Keystone Research Jobs Confusion

Keystone Research Jobs Confusion

Parroting President Obama’s notion that job growth nationally has weakened because of the layoffs of government workers, the Keystone Research Center says that Pennsylvania’s slowdown in job growth is also due to government layoffs. Some facts might be useful. Over the last twelve months government employment fell by 10,800 in the state while private employment expanded by 48,000 jobs-not stunningly good but okay. In June of this year, government payrolls jumped by 9,000 over the May figure (seasonally adjusted so it is not due to seasonal hiring factors) while private jobs managed only a 5,400 pickup.

Several private sectors showed decrease in employment in June including construction, trade and transportation, information and education and health. The big increase in leisure and hospitality employment (7,000) kept the private monthly figure from showing a decrease. So, over a period when government jobs fell, private sector jobs were moving higher at a reasonably good pace with broad based gains led by mining and leisure employment but when government jobs jumped, private jobs were very weak except for one sector. Now how does the President’s theory explain this? It cannot.

First of all, increasing or maintaining government jobs means resources have to be taken from the private sector to cover the costs of government workers. Moreover, government workers in many categories receive higher salaries and much richer benefits than comparable private sector workers. Certainly that is true for teachers, who account for the largest single share of government jobs. And because the competition in most private sectors is absent in government, it is a virtual certainty that comparably situated employees in government jobs are less productive. Indeed, it is not clear how to measure productivity in government jobs.

Second, most government workers in non-supervisory positions are unionized in Pennsylvania. And Pennsylvania laws protect unionized government workers. Pension obligations-no matter how generous-have to be met, unlike the private sector where bankruptcy can reduce such obligations for employers. Teachers cannot be laid off for economic reasons. Unless enrollment declines or entire programs are cut, teachers’ jobs are safe and they will get any wage or benefit increases called for in a contract regardless of the financial situation in a school district.

In short, the Keystone Research Center has it exactly backward. A growing government sector, for any reason other than population growth, is detrimental to the private sector where real, measurable production takes place and is necessary to support whatever government exists. Keeping government small is the best strategy. Privatize, outsource wherever possible. It can be done if the will is there to do it.