chart of the week - 'goods producing' workers vs gov't 'employees'
http://www.iaconoresearch.com/BlogIm...government.png
(snip)"06 January 2010
There Are Now More Government Employees than Goods-Producing Workers in the US
For the first time there are decidedly more government employees than goods-producing (manufacturing) employees in the US according to the Department of Labor.
This chart is from 'The Mess That Greenspan Made' - (snip)"back in late-2007, the total number of government jobs exceeded the total number of goods producing jobs. After the events of the last two years, the gap is now about four million.
The Goods Producing category currently includes less than a million workers in mining and logging, about 6 million in construction, and 11.7 million in manufacturing.
The Government category includes 2.8 million federal employees and almost 20 million state and local workers, just over half of whom work in education."(snip)
It is interesting to think about this in terms of health care, pension plans, job security, employee loyalty, and so forth.
The reason for this is not the growth of government jobs but rather the drastic shrinkage in US based manufacturing employment while government employment remains resilient. As a percent of the population, the number of government employees is now about 9% which is slightly lower than it was in the 1970's.
The Service sector dominates. There is a nice chart showing goods-producing, government, service, and non-employed percentages from EconomPicData here.
http://4.bp.blogspot.com/_8rpY5fQK-U...00/empgovt.png
US corporations have been offshoring jobs for many years, in part due to the structural problems of benefits and environmental costs in a developed nation and Asian mercantilism. Some of this transfer of employee is due to natural market forces, but a great deal of it is a result of purposeful national policy and trade practices such as currency pegs, for example.
As Adam Smith observed in Wealth of Nations (1776):
"To found a great empire for the sole purpose of raising ... customers may at first sight appear a project fit only for a nation of shopkeepers. It is, however, a project altogether unfit for a nation of shopkeepers; but extremely fit for a nation whose government is influenced by shopkeepers."
In this case if one substitutes "kleptocrats" for "shopkeepers" and "dollar debt slaves" for "customers" then the quotation may fit the current situation in the US and its reserve currency empire quite well. It also helps to explain the steady role of the government bureaucracy in administering this paper empire, as well as the outsized financial sector. "(snip)
from
and if that wasn't shocking enough ...
(snip)"
This spring has a hot new job: census worker. The Census Bureau is looking to fill some 1.2 million part-time positions as the government gears up for its once-a-decade count of every person living in the U.S. Most of those openings are for enumerators — people who go door to door to collect information from the roughly 35 million households that won't return their Census forms by mail. Considering the unemployment rate stands at 10% — much higher than in any other Census year since 1940 — prospective workers are turning out in droves. "The numbers who are applying are just phenomenal," says Census director Robert Groves"(snip)
A curious development to say the least ... given the fact that if gov't budgets are ever to be truly balanced, every dollar needed to cover government paychecks must first be taxed away from goods producing workers ! Arguably, gov't workers 'consume' wealth, and service workers 'transfer' wealth, but only goods producing workers 'create' wealth !
~
Re: chart of the week - 'goods producing' workers vs gov't 'employees'
A colleague of mine quipped that we (Canada) used to have a resources economy, then it became a manufacturing economy, then a services economy and now it's a regulatory/government economy... An amusing comment... except that, as you say, someone out there has to create the wealth.
My thinking is that, over the long term, one can only tax or transfer so much, and foreigners will only work underpaid for so long. If the creation of wealth part isn't there, eventually, the problems will be.
The situation in the U.S. seems to be heading in this direction, as you point out - but the writing has been on the wall for a long time, evidenced in things like trade deficits.
Re: chart of the week - 'goods producing' workers vs gov't 'employees'
^^^ true to some extent. But unlike the US, Canada does have the ability to generate large amounts of gov't revenues without having to tax its citizens. This is due to the 'royalty' income the Canadian gov't generates on the oil / gas / lumber / metals etc. which are 'harvested' from gov't lands ! The US gov't receives next to nothing in 'royalty' income compared to Canada ( and pitifully less on a per-capita basis given the 10 to 1 population difference ), and as such will eventually have to impose even higher taxes to pay for similar gov't employment / social welfare benefit levels.
Royalty income by various gov'ts from Canada to the UK to Norway to Australia has arguably helped to 'camouflage' the true cost of high levels of gov't employment as well as social welfare programs for the citizens of those countries. However, as the UK is now finding out, that royalty income may not continue forever ... thus forcing the gov't to raise taxes or run ever larger deficits / trash the currency or ( the horror ) actually reduce gov't employment / spending levels.
Re: chart of the week - 'goods producing' workers vs gov't 'employees'
I quite agree: resources still prop up the Canadian economy well beyond where it'd be otherwise - although there are strong differences between provinces in terms of how much that's worth.
Relatively to the U.S., we'll probably have less pain in the upcoming mess - although transferred pain through cross-border trade decreases could make it just as bad. Either way, I don't think it'll be good for Canada when it all hits the fan in the U.S.
Anyway - I've been away for a bit, so I haven't been able to observe my usual empirical indicators (bags in shopping malls, store closings, etc).
Re: chart of the week - 'goods producing' workers vs gov't 'employees'
Notice also that real wages in the last decade have held steady, except in the last couple of years. That has almost never happened before. Wonder why?
Re: chart of the week - 'goods producing' workers vs gov't 'employees'
Quote:
Originally Posted by
Melonie
As Adam Smith observed in Wealth of Nations (1776):
"To found a great empire for the sole purpose of raising ... customers may at first sight appear a project fit only for a nation of shopkeepers. It is, however, a project altogether unfit for a nation of shopkeepers; but extremely fit for a nation whose government is influenced by shopkeepers."
~
The problem with Adam Smith's observations/opinions (out of the Eighteenth Century) is that he only got it half right. His theories produce "Lord of the Flies" economic systems. Two problems: (1) such economic systems must be supervised by something powerful enough to actually regulate it; (2) huge economic power will crush the very population segment that provides both the labor and the demand for products.