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The public sector is bigger than ‘the government’

December 18, 2019

How many people in the United States work for the government?

A quick way to answer this question is to look at government statistics. The Bureau of Labor Statistics (BLS) in the U.S. Department of Labor produces employment statistics by industry. Some of those industries include local, state and federal governments. 

In the latest release for “The Employment Situation,” the BLS estimated that there were 14.6 million people employed by local governments, 5.2 million people employed by state governments, and 2.8 million people employed by the federal government, out of a total 152.3 million people employed in the United States.

That’s based on formal employment relationships, however.  In a world where government contracts with other organizations to provide goods and services, and where public capital effectively stands behind “private sector” financial organizations supported by a government safety net, drawing clear lines between the government and the private sector isn’t so easy.

The public sector is effectively much larger than “the government.” Consider that the Federal Reserve Banks report total assets of $4.1 trillon, more than the total assets reported by the entire federal government. How can this be? Well, the Federal Reserve Banks' financial statements are not consolidiated in the US government's financial statements. And employment in the Reserve Banks is not included in federal government employment, either. 

In turn, for the BLS establishment survey, government employment covers only civilian employees; military personnel are excluded. Employees of the Central Intelligence Agency, the National Security Agency, the National Imagery and Mapping Agency, and the Defense Intelligence Agency also are excluded. 

For another example, there’s a reason we call them “public utilities.” Water and electric utility rates aren’t taxes, formally, but they take on similar characteristics in a world where government influence reigns

In coming weeks, I will be drawing some lessons from the career of former U.S. Senator Paul Douglas (1892-1976) for perspective for following the Illinois corruption investigation next year. Douglas had an amazing career, with notable contributions in the areas of public utility regulation and ethics in government. 

How many people in the United States work for the government? There’s another reason the answer is bigger than just government employees. The Tax Foundation computes something called “Tax Freedom Day,” which depends on how many months it takes to work to pay government taxes. 

And if you include the per-taxpayer amount of unfunded federal government obligations, there is a sense in which we are all working for the government.


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