As employment has boomed in the US of late, more and more workers who had long ago given up looking for work have again entered the labor market, and found work. This growth in the supply of American workers has prevented wages and inflation from rising much, despite the greatly increased demand of the private sector for labor of all kinds. It’s been great. But with downward pressure of all sorts on immigration of all sorts, there is now serious worry that the former “reserve army of the unemployed” is approaching depletion, and that the supply of new labor is drying up; that the labor market is going to heat up enough to ignite significant demand led inflation, laying the groundwork for a recession.
Well, in the first place, if the economy is trying to produce more than she has the resources to produce efficiently, a recession is just what is needed. Or, at least, a slow down.
But, in the second, in 2013, the public sector in the US employed about 17.6% of the workforce. Or, should I say rather that the public sector “employed” about 17.6% of the workforce. Many of them do important work, to be sure: cops, soldiers, park rangers, teachers, scientists, and so forth – the people on the front line, as it were, and those who support them logistically (but not, mind, those who merely administer their activities). Let us estimate, generously, that such important public workers constitute half the public work force. The rest are supernumeraries, drones, spear carriers at the opera. They are beneficiaries of sinecures, doing work that does not need to be done.
The American labor force in January 2018 was roughly 160 million people altogether. If the ratio of public to overall employment has held more or less steady since 2013, then about 28 million people are now working government jobs. If half of those people were liberated from their “jobs,” well …
Just saying.
The Orthosphere 
@Kristor “doing work that does not need to be done.”
You are too kind. The problem with these folk (let’s call them ‘managers’) is that they reduce, very substantially, the amount of productive work done by the front liners. They create new schemes of monitoring and control – to subordinate skilled and experienced frontliners to ignorant and temporary managerial whims.
All the frontline workers of which I have direct knowledge do less of their job, usually only about half of their job, than was the case fifty years ago – do almost entirely to the managers.
If nothing else managers ‘change things’ and thereby impose substantial opportunity costs – because that is what manager do; that is how they get promoted. The more they change, the more successful they are – the more successful the faster they move up and away from the chaos, inefficiency and ineffectiveness they have caused.
Ah – if only they just did work that did not need to be done. The reality is that it would literally be better for everyone if they had genuine sinecures, and did absolutely nothing for their salaries – just stayed at home and spent them.
Yes. The really maddening thing is how much time people in the private sector must spend on compliance with the ukases of those government managers. It’s ridiculous.
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If coronavirus closes schools then one parent is going to be home, therefore…
Yeah; with corona virus, all bets are off. As with most discussion of economic factors, the post presumes everything else is held equal. Corona virus will certainly, somehow or other, violate that presumption.
I was a bicycle courier in Washington D.C. in the early 1980s. This was before fax machines, so there was plenty of business and I spent a lot of time walking the corridors of vast Federal office buildings. There was a great appearance of activity, but also a strong sense that not much work was being done. The bureaucrats would come bursting out of their offices and charge down the corridor anxiously riffling through a stack of papers, but I always suspected they had been napping in their office and were now going to another office to drink coffee and shoot the breeze. Since I was, as often as not, soaked to the skin with sweat or rain, I felt a good deal of scorn (perhaps veiled envy) for what I called Coffee Cup Commandos.
Greater experience has taught me that actual loafing on the job is rare among white-collar government workers. (Blue collar government workers, on the other hand . . .) They make a great appearance of activity, and actually give themselves ulcers and heart attacks, but very often by shoveling dirt into holes the excavated only last week. The big tell is the length of meetings. Meetings at my (public) university are long, and an hour is deemed barely sufficient to accomplish the smallest task. Meetings often swell to “retreats,” which can last eight hours. Meetings are short where work is being done; meetings are long where time is being wasted.
Whenever the price of my assets begins to rise, I see various know-it-alls running around declaring that armageddon can be averted only by inflation of those assets. I sell my labor for a living, so when the price of labor begins to rise they inflate the labor supply with immigrants. I save some of the money I am paid for my labor as cash, so when the price of money begins to rise they inflate the money supply with quantitative easing. My house is one of my major investments, so when the price of housing begins to rise they inflate the housing supply with new construction. There is, however, one asset that brings nothing but blessings when its prices is rising, and this is, of course, stocks. I’m now old enough to benefit from a “booming stock market,” but this still seems unreasonable to me.
Ha! I was a courier, too, for a big law firm in Indianapolis. “Soaked with sweat or rain:” absolutely! Often both at once! It was a problem to keep the documents dry.
The firm had a fax machine, the first that any who passed through that office had ever seen. It stood in the elevator lobby, the glorious thing, where everyone could see it. The size of a small refrigerator, it could print a page every five minutes, at a cost of only $5.00/page. Amazing!
