Governments outpace factories in creating jobs

July 17, 1992|By Bloomberg Business News

WASHINGTON -- The United States now has more bureaucrats than factory workers.

That fact belies the preaching of national leaders -- and could have a profound effect on the future of the American economy.

In 1980, when Ronald Reagan was first elected president, 16.3 million people worked for the federal, state and local governments. By last month, the number had risen to 18.6 million. During the same time, the number of U.S. manufacturing workers fell to 18.2 million from 20 million.

Despite continued pleas for a smaller government by Mr. Reagan and his successor President Bush, the federal payroll rose 8 percent to 3 million people from 2.8 million between 1980 and 1991. There were more rapid increases in the number of people (( working for state and local governments, in part because those governments scrambled to continue on their own programs that were cut by Washington.

This doesn't mean government is now the nation's biggest employer. From 1980 to 1992, the number of workers employed by the burgeoning service industries climbed to 66.3 million from 48.3 million.

The rise in government jobs may not be surprising. While Mr. Reagan and Mr. Bush talked about the evils of government spending, the federal budget deficit soared from $128 billion in 1982 to an estimated $399 billion in this fiscal year. The federal debt jumped from $998 billion in 1981 to the current figure of almost $4 trillion.

Factory jobs declined during the last dozen years because of two recessions and severe competition from foreign manufacturers.

There was a benefit for the U.S.; its exports are now more competitive. But the downside is a loss of what often were high-paying factory jobs. "The loss of these above-average-paying jobs has had an effect on the standard of living," said Daryl Delano, an economist at Cahners Economics in Newton, Mass. "It's a deep-seated problem."

And a permanent one. "Manufacturing jobs have gone overseas to lower-wage manufacturing centers," said Kathleen Camilli, chief economist at Maria Ramirez Capital Consultants. "Over 50 percent of them are not coming back."

The skewing of the nation's employment rolls toward government and service jobs could plague efforts to increase worker productivity, that is, the amount of work each employee produces each hour. Some economists say it's much harder to get productivity gains in the service sector and in government than it is in manufacturing.

That job may only get harder. Factory workers will steadily continue to constitute a less significant portion of overall U.S. employment, said Jim Challenger, president of Challenger, Gray Christmas, a Chicago firm that tries to get jobs for employees laid off by large companies. "We're turning into a service economy," he said.

A service economy with a growing component of government workers, that is.

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