Updated at 2:25pm ET The dismal data in Friday’s report from the Bureau of Labor Statistics -- the number of unemployed remained at 12.7 million in June and a mere 80,000 jobs were added – will add fuel to the debate over whether government at all levels is downsizing – and if it is, is it downsizing so much that it is weakening the larger economy?
One way to get an answer to this question is to compare the number of jobs at the start of the recession and in June in three key sectors of the economy: Building, Buying, and Governing, in other words, construction, retail sales, and government -- not only government at the federal level but at the state and local level. Keep in mind that there are more than six times as many state and local workers as there are federal workers.
During the worst phase of the recession President Barack Obama and the Democratic Congress went to extraordinary lengths to keep state governments – and the workers on state and local government payrolls – afloat.
The $831 billion stimulus was in large part designed to send money to public schools, to state road-building and transportation projects, and, through a burst of extra federal matching money for Medicaid, to state coffers. Since money is fungible, every extra stimulus dollar which a state received from Washington for its Medicaid program allowed it to keep state employees on the job.
That stimulus experiment is over and it won’t be repeated. But for a time, in the worst months of the recession back in 2009 and 2010, the stimulus money did keep state and local government employment higher than it would have been otherwise.
Here what you can see in Friday’s data, compared to the month the recession officially started, December of 2007.
Building: Employment in construction stood at 7,490,000 jobs when the recession began in December of 2007. It went into a steep decline in 2008 and 2009 and has now been at a plateau since the start of 2010.
Friday’s BLS report – which has preliminary figures for June which might later be adjusted up or down – said that there were 5,509,000 construction jobs in June, a decline of more than a quarter since the recession began.
The number of construction jobs kept falling in 2009 and remained flat in 2010. The only good news here is that the number of construction jobs has ticked up a bit – by about 21,000 -- from its lowest point in November of 2010.
In an interview with CNBC Friday about an hour after the BLS data was released, Obama’s chief economic advisor, Alan Krueger, a labor market expert from Princeton University, said, “The unemployment rate is unacceptably high for construction workers because we over-built so many homes during the housing bubble years ago -- and we’re still working our way past that excess.”
President Obama tells a group of supporters in Poland, Ohio, takes aim at rival Mitt Romney and his prescription for the economy while maintaining that the overall employment numbers, from the past 28 months – and the creation of 5.4 million new jobs – are a "step in the right direction."
In addition to that excess of houses, there’s excess shopping mall capacity: the current vacancy rate for shopping malls is 8.9 percent – compared to 5.8 percent for shopping malls when the recession began, according to REIS, a retail commercial research firm.
Buying: The number of retail trade workers – which includes everyone from people who sell cars to people who sell plumbing fixtures at Home Depot – stood at 14,747,200 in June, a decline of 5.3 percent since the recession began. The retail sector has bounced back from its low point in December of 2009 – up by about 396,000 jobs since then – and has grown, with a few wobbles and stutters, for most of the past two and a half years.
Governing: According to the BLS data, there are more federal workers today than when the recession began -- about 50,000 more.
Federal employment, of course, spiked with the Census in 2010 – which by chance came at a fortunate time for the economy since it allowed the hiring of more than half a million temporary data collectors. But putting that Census jobs spike aside, federal headcount has drifted down slightly from the early months of 2011, by about 2.5 percent.
In addition to the BLS survey of employers – the source of Friday’s data – the federal government also keeps more precise data on its own employees through the Office of Personnel Management’s “FedScope” database. The most recent available data from that database shows that in March executive branch head count was at 2,102,269 – compared to 1,862,404 in September of 2007, which is the closest month to the start of the recession for which FedScope has published data. So as of March, the OPM was showing federal executive branch headcount up by nearly 13 percent compared to right before the recession began.
With state and local government headcount, the story is different. State government employment stood at 5,139,000 when the recession started and was at 5,060,000 in June, a decline of 1.5 percent.
Local government employment stood at 14,481,000 when the recession began and was at 14,077,000 in June, a drop of 2.8 percent.
Presumptive Republican presidential nominee Mitt Romney responds to the dismal June jobs report from Wolfeboro, New Hampshire.
Krueger told CNBC, “We now have had 28 months in a row of private-sector job growth – 4.4 million jobs added in that time period. That’s moving in right direction, but we’d like to have faster job growth and there are steps Congress can take right now that would strengthen job growth…We weren’t creating enough jobs before the recession; the recession just made the jobs gap much, much bigger.”
Krueger gave his pitch for the mini-stimulus plan which Obama proposed last summer – and stressing the need for federal aid to keep state and local government workers afloat: “If Congress were to act on the president’s proposal to help state and local governments retain teachers, firefighters, policemen – also to invest more in infrastructure, we could put more Americans back to work quickly.”
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Lee Saunders, the president of the union that represents many government workers, the American Federation of State, County and Municipal Employees, said Friday, "You can’t cut your way out of a jobs crisis. Laying off thousands of public service workers keeps weighing our economy down. President Obama’s jobs plan would get our economy moving by putting thousands of teachers, firefighters and first responders back on the job. But Mitt Romney has proposed just the opposite."
But Romney said Friday after the jobs data came out, “Millions of families... are struggling today in this great country. It doesn't have to be this way. The president doesn't have a plan, hasn’t proposed any new ideas to get the economy going—just the same old ideas of the past that have failed.”
And Republicans have one more answer to the Obama “more stimulus, please” argument: debt. The stimulus is history and the federal government, they contend, just cannot afford to spend and borrow more.