Government does create jobs, but many of them are unnecessary
I have noticed controversy on these pages lately about whether government can create jobs. I assume this means private-sector jobs, since creating government jobs seems as easy as falling off a log onto a mattress of tax dollars.
The short answer is: Sure, government can create jobs, they’re just not usually the kind of jobs we like to have too many of. Think tax attorneys, CPAs and criminal defense attorneys to defend people who weren’t well-off enough to afford CPAs and tax attorneys.
Government also creates “compliance” positions as companies hire individuals to conform to regulation.
Imagine standing in the press room of this newspaper as the presses are pounding away. After a day of steady printing, you would get some idea of how many pages of new regulations are generated every year. Just hiring someone to read all the regulations will result in a full-time job, much less to make sure you’re in compliance so you don’t need that defense attorney.
Creating unnecessary jobs is not difficult when you have the power to write laws and imprison people in the hoosegow if they don’t follow them. You also can spend large amounts of other people’s money on projects that are bad ideas, like the rapidly bankrupting solar industry, which, even with other power users paying for it and generous government grants and tax breaks, still can’t make a profit. It does, however, generate some business for auctioneers and furniture movers.
Government is good at one thing with its employees — running up debt. In Colorado, State Treasurer Walker Stapleton estimates the Public Employee Retirement Association has $21 billion to make up in promised benefits, which he doesn’t think is possible given the figures he’s seen. He’s only been allowed to see a few because, you know, if you have good numbers you always want to hide them from people.
PERA officials, however, are happy to tell you there’s nothing to see here since their projections show the fund solvent — so long as we have many years of growth like we haven’t had since Reagan or for about two weeks before the dot com bubble burst under President Clinton.
When you look at public employment, it’s not hard to see why governments desperately need money. First, according to USA Today, in 2009 the gap between private compensation and state and local government compensation had increased more than 10 percent since 2000. During that time, the federal government compensation gap doubled, with a difference of about $62,000. The average compensation package in the federal government was worth over $123,000 per year.
Between 2000 and 2009, the average federal salary grew 33 percent faster than inflation and the federal government paid 20 percent more than private firms for comparable occupations.
Over the same time, total compensation in federal employment has grown 36.9 percent, after adjusting for inflation, while USA Today notes the same compensation for private sector workers increased 8.8 percent.
With this kind of trend, it doesn’t take an economic genius to see that the two curves of compensation, representing public and private employment, can only divert farther. With private employment being the source of income used to pay federal and other government workers — the percentage removed from the private sector must increase, if the trajectory for the public is to remain the same.
At the same time, the percentage of government workers in each state’s workforce remains shockingly high, with a 2010 national average of 17 percent. It’s not just places like Washington, D.C., which has 38 percent of its workers on the government payroll, but way out in the middle of the ocean in Hawaii, along with the president’s birth certificate, some 24 percent of the workforce is government employed. Colorado comes in at 15 percent.
It’s not that government doesn’t create jobs. It creates too many of them we don’t need or even want. It generates expenses and positions in the private sector that are similarly superfluous, but each one spins the wheels of the next, like the gears of some infernal machine.
The important point to remember is that governments don’t create products for revenue. They assess taxes and fees on those that do. We need some of these jobs, but we should be darned careful about what ones we let government create.
Rick Wagner writes more on politics at his blog, The War on Wrong.