Friday, April 1, 2011

Takers v. Makers, or Our Choices Have Consequences

Over at the WSJ, Stephen Moore laments the rise of government employment:
Today in America there are nearly twice as many people working for the government (22.5 million) than in all of manufacturing (11.5 million). This is an almost exact reversal of the situation in 1960, when there were 15 million workers in manufacturing and 8.7 million collecting a paycheck from the government. It gets worse. More Americans work for the government than work in construction, farming, fishing, forestry, manufacturing, mining and utilities combined. We have moved decisively from a nation of makers to a nation of takers...

Surveys of college graduates are finding that more and more of our top minds want to work for the government. Why? Because in recent years only government agencies have been hiring, and because the offer of near lifetime security is highly valued in these times of economic turbulence. When 23-year-olds aren't willing to take career risks, we have a real problem on our hands. Sadly, we could end up with a generation of Americans who want to work at the Department of Motor Vehicles.
It's worth noting that we have created an economic structure that incentivizes working at the DMV. Moore bemoans the state of 23-year-olds not wanting to take career risks, but 23-year-olds, just like corporations, have every right to make decisions that are in their own economic best interests.

Consider manufacturing: the de facto federal consensus over the past twenty years has in many ways been that manufacturing workers should accept lower wages. Indeed, much of the right's anger with manufacturing unions in Detroit and elsewhere focuses on the fact that these unions have won generous pay and benefits for their members. Our trade and regulation policies have, over the past few decades, further shrunk a manufacturing employment sector already diminishing due to gains in technology.

Or construction: this field has already taken a hit due to the collapse in the housing market. Moreover, construction jobs have also witnessed a significant wage decrease due to a flood of illegal immigration.

Or hi-tech fields: many large companies are perpetually lobbying to employ more and more foreign-born workers through mechanisms such as the H1-B visa. Or they are outsourcing programming work. Both of these mechanisms have hurt employment prospects and the wage growth for Americans in these sectors.

There are still plenty of opportunities in these sectors of the American economy, true. But while many economic sectors were hollowed out, government employment, under George W. Bush and Barack Obama, has boomed. Government jobs are harder to outsource or close down due to foreign subsidies. And with youth unemployment at exceedingly high levels, the young people of America are going to take any opportunity they can get.

I think our energies would be better spent not on attacking working for the government but on improving the economic conditions for the private sector. Destroying teachers unions will not turn around our economy and is not even a certain recipe for improving public education.

The weakening of many parts of our economy has in turn strengthened government, but a half-dead economy cannot indefinitely support a perpetually-growing government. Revising some of our public policies and making targeted investments in the future can be a way forward. Supporters of a vital free-market economy and of effective government are no doubt hoping that such a way can be found.

UPDATE: It's worth adding that government entities, particularly at the state and local level, are already feeling the pinch of economic hardship. State and local governments have cut tens of thousands of jobs over the past year or so. Meanwhile, the federal government is still hiring, but even its numbers are down and do not seem to be making up for the cuts in state and local workforces. So employment in state and local governments may be a more challenging prospect in the months to come. According to the US Bureau of Labor Statistics, the sectors of the economy to gain the most over the past year were "administration" and "health-care" (though much of the US's health sector is driven by government spending).

(Thanks to David Frum, who rightly noted that government employment in the US has become less of a growth industry.)

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