The Government’s Hiring Binge

By Stephen Moore and James Carter
December 24, 1996

The news last week that the November unemployment rate had risen to 5.5 percent, didn’t prevent President Clinton and Labor Secretary Robert Reich from crowing about the 11 million new jobs created since January 1993. Those are impressive numbers indeed, but they camouflage a disturbing trend in America’s labor force to which few are paying much attention. Government is a prime source for that job growth. In fact, the third fastest area of employment gain (behind the service and construction sectors) in the United States in this decade has been government.

Nearly 750,000 new public-sector jobs have been added since January 1993—almost all at the state and local levels. Take out the decline in Pentagon employment and there are now nearly 1 million more nondefense government jobs than there were when Bill Clinton took office. This is a good time to be a school teacher, a social worker or a foreign service officer.

Government jobs have grown more than employment in manufacturing, mining, finance, insurance and real estate combined. The accompanying table shows that in 1989, when Ronald Reagan left the White House, there were 1.6 million more Americans working in manufacturing—building things—than working for government. Today, there are 1.3 million more workers in government than manufacturing. We now have fewer people making widgets than regulating and taxing them.

The government is, of course, a source of high-paying jobs. Unionized government employees, particularly at the state and local levels, typically receive salaries and benefits that exceed comparably skilled private-sector workers’ compensation by 30 percent or more.

How can government be on a hiring binge when the Clinton administration claims that government employment is at its lowest level since the Kennedy administration? As usual, the White House is economizing with the truth. Today there are 400,000 more federal workers than there were when JFK was president.

It is true that federal employment has fallen during Clinton’s tenure. Bureau of Labor Statistics data show that the federal workforce has contracted by 6 percent since January 1993, a reduction of 180,000 jobs. In Washington, D.C.—where reductions in the rate of growth are considered cuts—any genuine cut (even just 6 percent) is a genuine achievement.

Where did the 180,000 workforce reduction come from? Where else? From the military. Since Bill Clinton assumed office, Department of Defense (DoD) civilian employment has fallen by 160,000 or 18 percent. DoD employment has fallen from 32 percent of total federal employment in 1989 to 27 percent today. The cuts in defense employment have been so deep, in fact, that Postal Service employment now exceeds civilian DoD employment for the first time since before World War II. Nine of 10 of the federal jobs eliminated over the past four years were military.

That leaves a reduction of fewer than 20,000 in the bureaucracy of all other agencies. That’s a meager 1 percent cut. Much of that was in the legislative branch, as the 104th Congress kept its promise to cut its own budget first.

The official government employment statistics actually understate the growth of federal civilian employment under Clinton. According to the Wall Street Journal, “Federal personnel reductions aren’t as impressive as they first appear. Of the … civilians lopped from the federal payroll since January 1993, 17% were part-timers and 13% were temporary employees. At the Environmental Protection Agency, 89% of those let go were temps.”

The official employment statistics also ignore the rapid increase in the use of contracted labor, which has become a kind of shadow government. As the New York Times pointed out last March, of those federal “jobs that have vanished on paper, many of the responsibilities are being fulfilled by outside contractors.” Today, more than 22 million people work for companies that are predominantly doing business with the federal government. Arkansas Sen. David Pryor, a Democrat and long-time associate of Bill Clinton, concedes, “The whole philosophy of beating our chest and saying how many fewer employees we have but never in the same breath saying, ‘Look at how much larger we are getting in the use of private contractors,’ is not an honest portrayal of what’s going on with tax dollars.”

Despite the congratulatory talk in Washington about lean budgets and tight-fisted politicians, government in the 1990s continues to be one of America’s most rapid by growth industries. The $2.6 trillion of total government spending in America is now more than the combined earnings of the Fortune 500 companies. And the government has more workers than all those firms combined. In fact, the federal government is the world’s largest — and most generous — employer.

Those numbers help explain the swerve to the extreme left by unions in recent years. Government bureaucrats have captured the agenda of the AFL-CIO because their numbers are the only over growing among its ranks. Public-sector workers now constitute nearly half of total union membership.

So one message embedded in these numbers is that if the Republicans intend to retaliate against the 20-month onslaught by union bosses, there’s one sure way to go for the AFL-CIO’s jugular: Cut government spending and payrolls.

We need to build a bridge to a 21st century economy that contains more workers who are payers, than are recipients of taxes.

(Millions of employees on nonagricultural payrolls)
  Manufacturing Government
1989 19.4 17.8
1990 19.1 18.3
1991 18.4 18.4
1992 18.1 18.6
1993 18.1 18.8
1994 18.3 19.1
1995 18.5 19.3
1996* 18.2 19.5
* Through October 1996.
Source: Bureau of Labor Statistics, November, 1996.
Stephen Moore is director of fiscal policy at the Cato Institute. James Carter is an economic analyst in Northern Virginia.