Private Sector Jobs Decline, Government Jobs Increase
March 6, 2009 - 6:49 PMThe Bureau of Labor Statistics reported Friday that America's unemployment rate is the highest since 1983, but while most of the job losses have been in the private sector, public sector jobs – including jobs in government, education and health services – continued to increase.
Experts conclude that the number of government jobs will continue to grow in the coming years.
The nation’s unemployment rate is now at 8.1 percent. In February, 651,000 additional jobs were lost, and the number of unemployed nationwide is now 12.5 million. A little over 5 million people have lost their jobs over the last 12 months.
In the private sector, construction, manufacturing, and business services all lost more than 100,000 jobs in February, and the service-providing sector lost more than 375,000 jobs, according to the BLS.
Yet public sector jobs grew in February, as they had in previous months. The government added 9,000 jobs last month, and the education and health service fields added 26,000 positions.
Back in January, the government sector added 31,000 jobs, while the education and health service fields grew by 43,000, according to the BLS.
These latest data follow a trend that has continued for more than a year. According to the BLS, the private sector lost an estimated 3.65 million jobs in 2008, but government jobs increased by nearly 150,000 in the same time period.
John Palatiello, president of the public affairs consulting firm John Palatiello & Associates, said that President Obama’s plans to continue to expand government while the private sector struggles is a strange way to go about strengthening the economy.
“[This trend] creates a very interesting and unfortunate irony: You have rising unemployment in the private sector and you have rising employment in the government sector,” he said. “It seems to me that, if you really want to stimulate the economy, you should do the opposite.”
“You should be trying to get more and more things out of the government and into the private sector because that has a much more stimulative effect,” said Palatiello. “You should put the brakes on some forms of government spending and increase the number of people who are on payrolls, paying taxes and employed in private sector jobs.”
The Obama administration has indicated that many more federal jobs are on the way. Last week, the president unveiled a $3.6 trillion budget that included a variety of projects in education, health care and energy independence.
Experts have suggested that to accomplish the goals set out in the budget, hundreds of thousands of workers will need to be added to the government’s payroll. Independent estimates set the number of new workers needed at 100,000, while the conservative Heritage Foundation said the number could be as high as 450,000.
Bill Beach, director of the center for data analysis at the Heritage Foundation, said the group analyzed the effects of the recently passed American Recovery and Reinvestment Act based on the details available.
After applying the details to a large scale U.S. economic model, the center determined that there will be a rapid acceleration in public sector employment starting this year and continuing through 2012.
This is partly because a large amount of the spending as detailed in the Act goes toward public sector projects – infrastructure, bridges, highways, schools, government buildings, health care and similar work, according to Beach’s analysis.
Beach said he expected 450,000 jobs to be added to the public sector in that time, the largest boost coming with an increase of 130,000 government workers in 2012.
The projects in the stimulus package – in the private and public sectors – are expected to boost the country’s gross domestic product in the short term. However, Beach warned that most of the boost provided by pouring money into federal programs will be temporary.
“I use the word ‘temporary’ because the growth rates fall back to less than potential and less than optimal levels as soon as the temporary effects are over,” he said. “You’re getting the typical reaction in the economy of government spending, which is temporary, and the moment the construction project is over or [the government project ends], it goes away.”
Beach also suggested that funding for government projects is likely to be included in federal budgets for years to come.
“The programs for people – the income-transfer programs, the welfare programs – those will continue on from budget to budget,” said Beach. “That’s what history tells us will happen.
“You have to have a rare moment like the Welfare Reform Act of 1996 to actually cause government to shrink back. So we’re going to assume that history is the right guide and that, once you start these things, they stay in the budget until you physically take them out,” Beach added.
Palatiello also echoed the probability that the trend of government spending is unlikely to stop anytime soon.
“Ronald Regan once said that the closest thing to eternal life that we have here on Earth is a federal program,” he said. “They never end.”