Federal, state and local governments in the US currently employ approximately 22.6 million people. That is just over 17% of the total nonfarm payroll. In the recent Great Recession, the government did very little to adjust its labor expense.
On a seasonally adjusted basis, private industry employment peaked in January 2008 and fell by 7.3% before reaching it trough in December 2009. Government employment, on the other hand, continued to grow until April 2009. It subsequently bottomed in February 2010, but only ended up losing 1.0% from its high. Both are now up approximately 0.5% from their lows.
Government also continued to grow compensation throughout the down turn. And, it did so at rates consistently higher than private industry. According to the BLS Labor Cost Index for Compensation, since 2005 state and local governments grew year over year compensation between 0.3 and 1.6 percentage points faster than private industry in each and every quarter.
There is obviously a lot more to solving the federal, state, and local government deficit challenges than managing headcount and compensation, but at this point every bit counts.
Disclosure: No positions
