Reducing Government Growth isn’t Austerity
One meme that some are attempting to make take hold (including the President; “the public sector isn’t fine”) is that the high unemployment we’re seeing is in large part because of the loss of public-sector jobs and especially at the local level:
See that little dip in public sector employment? That right there’s you’re problem. But, given the 50 year(ish) growth trend, that little dip doesn’t seem like much. You see, the greatest portion of governmental growth has historically been at the local level, as this graph from Menzie Chin at the Econbrowser blog shows:
Hm. How to make the argument, then? Ya gotta shape the data! This is how a comparison of private sector to public sector unemployment looks when both are compared to their own relative peak employment (instead of raw numbers), as done by Yale’s Ben Polak and Peter K. Schott.
Mon dieu! Look at that, the public sector is going down while the private sector is recovering, just like President Obama said. Yet, as Mickey Kaus explains, the loss of many of these local government jobs can be attributed to the disappearance of federal subsidies:
In this recession, Democrats voted a temporary subsidy for state and local governments to keep up their hiring–and when it expired, those governments found they couldn’t afford to keep on as many employees–especially given the unsustainable pensions and benefits Democrats and others had granted oft-unionized public workers in good times (and that the Dem stimulus subsidized).
That’s what happened around here when the Department of Labor and Training announced the layoffs of around 60-70 workers. There is also a shift in priorities as older workers retire and aren’t replaced. Regardless, the most telling graph shows that it’s still the private sector that has bore the brunt of this recession:
We’re a long way from saying the private sector is “fine”.