on public sector employment reveals some interesting trends.(ftp://ftp.bls.gov/pub/suppl/empsit.ceseeb1.txt ) Sorry- it's not in an easily usable format- I had to transcribe it into Excel to perform my calculations, but once you do that you can quickly see that public sector employment as a share of non-farm employment (the standard comparison figure) has actually declined substantially since the early 1980's (it peaked in the late 1970's). It actually looks to be at the lowest levels since the mid 1960's (the dataset begins in 1961). So if you're concerned about the size of public sector workforce, then you should be concerned about the past 30 years.

Additional results from my research: Reagan's economy for instance had slightly faster private-sector employment growth than the public sector so he slowly reduced the relative size of the public sector workforce, Clinton had similarly strong private-sector employment growth while keeping public sector growth very small so he actually did even better and reduced the public sector's share in almost every year of his presidency. Bush Jr. also had small public sector employment increases- unfortunately his private-sector job creation was abysmall so public-sector employment started to creep back up to Reagan levels (even I was surprised at how bad Bush's recrod was, though I shouldn't have been. Sen. Wyden has been pushing this point for the past few weeks, pointing out that the two years after 1986 tax reform saw more job creation than seen in all of the Bush presidency).

I also quibble with Moore trying to make comparisons to the manufacturing sector. That's sort of misleading and designed to play off American's innate love for manufacturing jobs (which are great, I admit). However, the global economy has changed since the 1950's because of what other countries are doing, not just what the U.S. is doing. We can never regain that level of a manufacturing sector, at least considering the economic conditions that are going to be prevelent for the next few decades (probably at least the next century).

Also, his back-of-the-envelope estimations of education-sector productivity are simplistic and not really what we'd want to use if we actually studied the issue. But that's really a minor point for me- I agree that education sector productivity increases have been depressing compared to the rest of the economy- though much of that can be explained by the sector (eduction). Different sectors see different increases of productivity due to varying impacts of technology change and such. Certainly I'd like to see productivity increases in the public sector- and I think they're achievable if we just apply some more pressure. But politicians aren't really interested in those kinds of reforms which take years to have impact and are hard to quantify or predict (i.e. score by the CBO). Congress only has an incentive to pursue spending cuts or tax increases for which they can get credit for.

TJE said...

Are you including all federal employment? Defense and postal employment has declined significiantly.

http://www.cbo.gov/doc.cfm?index=2864&type=0

TJE said...

Here's some data about growth in state and local employment:

http://www.cbpp.org/cms/index.cfm?fa=view&id=3410

I offer it without endorsement, for the outfit publishing it seems a bit hinky to me.

Mr. L, your point about Moore's comparison with manufacturing is well taken. The big story is the relative decline in manufacturing as compared not just with public sector but with service sector. Of course, that raises other issues. Are we becoming a nation of bureaucrats, money managers, and baristas?

TJE said...

I forgot lawyers:

http://www.law.harvard.edu/programs/plp/pages/statistics.php

Patrick_L said...

My employment figures would include all government employees, including defense and and the postal service. The postal service has appropriately declined due to increased productivity and reduced demands for services. If you use the non-defense employment figures (adjusted for the census- as you can see how to do by reading the footnote), "core" federal employment declined by over 25% from 1985 to 2000.

And whoops- I actully meant to inclde the cbpp look at state and local employment (which you'll notice increased marginally).

If you combine these two trends, it's quite clear that the public sector has not been growing in the past few decades.

And yes, our economy is moving to a service focus. Though I'm interested in the research about our economy's best hope being to move up the value-chain. Manufacturing isn't the only sector out-there with good jobs (I know that's not what you're saying- basically I just think the American people needs to get over it. We've lost those jobs- there is no going back. We should stop wasting so much money subsidizing inefficient manufacturing in this country- we need to focus more heavily on increasing exports, whatever they may be, and moving up the global value chain.)

Patrick_L said...

And I forgot to mention, the CBPP figures are for residents (which would be heavily impacted by the aging population). Any growth, which I'm not sure there would be any since the population's aging is such a huge demographic trend, as a share of the workforce would actually be even smaller.