By Conn Carroll
Since the beginning of the last recession (December 2007) the private sector workforce has shrunk by 6.6% while shedding more than 7.5 million jobs. Over that same time period, the federal government workforce (excluding Census and Postal workers) has grown by 11.7% while adding 230,000 jobs.
This trend has continued throughout the Obama Administration. Since President Barack Obama was sworn into office, the private sector workforce has shrunk by 2.6% while shedding 2.9 million jobs while the federal workforce (excluding Census and Postal workers) has grown by 7% while adding more than 144,000 jobs.
Now, President Obama’s FY 2012 budget proposes adding even more people to the federal payroll. Specifically, the President wants to create an additional 15,000 federal government jobs including 4,182 additional Internal Revenue Service employees 1,054 of which will be needed to implement Obamacare alone.
The problem with all these additional government jobs is that government spending does not create the economic growth needed to sustain private sector job growth. Heritage analysts James Sherk and Rea Hederman explain:
The resources the government spends do not materialize out of thin air—they are taken from the private sector. Research shows that government spending crowds out private investment. Each $1 increase in government spending reduces private-sector investment by between $0.46 and $0.97 after two years and $0.74 and $0.95 over five years. Government spending substitutes for private-sector investment; it does not supplement it. Increased government spending further reduces private-sector investment, making the problem of low job creation worse.
Moreover, government spending misdirects economic resources. Political priorities, not economic return, drive government spending. The desires of influential Members of Congress and political fads determine where government appropriations are allocated. This often differs greatly from the use that creates the most wealth and jobs.
This is one of the main reasons why countries in which the government spends heavily to create jobs—such as France and Germany—do not enjoy higher employment rates. In fact, countries with greater government spending and larger public-sector payrolls have higher unemployment.