Thanks to Firings of Teachers and Cops, the Age of Big Government Really Is Over

Critics of government say that the public sector is bigger now than it's ever been before and, in fact, swells larger in a nearly automatic fashion.

This is nonsense. Government spending as a share of GDP hasn't greatly changed in recent decades and the spike in outlays over the past few years is largely due to the economic crisis. Also, state and local governments have actually been firing workers like crazy -- layoffs that have aggravated the economic slump.

Now comes new data from the Hamilton Project that shows just how far-reaching the downsizing of government has gone, and who exactly has been fired.

We've all heard again and again about layoffs of teachers and cops, but the Hamilton Project uses Census data to estimate precise numbers. According to their analysis, the U.S. has lost 220,762 teachers, 56,125 police officers, 30,200 first responders, and 6,831 air traffic controllers.

Quite apart from the economic impact of firing so many people in the middle of a recession, these layoffs have hit areas where government needs to be doing more, not less. Disinvesting in education is particularly stupid at a time when prosperity and human capital are more closely linked than ever, and the U.S. increasingly lags behind other industrialized nations in how well we educate our young people. Drawing on analyses which show that bigger class sizes diminish student achievement and later earnings from work, the Hamilton Project notes that:

The savings from these cuts, in terms of teacher salaries and benefits, are $11.8 billion per year nationwide. While a significant figure, it is substantially smaller than the estimated present value in foregone earnings of $49.3 billion dollars for the children, whose education is affected by larger class sizes. To put a fine point on these findings, this translates into a per-student, per-year loss of nearly $1,000 in future earnings.

As for firing cops, while crime is down, the United States still has the highest violent crime rate of any OECD country. Finally, amid chronic air traffic delays across the U.S., I don't need to comment on the wisdom of having fewer air traffic controllers.

Sure, over 20 million Americans still work for government, but the public sector's capacity to serve a country of over 300 million has dramatically diminished, with the Hamilton Project noting that the ratio of government workers to population is at the lowest point in at least thirty years -- as the chart below shows.

Public_Sector_Hamilton_Project.PNG

One last point about this new analysis: The Hamilton Project estimates that if government were as big now as it was through the Bush years, we'd have 1.7 million more jobs in America. Looking ahead, one clear strategy for returning the economy to full employment is to reverse cuts to government and bring the public sector more in line with the needs of the public.

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