The 1990s were a decade of rapid private sector expansion and federal government restraint. The 2000s are a decade of government expansion at all levels and private sector retrenchment.
From 1990 to 2000, private sector employment soared 21 percent. Then, remarkably, private sector employment actually fell during the 2000s and was 3 percent lower in 2010 than it was in 2000.
The chart shows the changes in government employment in these time periods.
(Note: Numbers are for January of each year for consistency and to avoid the inclusion of temporary federal decennial census workers that show up in later months.)
Federal employment declined during the 1990s, when we mainly had Clinton in the White House and Republican control of Congress. However, federal employment increased under the Bush administration and the Obama administration is pursuing further growth. As a Cato essay on overpaid federal employees shows, growth in federal employment will cost taxpayers billions of dollars.
The Obama administration is concerned that the economic recovery will be jeopardized by revenue‐strapped state and local governments cutting employees. Therefore, it’s advocating another federal bailout for the states to head off government job cuts. However, government jobs are supported with money taxed or borrowed out of the economy. Diverting more resources away from the private sector in order to sustain the public sector is a recipe for economic stagnation – not growth.