The Public Sector Still Needs Help

Washington Post columnist, and former speechwriter for President George W. Bush, Marc Thiessen penned an article yesterday rebuking President Barack Obama’s claim that “It’s very clear that private-sector jobs have been doing just fine; it’s the public-sector jobs where we’ve lost huge numbers.” Obama has since refined his comments a bit as the private-sector is certainly not doing “just fine,” but Thiessen still disagrees with the President, arguing that the public-sector doesn’t need any help:

According to the Bureau of Labor Statistics, the unemployment rate for government workers last month was just 4.2 percent (up slightly from 3.9 percent a year ago). Compare that to private-sector industries such as construction (14.2 percent unemployment), leisure and hospitality services (9.7 percent), agriculture (9.5 percent), professional and business services (8.5 percent) and wholesale and retail trade (8.1 percent).

So, the private sector is struggling more than the public sector, right?

Well, no. Thiessen’s way of looking at the unemployment data is wrong. The absolute percentages don’t matter. Just look at the government workers’ unemployment rate compared to the unemployment rate in the economy since 1976 (when the Bureau of Labor Statistics started recording the government workers’ unemployment rate): the overall unemployment rate is always much higher than the government workers’ unemployment rate. According to the Bureau of Labor Statistics, during the Dot Com boom (1995-2000), the overall unemployment rate averaged just 4.8 percent while the government workers’ unemployment rate averaged just 2.5 percent.

But Thiessen takes the relatively low unemployment rate of government workers to indicate that Obama should “reduce barriers for job creators in the private sector.” And while that focus is not wrong, it is also not what the government’s main strategy should be.

The correct way to look at the data is by examining the percent change in the unemployment rate. When you look at it that way, it’s clear that the public sector unemployment rate has rebounded much worse than nearly every other industry.

As expected, every industry was hurt significantly by the Great Recession, but most industries have started to recover over the past few years. The construction unemployment rate dropped by more than 20 percent in 2011, from 20.6 percent to 16.4 percent. Already in 2012, it’s down to 14.2 percent. Leisure and hospitality services improved less than five percent in 2011, but just through May of 2012, they’ve already improved another 16 percent. The agriculture unemployment rate improved more than 10 percent in 2011 and has improved 24 percent this year already. Only three industries didn’t see their unemployment rates drop in 2011: other services, self-employed workers, and government workers.

As Thiessen himself points out, the government worker unemployment rate is higher now (4.2 percent) than it was a year ago (3.9 percent). The fact of the matter is that other industries are recovering. Their recovery may be slow, but it’s happening. But the public sector is not. It has lost 600,000 jobs since Obama was elected and as Ezra Klein points out, “if you put those jobs back, the unemployment rate would be 7.8 percent.”

This all shows that Obama is right: 4.2 percent unemployment may sound low, but the public sector could use government support too.

Danny Vinik

Danny Vinik is an intern at the Washington Monthly.