One of the major contentions being made about the deficit is that the primary cause is that government has gotten “too big.” While often the charge is leveled at only the Federal government, it is often leveled at the lower levels as well, particularly when the topic of the grossly underfunded pension plans of the states come up.
How true is this contention? Well, one simple measure would be the number of people working for the government. As the population grows, it would be natural that the number of teachers, mailmen, police, social workers, and yes, even regulators, would grow with it. A city the size of New York is naturally going to have more people working or it than a city the size of Omaha. A central government of a country of 310 million is naturally going to have more employees than a country of 175 million.
Thus it is not the raw count of employees that should matter, but the number of government employees relative to the overall population. The percentage of the population working for the government at all levels relative to population is shown in the graph below since 1959 (the first year of monthly population numbers available).
The data shows that while a good case could be made that government was growing too quickly (by the crude measure of employee head count) in the 1960’s and 1970’s, since 1980 the number has been remarkably stable. At the start of the data in January 1959, all levels of government had a total of 8.1 million employees and the population of the country was 175.8 million.
That works out to be one government worker for every 21.7 people, or alternatively, 4.16% of the population worked for the government. By April of 1980, the population of the country had grown to 227.2 million, but the number of government workers had more than doubled to 16.3 million. That is one government employee per 13.70 people, or 7.30% of the population working for the government.
The percentage of people getting government paychecks has declined a little bit, but the decline did not last that long. It fell as low as 6.80% by October 1983 before gradually starting to trend up again and was back up over 7% by September of 1986. Since then, the number has ranged between 7.0% and it briefly hit 7.50% in May 2000, but that was due to a spike in temporary Census workers.
Recently the absolute number of government employees has actually been falling as states and municipalities deal with budget problems due to lost tax revenues caused by the recession. The population continues to grow. As a result, the government now employs 22.27 million people, but that is in a country of 310.94 million.
That works out to be one government worker per 13.96 people or 7.16% of the population. That is actually the lowest percentage employed by the government since August 1988. It is not a huge decline relative to recent experience (the average since 1/80 is 7.23%, and since 1/00 it is 7.37%), however it is hard to make the case that government has recently too big and bloated when its employee headcount is the lowest share of the population in nearly a quarter century.
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