I got the graph above from Mark Thoma, Austerity: The Public-Sector Jobs Gap. I was aware of the basic information, but I’ve never seen it displayed in such a startling way. What it shows is the total number of people employed by the government at all levels. But let me go over it in a little detail, because it is important stuff.
The first thing that comes into my mind when seeing this graph is that conservatives will think, “Great! The government shouldn’t be growing!” But the government should be growing. The extrapolated number of government workers in 2015, is roughly 14% higher than it was in 2000. It just so happens that the US total population is also 14% higher than it was in 2000. People can argue about which government programs should exist, but that is a different issue. The government is doing exactly what it was doing 15 years ago. It just doesn’t have nearly as many people to do it.
Another thing to note here is the timing. If you go back through Bush, Clinton, Bush, Reagan, and on and on, you will see that after recessions, we increase spending. As Keynes said, “The boom, not the slump, is the right time for austerity at the Treasury.” And everyone learned that lesson — right up to this crisis. And as a result, we have had a very sluggish recovery. And the Republicans blame Obama, because they thought that even more austerity would have solved all our problems. To see how ridiculous that claim is, just look at Spain, which has had an unemployment rate over 20% for years because of misguided austerity policies.
Even if austerity had been called for, what we should have seen is the rate of growth of government workers decline. We shouldn’t have see growth stop and then actually go into reverse. These numbers are shocking: 1.3 million jobs that should have been created weren’t; and almost a half million jobs cut. That’s almost two million jobs lost. Using a reasonable 1.5 multiplier for the economy, that means our economy has three million jobs less than it should have. This is like someone taking a frying pan and hitting themselves over the head. Of course, in this case, the people who decided on this policy were not the same people who suffered from this policy.
Another conservative criticism would be that these jobs created by the government would have been offset by jobs in the private sector. According to this theory, the money to pay the people has to come from somewhere, so the money collected in taxes wouldn’t have been available to the private sector to create jobs. I hate this criticism because it is based on one thing that is true: when the economy is booming, government spending really does take money out of the private sector and slows the economy. But that is only true under that circumstance. And that hasn’t been true for years. This is why interest rates are so low: there is loads of private money swimming around looking for investment opportunities. Private sector money is not going to create jobs. Therefore, the government should have used that money to employ people. As it is, the government has been able to borrow money almost since the beginning of the crisis nearly for free (sometimes, people are actually paying the government to take money).
If the bad economy is hurting you, all you need to know about why can be found in that graph above. Notice that when Bush took over the presidency, the hiring actually went up at a faster rate. That’s because there was a recession. That was the right thing to do. I can’t help but think that if a Republican had become president in 2009, we would have seen the same thing. But when a Democrat is in the White House, the Republicans have to do everything they can to harm the economy and the nation. Because they are “patriots.”
This graph should be the shame of Congress, and even Obama, because he was definitely pushing austerity too.