{"id":12454,"date":"2025-03-27T04:59:26","date_gmt":"2025-03-27T04:59:26","guid":{"rendered":"https:\/\/finderica.com\/?p=12454"},"modified":"2025-03-27T04:59:26","modified_gmt":"2025-03-27T04:59:26","slug":"why-cutting-government-workers-wont-solve-u-s-spending-problems","status":"publish","type":"post","link":"https:\/\/finderica.com\/?p=12454","title":{"rendered":"Why Cutting Government Workers Won\u2019t Solve U.S. Spending Problems"},"content":{"rendered":"\n
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WASHINGTON, DC – FEBRUARY 10: U.S. Sen. Elizabeth Warren (D-MA) speaks at a rally outside the … More<\/span> Consumer Financial Protection Bureau (CFPB) on February 10, 2025 in Washington, DC. Lawmakers, federal workers and supporters participated in a protest against Elon Musk and the Department of Government Efficiency’s (DOGE) plan to shut down the consumer watchdog agency. (Photo by Anna Moneymaker\/Getty Images)<\/span><\/p>\n

<\/fbs-accordion>Getty Images<\/small><\/figcaption><\/figure>\n

There\u2019s been a heavy focus on reducing the size of government in the name of reducing government deficit spending and the national debt. Fingers point to the number of government workers. However, expressed as a percentage of overall employment, federal employment has been shrinking since 1975.<\/p>\n

Why People Worry About The Deficit<\/h2>\n

Devotees of modern monetary theory argue that the concern over the debt is somewhat irrational because a country that pays for things in a currency it controls can\u2019t really get into trouble. Printing money isn\u2019t a problem unless inflation rises they say, and then there are multiple ways of addressing the issue by reducing the amount of money available \u2014 taxation by Congress or so-called appropriate monetary policy by the Federal Reserve.<\/p>\n

The federal government pays its bills by borrowing money through selling Treasury instruments \u2014 bonds, notes, and bills. Even if MMT theories were correct, getting there from the vast global market entanglements, existing obligations, and trust issues would be immensely difficult.<\/p>\n

Annual U.S. debt payments are already larger than the defense budget \u2014 the largest single discretionary spending item \u2014 and growing. The concern among many is that without a rapid imposition of control, the country and economy could spin out of control, leaving current and future generations to deal with the aftermath.<\/p>\n

Why Many Think Government Workers Are The Problem<\/h2>\n

Labor costs are often a significant portion of an organization\u2019s expenses. According to a Deloitte analysis, workforce costs on average run between 50% and 60%<\/a> of the spending of a \u201ctypical Fortune 500 company.\u201d<\/p>\n

The figures can vary wildly. When corporations have a bad quarter or face negative macroeconomic forces, many will hold layoffs to reduce headcounts and, if publicly held, placate shareholders and potential investors.<\/p>\n

When the discussion topic is reducing government spending, the federal workforce is bound to come up. If a big expense in a large organization is typically people, then assuming the same for the federal government might seem reasonable. But the impression many have is mistaken.<\/p>\n

Government Worker Patterns<\/h2>\n

Estimates of federal layoffs have been confusing and conflicting, largely because getting central and accurate data has been extremely difficult. Roughly 200,000 dismissals were mentioned, but there have also been some rehires of critical workers as well as a few reversals by courts.<\/p>\n

Additionally, as Marketplace<\/em> reported in February<\/a>, the cost of federal headcount is much lower than in businesses. The annual federal payroll for workers \u2014 probably not including contractors and not including active-duty military personnel\u2014 is about $336 billion a year for about 3 million workers, which is a bit under 5% of total federal spending. As Don Kettl, a professor emeritus and former dean of the University of Maryland School of Public Policy, told the public radio program that government payroll for other developed countries is about 5% of their GDP. It is about 1% for the U.S.<\/p>\n

The absolute number of federal workers has grown over time but so have the country\u2019s population and the number of services. Maybe a more realistic way to look at the federal labor force is to look at it as a percentage of all nonfarm workers. Below is a graph showing the figure over time<\/a>, created on the Federal Reserve Bank of St. Louis\u2019s FRED site by dividing the number of federal employees by all nonfarm workers, or, mathematically, (the number of federal employees) divided by (the number of all nonfarm employees in the country):<\/p>\n

<\/p>\n

Federal government workers as a percentage of all U.S. nonfarm workers<\/p>\n

<\/fbs-accordion>Erik Sherman\/Federal Bank of St. Louis<\/small><\/figcaption><\/figure>\n

The available government data does not include military personnel or employees of the Central Intelligence Agency, the National Security Agency, the National Geospatial Intelligence Mapping Agency (formerly the National Imagery and Mapping Agency), and the Defense Intelligence Agency. However, employees of the Postal Services are included. As cutbacks have not focused on such personnel, this analysis seems reasonable.<\/p>\n

Starting July 1975, the labor overhead \u2014 the percentage of total labor needed for government functions \u2014 dropped from 19.4% to 14.8%. The gray bars represent recessions and as the federal government doesn\u2019t tend to lay people off as many private employers do in difficult times, temporary upward spikes are understandable as the denominator of the ratio shrinks, making the resulting fraction larger.<\/p>\n

The common concern about the number of government workers is overblown. The comparative size has been shrinking steadily for nearly 50 years and, as a percentage of overall government expenses, it\u2019s a relatively small one.<\/p>\n<\/div>\n

Source link <\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

WASHINGTON, DC – FEBRUARY 10: U.S. Sen. Elizabeth Warren (D-MA) speaks at a rally outside the … More Consumer Financial Protection Bureau (CFPB) on February 10, 2025 in Washington, DC. Lawmakers, federal workers and supporters participated in a protest against Elon Musk and the Department of Government Efficiency’s (DOGE) plan to shut down the consumer<\/p>\n","protected":false},"author":1,"featured_media":12455,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"rank_math_lock_modified_date":false,"footnotes":""},"categories":[196],"tags":[464,2077,390,1440,479,272,2226,2873],"class_list":{"0":"post-12454","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-finance-news","8":"tag-cutting","9":"tag-government","10":"tag-problems","11":"tag-solve","12":"tag-spending","13":"tag-u-s","14":"tag-wont","15":"tag-workers"},"_links":{"self":[{"href":"https:\/\/finderica.com\/index.php?rest_route=\/wp\/v2\/posts\/12454","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/finderica.com\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/finderica.com\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/finderica.com\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/finderica.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=12454"}],"version-history":[{"count":0,"href":"https:\/\/finderica.com\/index.php?rest_route=\/wp\/v2\/posts\/12454\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/finderica.com\/index.php?rest_route=\/wp\/v2\/media\/12455"}],"wp:attachment":[{"href":"https:\/\/finderica.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=12454"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/finderica.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=12454"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/finderica.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=12454"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}