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By Steven Moore |
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The Wall Street Journal |
| More
Americans work for the government than in manufacturing, farming,
fishing, forestry, mining and utilities combined. |
| If you
want to understand better why so many states—from New York to
Wisconsin to California—are teetering on the brink of bankruptcy,
consider this depressing statistic: Today in America there are
nearly twice as many people working for the government (22.5
million) than in all of manufacturing (11.5 million). This is an
almost exact reversal of the situation in 1960, when there were 15
million workers in manufacturing and 8.7 million collecting a
paycheck from the government. |
| It gets
worse. More Americans work for the government than work in
construction, farming, fishing, forestry, manufacturing, mining and
utilities combined. We have moved decisively from a nation of makers
to a nation of takers. Nearly half of the $2.2 trillion cost of
state and local governments is the $1 trillion-a-year tab for pay
and benefits of state and local employees. Is it any wonder that so
many states and cities cannot pay their bills? |
| Every
state in America today except for two—Indiana and Wisconsin—has more
government workers on the payroll than people manufacturing
industrial goods. Consider California, which has the highest budget
deficit in the history of the states. The not-so Golden State now
has an incredible 2.4 million government employees—twice as many as
people at work in manufacturing. New Jersey has just under
two-and-a-half as many government employees as manufacturers.
Florida's ratio is more than 3 to 1. So is New York's. |
| Even
Michigan, at one time the auto capital of the world, and
Pennsylvania, once the steel capital, have more government
bureaucrats than people making things. The leaders in government
hiring are Wyoming and New Mexico, which have hired more than six
government workers for every manufacturing worker. |
| Now it
is certainly true that many states have not typically been home to
traditional manufacturing operations. Iowa and Nebraska are farm
states, for example. But in those states, there are at least five
times more government workers than farmers. West Virginia is the
mining capital of the world, yet it has at least three times more
government workers than miners. New York is the financial capital of
the world—at least for now. That sector employs roughly 670,000 New
Yorkers. That's less than half of the state's 1.48 million
government employees. |
| Don't
expect a reversal of this trend anytime soon. Surveys of college
graduates are finding that more and more of our top minds want to
work for the government. Why? Because in recent years only
government agencies have been hiring, and because the offer of near
lifetime security is highly valued in these times of economic
turbulence. When 23-year-olds aren't willing to take career risks,
we have a real problem on our hands. Sadly, we could end up with a
generation of Americans who want to work at the Department of Motor
Vehicles. |
| The
employment trends described here are explained in part by hugely
beneficial productivity improvements in such traditional industries
as farming, manufacturing, financial services and
telecommunications. These produce far more output per worker than in
the past. The typical farmer, for example, is today at least three
times more productive than in 1950. |
| Where
are the productivity gains in government? Consider a core function
of state and local governments: schools. Over the period 1970-2005,
school spending per pupil, adjusted for inflation, doubled, while
standardized achievement test scores were flat. Over roughly that
same time period, public-school employment doubled per student,
according to a study by researchers at the University of Washington.
That is what economists call negative productivity. |
| But
education is an industry where we measure performance backwards: We
gauge school performance not by outputs, but by inputs. If quality
falls, we say we didn't pay teachers enough or we need smaller class
sizes or newer schools. If education had undergone the same
productivity revolution that manufacturing has, we would have half
as many educators, smaller school budgets, and higher graduation
rates and test scores. |
| The
same is true of almost all other government services. Mass transit
spends more and more every year and yet a much smaller share of
Americans use trains and buses today than in past decades. One way
that private companies spur productivity is by firing
underperforming employees and rewarding excellence. In government
employment, tenure for teachers and near lifetime employment for
other civil servants shields workers from this basic system of
reward and punishment. It is a system that breeds mediocrity, which
is what we've gotten. |
| Most
reasonable steps to restrain public-sector employment costs are
smothered by the unions. Study after study has shown that states and
cities could shave 20% to 40% off the cost of many services—fire
fighting, public transportation, garbage collection, administrative
functions, even prison operations—through competitive contracting to
private providers. But unions have blocked many of those efforts.
Public employees maintain that they are underpaid relative to
equally qualified private-sector workers, yet they are deathly
afraid of competitive bidding for government services. |
|
President Obama says we have to retool our economy to "win the
future." The only way to do that is to grow the economy that makes
things, not the sector that takes things. |
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