Mass Layoffs Down 30% in Government – Up Slightly in Private Sector

The Bureau of Labor Statistics just released data describing mass layoffs in July 2012.  There were 1,340 layoff actions involving 127,092 private sector and 10,328 government workers (seasonally adjusted).  The number of workers affected by the layoffs is based on new filings for unemployment insurance during July.  Each layoff event involved at least 50 employees from the same employer.

Over the past three months there have been 35,820 government workers and 363,197 private sector workers filing for unemployment benefits as a result of mass layoffs.  This represents a 30% decline in the number of government workers laid off compared to the same period in 2011.  Mass layoffs in the private sector increased by 5% compared to 2011.

About one in 292 private sector workers experienced a mass layoff in the past three months compared to one in 427 government workers.  In other words the typical private sector worker was 46% more likely to be part of a mass layoff than the typical government worker.  At least when it comes to mass layoffs, it would be hard to conclude that the private sector is doing fine.

Public Sector Administration: A Safe Job If You Can Get It

Liberal economists and politicians lament the fact that public sector employment has contracted over the past two years while the economic recovery has sputtered.  The following chart compares the change in private sector and government employment from May 2008 to May 2011, and from May 2008 to May 2012.  Private sector employment fell by 5% between 2008 and 2011 but rebounded enough in the past year to stand 3.3% below its May 2008 level.  Public sector employment fell by much less between 2008 and 2011 but has dropped more in the past year and now stands about 2.3% below its May 2008 level.

Despite the budgetary problems faced by state and local governments, layoffs of teachers, police, and firefighters are generally not politically popular.  Advocates of more government spending often equate fiscal restraint with layoffs of educators and first responders.  But the 2.3% decline in government employment between 2008 and 2012 includes a wide variety of public sector jobs.

Have cutbacks in state and local government spending caused substantial declines in the employment of teachers, police and firefighters?  The Bureau of Labor Statistics Occupational Employment Statistics (OES) program provides annual employment counts and measures of the pay distribution by detailed occupation for nearly all nonfarm workers, public or private, who aren’t self employed.  The OES data are reported for May of each year and the most recent data are for 2011.  The OES can be used to measure the change in employment from 2008 to 2011 in key jobs, such as educators and first responders, that are primarily found in the public sector.  (For example, about 90% of elementary and secondary school students attend public schools and about 75% of college students attend public institutions so changes in the employment of educators from 2008 to 2011 are likely to be dominated by government budget cuts.)  Unfortunately the OES data can’t be separated by government and private sector, so the data are less informative for identifying government reductions in jobs that are primarily found in the private sector (e.g. clerical workers).

The following chart indicates that the employment of elementary and secondary school teachers fell slightly while the employment of post-secondary teachers grew by over 5% from 2008 to 2011.  The employment of school administrators grew by 1.7% for elementary and secondary schools and by 16.6% for colleges and universities.

The OES data can also be used to measure the change in employment of police, firefighters, and their supervisors.  The following chart shows that between 2008 and 2011 the employment of police and firefighters increased by less than 2% while the employment of their supervisors grew more than six times faster or by more than 9%.

Government spending advocates criticize fiscal restraint by asserting that teachers, police, and firefighters will lose their jobs if government spending decreases (as a fraction of GDP).  The OES data indicates that while employment in the private sector fell by more than 5% from 2008 to 2011, employment in some government administrative positions grew briskly.  From 2008 to 2011 the employment of police, firefighters and elementary and secondary school administrators increased slightly and teacher employment fell by only 0.4%, but the employment of police and fire supervisors increased by over 9% and the employment of administrators in higher education grew by more than 16%.

The public’s appetite for fiscal restraint is likely to depend on their understanding of which public service jobs are being trimmed and which are growing.  It is unlikely that voters support substantial increases in the employment of university administrators, with an average annual salary of over $97,000, and police supervisors, with an average annual salary of over $82,000, while the number of classroom teachers declined and the number of patrolmen barely increased.  But this is exactly what happened between 2008 and 2011.

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