Is the government a job creator?

October 22, 2012 at 10:29 am

An editorial in yesterday’s New York Times takes a closer look at something that both presidential candidates seem to agree on: that the government does not create jobs. In this polarized political climate, the role of government has become a contentious issue, and both sides seem to be downplaying the role that it plays in creating jobs. However:

At last count, government at all levels — federal, state and local — employed 22 million Americans, with the largest segment working in public education. Is that too many? No. Since the late 1980s, the number of public-sector workers has averaged about 7.3 for every 100 people. With the loss of 569,000 government jobs since June 2009, that ratio now stands at about 7 per 100.

Public sector employees perform essential functions that we all depend on. They are teachers, police officers, and firefighters. They help protect our environment, promote public health, and provide safety for our communities. And as the NY Times states, through contract and procurement, the public sector creates economic opportunities for private sector companies.

The budget cuts enacted since the onset of the recession have already had a significant impact on public sector jobs, and thus the economy as a whole.  The Economic Policy Institute reports that “the public sector has shed 627,000 jobs since June 2009.  However, this raw job-loss figure understates the drag of public-sector employment relative to how the economy functions normally.” These cuts ripple through the economy. Every dollar cut in salary and supplies for public sector workers, means that these workers will have to cut back– they will visit fewer stores, restaurants, and other businesses; their spending power will decrease; and demand will decline. These ripple effects are significant. When added together, EPI estimates that 1.1 million jobs lost in the public sector results to 751,000 jobs lost in the private sector.

So yes, the government does create jobs– really important jobs. The looming fiscal cliff would  be disastrous for federal, state, and local budgets. Without a budget deal, the ripple effects of across-the-board cuts would mean a spiral back into recession, which is something that many our communities’ struggling families and workers cannot afford.



Entry filed under: Economic Development, Economy, Jobs & Employment. Tags: , , .

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