The Myth of Big Government

Before we waste a lot of time talking about the pros and cons of big government, let’s establish whether it really exists. 

I’m just going to throw this out there: It doesn’t. Well, relative perhaps to 1900, the government is large, but looking at the past 50 years, government is actually getting smaller. It was at its largest under Nixon.

I know, I know. Folks are going to say, but more people work for the government now! It’s true there are more government jobs now than 50 years ago, but there are also more people in this country, more services in demand, and more total jobs in the economy.

The important thing to examine is the relative size of the government, what I’m calling the “share” (the percentage of government jobs among total jobs).  Also, the various components of “government” are important. For example, local government by far makes up the majority of government jobs in this country. The federal government is relatively quite small.

My goal is to avoid wasting any more time having a national debate about the implications of the growing big government. It isn’t growing. For evidence, please look at these charts I made, and let’s move on to more important matters.

Whether government is too big is an entirely different debate. But our government was as big and bigger during periods of robust economic growth, so it is hard to argue that the size of government is hampering our economy.

(Employment data is from the Bureau of Labor Statistics, Current Employment Statistics, and Population Data is from the US Census’ Current Population Survey).

Chart 1: Government Employment, 1961-2011

The number of government jobs has increased 154% over the past 50 years.  The percentage of government jobs among all jobs has gone from 16.1% in 1961 to 16.8% in 2011, with a great deal of variation in between.  Essentially, although total government jobs have increased, the relative size of the government has not.

Chart 2: Government Share of Total Employment, 1961-2011


This chart shows the share line from Chart 1 in greater detail (I apologize for skewing the y-axis, but it allows us to more readily view the variation).  As you can see, the size of government (as a percentage of all jobs in the US) actually peaked in 1975 at 19.2%.  Government has largely shrank since then.

Interestingly, in my lifetime, government was the largest during the administration of Ronald Reagan, with government jobs comprising an average of 17.4% of total employment.  It was lowest under George W. Bush at 16.2%.  Under Barack Obama it has returned to 17%; this has also been accompanied by a significant loss of total jobs and no decline in population.

Chart 3: Components of Government Employment, 1961-2011


Local government is by far the largest component of government size.  In 1961, local government comprised 54% of government jobs.  In 2011, local government comprised 64%.  That was due to a 201% growth in local government employment over these 50 years. (For comparison, the total number of US jobs grew 143% over this period, and the US population grew 70%).

In contrast, federal government jobs comprised 27% of government jobs in 1961 but only 13% in 2011.  The federal government only grew 20% over this period.  Significantly lower than state, local, total jobs, and population growth.  So if big government does scare you, look at local and state government as the issue, not the feds.

Chart 4: Percentage Growth of Government Jobs, Total Jobs, and Population, 1961-2011


The main takeaway here is that although in the 1960s and 1970s, government grew more quickly than the overall economy and population, for the next 20 years, it actually grew more slowly than the economy.  Over the last decade, overall employment growth dropped sharply, but so did government growth, with both dropping below population growth for the first time in 50 years.

Chart 5: Percentage Growth of Government Jobs, Total Jobs, and Population, 2001-2011


This is just a more detailed view from Chart 4 showing only the past decade.  A lot of ups and downs in the growth of total jobs, with recessions at the beginning and end of the decade.  Government growth remained fairly steady through the first 8 years, roughly matching population growth (as it should if government is serving population). Interestingly, from 2008 through 2011, government size stalled and then began declining.

Conclusion

Big government is largely a myth (at least that it’s been growing larger over the past 50 years).

Interestingly, Ronald Reagan did become president at a time when government was larger, but it actually began declining under Gerald Ford and Jimmy Carter.

Also, that was mostly non-federal jobs.  The size of the federal government was actually highest in 1961 at 4.4% and has been on decline every since.

Now that we dealt with that, let’s talk about real issues, like upgrading aging infrastructure, realigning our education system, and investing in new energy technologies.

 

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About Tony

Lives in Austin, Texas and likes music, art, philosophy, and random stuff.
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3 Responses to The Myth of Big Government

  1. Galen says:

    This is great stuff, well researched and presented. Real journalism. Thanks.

    Ok, government is not big–so what is causing all this FEAR of big government? Corruption? An unaccountable (and all-powerful) Federal Reserve system? These are vitally important concerns.

    But also: government forcing schools to teach science and disallowing prayer, forcing integration and affirmative action, “entitlements” for minorities and women, legalized abortion and gay marriage. There’s fear of big government coming from all sides (including a healthy fear of money corrupting politics), but I think a lot of this nonsense big government rhetoric stems from the fact that government isn’t evangelical or white enough for the Republican Party and it’s starting to scare them.

    • Tony says:

      Yeah, there are also a lot of other questions to address. Big government could mean government spending. Could mean the types of regulations. It’s a broad term, but I was just specifically addressing the issue of employment.

      I’m also very interested in seeing if there is any correlation between smaller government and economic growth. Trying to make a chart correlating periods of growth and government size.

    • Tony says:

      I think in general though, Big Government is often used as a spectre to create fear and push for tax cuts.

      I’m not sure about the why and the solutions, but I’m very interested in our refining the conversation and searching for clarity. For example when people complain about Regulation, as a general term, I get frustrated. I ask, which specific regulations? Similarly in this situation, it’s easy to talk about Big Government, but what are we really talking about? Need to be clear and factual.

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