All jobs are not created equal. This isn’t a snobbish comment meant to glorify executives while looking down on workers or that one type of industry is better than the others. Instead, it’s a statement about the difference between private sector and public sector jobs. Private sector jobs add productivity to the economy, while the public sector exists by taking away those gains through taxation. The public sector is dependent on the private sector for its existence.
The Private Versus Public Sector
Private sector jobs are paid for through private funds that belong to either a person or a company. When those funds are used to hire someone for a job, there is an expectation that a pre-negotiated service or task will be delivered in exchange for compensation. And, should that delivery not happen, or should it not be needed anymore, then the worker is fired or the job is eliminated through layoffs as it is no longer productive to help the business achieve its goal.
Public sector jobs are supposed to exist to provide a benefit to the public. Police officers are supposed to maintain law and order, firemen fight fires, and teachers educate the next generation. There are arguments as to how much of this workforce is necessary and how effective they are, which is fine because the taxpaying public is supposed to be their bosses with elected officials (like a local board of education) serving as trustees representing the public’s interests.
Private sector jobs are funded by private capital. If a business owner wants to expand their workforce then they must raise the funds to do so. And, if they don’t have the funds to maintain the workforce, then it needs to be restructured and downsized. Anyone who hires someone for a job that is completed with satisfaction only to not pay this person has stolen their worker’s time and labor.
Public sector jobs are paid through taxes and, for some administrators, this might make their budget feel unconstrained as any overages could be covered by tax increases. There is less need to be careful in the public sector because the money can always come from somewhere (someone) when push comes to shove. And when there is less incentive to manage money wisely, year-to-year spending seems to always increase. There are many school districts across America where spending increases yearly as enrollment consistently declines.
Jobs for the Sake of Jobs
In theory, every government action should be performed for the benefit of the public. Take infrastructure, for example. Let’s say there are two towns each with about 50,000 people that are on a river across from each other and the nearest bridge is thirty miles upriver at a larger city. This means that everyone traveling between these towns across from each other by car need to travel sixty miles. That could take an hour or more.
But if a modest bridge is built, then potentially 100,000 people can now travel between the towns in two minutes and save fifty-eight minutes of their day for other productive uses. Most people will agree that this is a good use of resources. And, during the construction, 100 people found full-time work during the six months it took to build it.
After a few years, there is an economic downturn in the region and, as a result, new construction has come to almost a stand still along with other industries. People are out of work, the unemployment rate is rising, and there is a general mood of desperation. An ambitious political leader sees the discontent and decides that if new businesses aren’t being started and if the established ones aren’t hiring, then he will create jobs for the people by having the government hire them to do something.
Remembering how the first bridge was such a success, he decides that they will build a second one right next to it. Traffic was never an issue with the original bridge, but this one is very important, the politician tells the skeptical public, because it is going to create over 100 jobs and that is how it will benefit everyone. And the current unemployment situation is a crisis!
Because the second bridge’s purpose is to put people to work, it takes more people and more time to build it than the original did. A lot of people feel good seeing it being made. While at the same time, tax increases were needed to cover its funding and the few businesses that were planning to expand their workforce now need to put those plans on hold since they no longer have that capital available with that money now paying for the new bridge.
One year later, the bridge opens but the workers are now unemployed again because private sector hiring has not picked up. The politician finds another project that isn’t necessary for the public good except that it will put people to work again. This time they will dig ditches and the next project after that might as well be filling those ditches back in.
Robbing Peter to Pay Paul
As of December 2023, almost twenty-four million Americans were employed by the government at either the local, state, or federal level. The population for the country that year was 335 million, which means about one out of every fourteen people were employed in the public sector. Of the 335 million, roughly half of that—171.9 million people—were in the workforce. The government was employing 14 percent of all workers with the other 86 percent financing their salaries through taxes.
The overwhelming amount of government jobs are at the local level and we can see them when we drive on roads (that may or may not be in good condition depending on your area), send our kids to school, need to call 911, and many other things. The federal level is much different because most of us do not deal with it every day. We are aware of the military and national defense, but there are a lot of departments that most Americans did not even know existed.
USAID has been the most prominent with a lot of people hearing about it for the first time this year. Here was a government department that did not directly benefit the average American taxpayer. It was argued that it indirectly benefited American foreign policy, and after an internal review the State Department decided to scrap more than 80 percent of its projects while consolidating the remaining directly under their control. Since then, other taxpayer-funded agencies have come to light where they seemed to serve no purpose other than to employ people like the Federal Mediation and Conciliation Service and the Institute for Peace.
The private sector adds value to the economy by creating goods and services that are demanded by consumers at prices they can afford. The government sector only exists at the expense of the private sector, by definition.
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