The shrinking government workforce doesn’t mean that government spending is at record lows.
It’s hard to believe the federal government now employs the fewest people since the mid-1960s. Yet according to jobs report earlier this month, the federal government now employs 2,711,000 people (excluding non-civilian military). Among the economy’s largest job sectors, it was the only one to shrink over the past year.
Not since July 1966 has the federal government’s workforce been so small. (The spikes every decade are the hiring of several hundred thousand temporary workers to conduct the census.) Federal government hiring climbed in the 1960s, moved sideways in the 1970s, climbed to the highest level ever outside of a census in the 1980s, declined in the 1990s and then again held steady for most of the 2000s.
Federal employment initially rose during the recession and climbed further in 2009 and 2010 with the stimulus package (and, again, the especially sharp spike for the census). The federal government has since shed about 200,000 jobs.
But that’s only the raw numbers! As a share of the total workforce, the federal government’s share of civilian employment is the lowest since World War II.
This chart only goes back to 1948, but data going back to 1939 would show no point where the federal government’s share of employment was so low. But what about all those employees at the Department of Motor Vehicles, right? True. When you include state and local governments, it’s clear where the public civilian workforce has been growing in recent decades.
Local governments, in particular, have boomed from 4 million employees in the 1950s to over 14 million today. In the mid-1950s, state governments employed half as many people as the federal government. Today, state governments employ nearly twice as many.
But these, too, are just the raw numbers. As a share of the total workforce, overall government employment has been dropping since 2010.
Currently, 15.7% of workers are employed by either federal, state or local governments. The share of workers on government payrolls was slightly lower than this during four months in the year 2000. But prior to that, you have to go back to 1960 to find a government workforce so small.
But the amazingly shrinking government workforce doesn’t mean that government spending is at record lows.
The government’s total expenditures are around 34% of GDP,back to their levels of around 2008. But in the late 2000s, at the tail end of the longest economic boom in U.S. history, government spending fell below 30% of GDP. The U.S. is still far from those levels.
There’s no major mystery here. Spending on Medicare, Social Security or unemployment go directly to individuals, not to government workers. The government’s share of the economy remains somewhat above its 32% average since 1960. But the government workforce is dwindling and dwindling.
Another reason government spending as a share of GDP remains high, even though the workforce has shrunk, is that government contractors — who may work primarily or entirely on projects for the federal government — are not counted as federal employees.
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