When a person “gets a job” he exchanges the use of his time for wages. Typically this is doled out in terms of being paid a certain amount for a time period of labor, but it always comes down to the worker doing something that profits the employer so that the employer is willing to pay him.
But what about government?
People who work for the government might do things that are good and necessary—for example, deliver the mail or teach students. But outside of government, and outside of government intervention, you don’t have any way to measure efficiency. In the market people only get rewarded for their services if they offer them at a lower price and/or a other people who might offer their services on the market.
The government has no such constraint. They set tax rates by what they think that people will bear to pay. Often, they also make it illegal for anyone else to offer services as an alternative to what they provide. So we see that public school teachers make much more than private school teachers (while often delivering an inferior product). And we see that no one else in the United States is permitted to deliver first class mail. Yet the US Postal Service won’t hesitate to use the size of their business as an excuse for when they mess up.
Thus, by any objective appraisal, an increase in government employees is a net loss to the economy while an increase in private employees is a net gain.
Which brings us to the jobs report that everyone is singing about.
Federal, state and local governments hired a net additional 338,000 workers in November, equaling 41 percent of the total of 818,000 net additional jobs created in the United States during the month.
At the same time, the unemployment rate for government workers fell from 4.4 percent in October to 3.2 percent in November. (The overall national unemployment rate fell from 7.3 percent to 7.0 percent.)
In October, governments around the country employed 19,726,000 people, according to data released today by the Bureau of Labor Statistics. In November, that rose to 20,064,000—a net increase of 338,000 people employed by government.
As Bob Allen pointed out,
There are 317 million people in America.
54% do not have jobs, and another 20 million work in government.
That leaves just 124 million people to actually create the wealth that sustains the nation—39% of the population supporting the other 61%.
Atlas, methinks we have a huge problem brewing.
Yes, we do. Atlas isn’t going to be able to hold up this economy on his shoulders forever.