In countries worldwide, leaders are building back better by growing the size and scope of government. In other words, they are trying to pad the data through artificial stimulus tools. But is a ballooning public sector reshaping the US economy? The doctrine of Bidenomics might usher in a new era of making everyone dependent on the state, be it corporations receiving generous green-related welfare or citizens working for Uncle Sam. But while the current president’s view of how an economy runs might offer a short-term fix, bolstering government with permanent trillion-dollar deficits and rocketing national debt might be unsustainable.
Bidenomics and Government Payrolls
The June employment reports for July 1-5 were fascinating reads.
First, the Bureau of Labor Statistics’ Job Openings and Labor Turnover Survey (JOLTS) showed that job openings unexpectedly soared by 221,000 in May to 8.14 million. Why? The government – federal, state, and local – drove them primarily, accounting for 154,000 of the new available positions. Second, the June jobs numbers confirmed that the national economy added 206,000 new jobs, with government payrolls representing a third of the creation.
Since January 2021, government payrolls have swelled by approximately 1.6 million to a record high of 23.364 million. The government’s share of overall job creation this year has been about one-fifth. This is higher when factoring in government-dependent industries, such as health care and social assistance. Evidently, the public sector is blossoming under Bidenomics.
On the other hand, the private sector? Not so much. Softening is what the market watchers are calling the latest trends. The three-month average of private sector payroll growth reached a cycle low of 146,000 in June. The situation could deteriorate further in the coming months based on the continual revisions by the statistics agency. Remember, in April, the Quarterly Census of Employment and Wages report, which covers more than 95% of US jobs, revealed a decline of 192,000 private sector jobs in the third quarter of last year, despite the Bureau of Labor Statistics reporting 640,000 new jobs in the July-September span.
What’s more, it is getting quite expensive to employ government workers. In fact, the average government employee is now roughly 40% more expensive to employ than a private-sector alternative when factoring in total compensation (wages and benefits). Additionally, in recent months, the Bureau of Economic Analysis has highlighted that government employees are enjoying faster compensation growth than personnel in the private sector. Put simply, a small business employee is barely keeping up with inflation while a government staff member is flying high.
Why is this happening? It is an exceptional trick to delay a recession. But how can the government keep growing if the private sector is shrinking? Deficits, baby!
Delay the Recession
Indeed, growing the size of government, sponsoring public works projects, and pushing citizens to collect paychecks from the state are exceptional methods of postponing a recession. However, they are unreliable long-term formulas for growing the economy or tackling the nearly $35 trillion national debt.
America suffers from a spending problem instead of a revenue issue. Rather than taking a chainsaw to the federal budget or trimming the fat, politicians on both sides of the aisle are maintaining the status quo. As Liberty Nation News reported, Treasury Department statistics show that Washington has issued $1 trillion in new debt over the last 12 months, much of which will be used to manage interest payments.
Many economists and market watchers now concede that reining the debt and deficits should be a top priority for the nation’s capital. However, the disciples of Bidenomics have rejected these pleas and have kept calm, kept up a stiff upper lip, carried on, and all that by maintaining the status quo and doubling down on the belief that government is the answer to all of life’s problems. Or, at the very least, the solution to keeping the gross domestic product in positive territory.
“Open-ended demands are a mandate for ever-expanding government bureaucracies with ever-expanding budgets and powers,” wrote legendary economist Thomas Sowell in his 2008 book Economic Facts and Fallacies.
Low Return on Investment
It’s no secret that the American people are taxed to death. What do they get out of it? Despite politicians using taxpayer dollars to create government jobs, the public has received a disappointing return on investment. New Pew Research Center data show that just 22% of Americans trust the government. It has generally been downward since the Lyndon Johnson administration, though there were eerie bumps under former President George W. Bush. So, growing the government might boost the GDP and wage growth, giving an incumbent a better record on a subject vital to voters, but these efforts will not be sustainable in the long run, especially if the private sector grinds to a screeching halt.