It seemed to me then, likewise, that the pace of work over at the state house and the court houses was more, shall we say, deliberate than what I saw happening with the lawyers and legal secretaries at my firm. Somehow it was always absolutely critical to them that I get the docs across downtown as soon as humanly possible. The government clerks who took receipt of them were by contrast always … relaxed.
Still it was a great job. I got a lot of studying done in the break room, in between the frantic dashes.
I’ve been running a small investment firm myself now for many years, and our meetings are both hasty and fidgety. It’s hard to get people to attend them, hard to keep their attention, hard to keep them at it for more than an hour, except when there is a really serious problem.
As to your frustration about inflation, it is a law of supply and demand that when the price of x rises, the quantity of x supplied to the economy rises too – if it can – with the result that the price either stops rising, or even falls. Some goods are more difficult to produce than others, so their supply is relatively inelastic to changes in prices. Land, e.g. Inelastic goods do well as stores of value.
re: “Well, in the first place, if the economy is trying to produce more than she has the resources to produce efficiently, a recession is just what is needed. Or, at least, a slow down.”
The need for supply line changes and demand for in-country production, even of cheap tchotchkes, opens opportunities for meaningful production that have been absent for a long time. Although the internet has sort of restored some of the lost “home business” production that was part of the unsung economy for hundreds of years, it would be good to see an explosion in small local factories with a few employees making real things we need day in and day out.
We can only shrink government if we shrink the government payroll. Government workers are terrified of having to compete in the real world marketplace. And this is true of those who seem to be good & effective people as well as the drones and grifters, They move from government job with the Feds to government job with the State or Schools to government job with the County, collecting pensions as they go. Outside of the military, one rarely sees people go from a government job to a real one.
I have done both at various times, and I must say government employees should not be afraid of giving up their voluntary servitude, well paid though it may be, for the private sector. There is a liberty to working for a private company or a corporation that overrides the perceived security of government employment. It’s a great thing to respect your boss and appreciate your coworkers, and to know that respect and appreciation is reciprocated. It’s worth much more than money or security in the long run.
When you start looking for it with a critical eye, you discover tons of slack in our current economy. It is prevented from use mostly by regulation and taxation – i.e., by the actions of people on the government payroll. If that payroll were cut, regulation and taxation would fall, ceteris paribus. We could be far more productive than we now are – i.e., richer – at far lower cost of labor.
I’ve always thought it backwards that government work is considered a stable and profitable employment. yes: we need civil laborers, and we need to pay them. But part of the reason civil service has ballooned is because it pays a higher than market wage for everyone but the highest levels. And I say this as a denizen of Northern Virginia, where just about everything is inflated beyond comprehension. Probably private wages here are incomprehensible to “middle america” so to speak.
One of the things I think this current regime has done well is restore the economic fundamentals to domestic points of origin. A service economy can’t sustain a population, because if the crisis scenario should ever happen, well, no one can do anything. China industrialized from the top down, and American industrialized from the bottom up, but then we outsourced our industrialization and were left with just the service stuff, which in the long term would have made us resemble China as a top-down economy that’s missing the important middle step.
A consequence of that is rising wages in the private sector. Eventually (hopefully) it will become more profitable to work in the private sector in any capacity than to work in the civil service. The raw economic calculus on that front will shrink the size of government. The shrinking size of government will necessitate a shrinking scope of government.
Nearly a decade ago now, I worked a summer job at my Dad’s engineering firm, which took me to rooftops of government buildings to do safety evaluations of cell-tower antennas mounted there. Well, I was the data collector, and my Dad would do the safety evaluations. In any case, while my work never took me through the heart of Bureaucracy that JMSmith describes, the thing that struck me most was the palatial nature of these buildings. The lowest level employee gets to work in a glass-and-marble monument to the best bereaucrats. Many businesses start in garages, many first-time employees fresh out of college work in hastily emptied closets, because the profit motive applies negative pressure to operating costs.
I dream of a future where it’s more profitable to work in private sector than in public. Where all of our executive bureaucracy can fit in a couple trailers. It could happen. But it requires more than just 8 years of sensible policy making, i think.
Yes. I think we need some fairly fundamental, systemic changes – all of which involve undoing reforms and returning to the way we used to do things, for thousands of years.
Big surprise there, right?
To take just one example, in America we have largely eliminated the spoils system, under which an incoming executive could and often did fire all the state’s employees and fill state offices with his political allies and friends. When that was stopped, we got the unelected and unaccountable Deep State, staffed by millions who cannot be fired, and who do their best to sabotage any policy of an elected officer of the state that threatens their sinecures, whether by cutting their budgets or by actually solving the problems their agencies were founded to solve, but never ever have solved.
Bring back the spoils system, say I. A clean sweep of the whole hierarchy at every election, if that’s what the winner wants.
How refreshing would that be?