Posted by: Josh Lehner | September 11, 2013

Public Sector Employment

During our most recent forecast release, the discussion with the Legislature turned to the topic of trends in public sector employment both from a near-term perspective and from a long-term viewpoint. My comments were along the lines that the public sector did not see nearly the same level of job losses as the private sector in recent years but from a per capita basis we are currently at levels not seen in quite some time and we are losing public sector jobs in recent months and years. To fact check myself and to better understand the relative size of government, at least in employment terms, I put together the following facts and figures.

Government employment in Oregon has generally been increasing over time, particularly among state and local governments. Since World War II there have only been three period when state and local employment fell outright in Oregon and are associated with very tough economic conditions in the state (and subsequent public sector budget cuts as revenue falls). These periods are the early 1980s following the devastating recession, after the dotcom recession (and voting down of Measure 28), and today in the aftermath of the Great Recession. See here for more on the nature of the public sector changes in recent years.

PublicEmp

While public employment has generally been increasing over time, once you adjust this employment based on population or the size of the economy, it has been pretty steady since the 1970s or so. One reason to show public employment on a per capita basis is that the demand for public services generally grows in-line with population. Now, the costs of providing those services does not not grow at the same rate of population, but the demand generally does. (At least this is how we model public sector employment in our outlook.) The second graph comes from the Employment Department and what it shows is that public employment is more stable over time so the ratio falls in recession as private losses mount but rises in expansions.

Public_Relative

As for the nature of public sector employment, I break out the education-related work and then all other. Since the Baby Boomers reached their college years in the 1970s, education workers per capita in Oregon have been fairly stable, but on an ever-so-slight downward trajectory. This largely follows the fact that as a share of the overall population, K-12 and college age Oregonians are a smaller share of the state, even if their outright numbers are at an all-time high. Along with an aging population (and lackluster economy over the past decade) comes a different set of demands from citizens, with a larger focus today on health care, job training and safety net programs. As such, the number of public workers in non-education (the “other”) has risen since the 1960s and 1970s. Note that the large jump in 1990 reflects the reclassification of home health care workers into the public sector (while this change occurred in 2005, the data was revised back to 1990 but not years prior to then). Another factor influencing the other state and local workforce is tribal employment, which is classified as local government.

Public_Nature

Finally, when comparing Oregon with the nation overall, Oregon does tend to have a bit more government workers per capita than the average state. What is interesting is that the nature of this relatively larger public sector has changed over time. Up until the 1990s Oregon had more education workers per capita, however since then Oregon has more non-education workers and an average number of education ones. As for the larger non-education workforce per capita, the reclassification of the home health care workers plus the larger tribal employment in the state does account for some of the gap, although as shown in the Employment Department’s ratio graph above, Oregon does have a bit more public jobs relative to private jobs.

Public_ORUS

This post was designed to just illustrate the relative size of the public sector in employment terms. As for what is the appropriate or right size and scope of the public sector, that is an ongoing political discussion that we, as citizens, get to vote on on a regular basis.


Responses

  1. Josh: Very interesting analyses, but a question (or two)!

    We’ve done some recent work here at the Center around the issue of “Total Employer Cost of Compensation”, whereby we looked at salaries as well as everything else (Health insurance, PERS, FICA, etc). And in the course of doing this work, we talked to a lot of city governments that had down-sized their FTE ranks by 10-15%, 2013 (current) levels viz. 2007. The explanation was pretty straight forward — with “TECC” costs rising at 6-10% a year (1-3% salary increases; step increases for many on top of that; PERS rate hikes of 5% of payroll, etc), and revenue (mainly property taxes) rising at 2-3% annually, whenever a position became vacant through retirement or someone leaving, many jurisidictions were instead using the money saved to pay for these costs of remaining employees. As one put it, “We cannibalize the savings to finance these cost hikes that outstrip our revenue, even when we’ve “frozen” the pay schedules.”

    This was interesting to us. So, too, is the fact that apparently, there’s no “common yard stick” used in local government viz reporting of the numbers of employees – is it FUNDED FTEs, or authorized FTEs, or just employees, period (including part timers), etc. So all of this is anecdotal — and perhaps also “apples to kumquats.”

    What I’m wondering about is whether the data you’re using for this gets down into that kind of detail (especially post July 2012; recall that many positions during the 2009-2011 biennia were “preserved” (at least temporarily) with AARA money. Any insights on this phenomenon — if it is one — and/or how one might go about delving deeper into, with the data that exists?

    You might also be able to answer a related question — which is whether the data out there allows an analysis of the demographics of the state and local government work forces in Oregon. Here’s a recent article from the Washington Post about the federal government sector; I’ve thought about seeing whether could get anyone interested in the Center doing some work (seems perfect for some graduate students) on a state/local government version.

    http://articles.washingtonpost.com/2013-08-26/politics/41453082_1_federal-workforce-boomers-retirement

    Keep up the great work — really enjoy these reports!

    Thanks.

    • Hi Phil. Thanks for the comment.

      I remember the research the Center put out not too long ago and have no doubt it was quite a task to put the information together. As for your questions, I am checking right now with Employment on them. However, the job counts presented in this post and in the monthly and quarterly employment data should be for actual individuals with jobs and receiving paychecks and not tied to the approved budget numbers. As you say, there is leeway in how managers are able to, well, manage their workforce to meet their goals so just using the approved budget numbers can be misleading, particularly within a fiscal year or biennium.

      Furthermore, the ARRA money did support public sector budgets starting in 2009, resulting in fewer layoffs than maybe one would have expected. Today, the combination of less federal funds, slowly increasing revenues, particularly property taxes as you mention, are very likely the driving forces behind these reductions in the past year or so. The vast majority of the public cuts in the past few years have been at the K-12 level, technically local government education, with non-education employment effectively unchanged over 5 years for both state and local.

      The workforce demographics is a really interesting piece of the puzzle and I know Employment has produced some of these demographic breakdowns for other industries and I am asking about one for the public sector. I will let you know when I hear back.

      Thanks again. Josh.

  2. […] up on the previous work on government workers, one additional thing to consider are the demographics of public employees. This was brought to our […]


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