When I first saw in yesterday’s August jobs report how many government positions the U.S. economy created last month, I knew it was an exceptional number. What I didn’t realize – until crunching the data today – is that it’s both exceptional and possibly a not-so-encouraging sign of things to come for the current American recovery. Especially when coupled with the strength of employment gains in the subsidized private sector that I described yesterday, it’s more evidence that the U.S. private sector’s job-creation power is weakening.
According to the report, 33,000 of the 173,000 total net new jobs generated last month came in government at all levels. (Both numbers, and all the rest, will be revised twice more in the next two months alone.) In absolute terms, that’s the biggest monthly advance in government job numbers since two Augusts ago (43,000). But what’s even more stunning is the relative government job-creation strength it shows. These new positions accounted for more than 19.08 percent of last month’s total employment improvement. That high a ratio hasn’t been seen since October, 2010, when the recovery was barely out of its first year.
Moreover, of the 30 months during the recovery when both public sector and total jobs grew, government jobs have accounted for ten percent or more of total net new job creation in only six. And here’s where matters get unusually interesting. Of those six, three occurred from the recovery’s beginning (in mid-2009) through August, 2012, along with one month when it hit 9.29 percent (October, 2011). August, 2013 registered a 16.80 percent figure (indicating that there’s some seasonality going on here), but two of the remaining three have come in the last three months.
Here are some more statistics suggesting that public sector job creation is gathering momentum. Of the six months of recovery in 2009, three saw increases in government job creation. The following year, government created net new jobs in five of twelve months (a period that included massive temporary hiring for Census taking). Over the next three years, however, government only added more jobs than its lost for two, three, and four months, respectively. But then in 2014, the number jumped to ten, and this year so far, it’s five out of eight.
Comparing January-August periods provides yet more evidence – and reduces the impact of seasonality.
For the the first eight months of 2010, 2011, 2012, 2013 the American public sector lost jobs on net. The following year, however, came a 37,000 improvement – which represented only 1.95 percent of all the jobs created by the economy. In the first eight months of this year, however, the 93,000 government jobs increase has represented 5.48 percent of total the U.S. employnent increase – not a huge share, but much higher.
Government payrolls have taken such a hit during the recovery so far that their share of total American employment is not only still well below its level before the last recession began. They’re still (slightly) below the share they accounted for last August. But their increased importance in total job growth over the last year in particular is unmistakable.
As I wrote yesterday, more government jobs may or may not be exactly what the nation needs right now. But economically speaking, the renewed strength of government hiring looks like a sign of mounting trouble in the private sector, and all of its historic innovation and productivity prowess. And this seems especially true not only because public sector hiring showed new signs of life, but because private sector hiring has tailed off notably from its (admittedly strong pace) from earlier this year.