Government employment: growing or shrinking?
Government payrolls have been shrinking steadily over the 40 years, but the last decade or so has seen an uptick.
This chart shows the percentage of jobs on government payrolls since 1940. The figure has always hovered between 10 and 20 percent, but government jobs take up a much smaller share of US employment than they did 40 years ago.
Donald Marron/FRED
My recent post on prompted several readers to ask a natural follow-up question: how has the government鈥檚 role as employer changed over time?
To answer, the following chart shows federal, state, and local employment as a share of overall U.S. payrolls:
In July, governments accounted for 16.5 percent of U.S. employment. That鈥檚 down from the 17.7 percent peak in early 2010, when the weak economy, stimulus efforts, and the decennial census all boosted government鈥檚 share of employment. And it鈥檚 down from the levels of much of the past forty years.
On the other hand, it鈥檚 also up from the sub-16 percent level reached back in the go-go days of the late 1990s and early 2000s.
Employment thus tells a similar story to government spending on goods and services: if we set the late 1990s to one side, federal, state, and local governments aren鈥檛 large by historical standards; indeed, they are somewhat smaller than over most of the past few decades. And they鈥檝e clearly shrunk, in relative terms, over the past couple of years. (But, as noted in my earlier post, overall government spending has grown because of the increase in transfer programs.)
P.S. Like my previous chart on government spending, this one focuses on the size of government relative to the rest of the economy (here measured by nonfarm payroll employment).聽Over at the Brookings Institution鈥檚 Hamilton Project, Michael Greenstone and Adam Looney聽find a more severe drop in government employment than does my chart. The reason is that they focus on government employment as a share of the population, while my chart compares it to overall employment. That鈥檚 an important distinction given the dramatic decline in employment, relative to the population, in recent years.聽
P.P.S. As notes, this measure doesn鈥檛 capture government contractors. So any change in the mix of private contractors vs. direct employees will affect the ratio. This is another reason why focusing on spending metrics may be better than employment figures.