In the Washington Post this morning, I write that contrary to President Obama’s claims, it is the public sector that is doing “just fine.” According to the Bureau of Labor Statistics, the unemployment rate for government workers last month was just 4.2 percent (up slightly from 3.9 percent a year ago).
Compare that to private-sector industries such as:
-Construction: 14.2% unemployment
-Leisure and hospitality services: 9.7%
-Agriculture: 9.5%
-Professional and business services: 8.5%
-Wholesale and retail trade: 8.1%
As AEI’s own Andrew Biggs points out, the public-sector unemployment rate “is the lowest of any industry or class of worker, even including the growing energy industry.” If the rest of Americans enjoyed the same unemployment rate as government workers, Obama would be cruising to reelection.
Still, President Obama says he wants to do more to help the public sector. He says that “cuts initiated by governors or mayors who are not getting the kind of help that they have in the past from the federal government” are responsible for the uptick in public sector employment. And his solution, of course, is more federal spending. That is why six months ago Sen. Harry Reid (using the exact same argument as Obama that the private sector is doing “fine”) pushed a Democratic plan to provide $35 billion we don’t have to help state and local governments hire more public workers.
But if Obama and Reid really wanted to help state and local governments meet the budget challenges they are facing so they can retain more public employees, there is a simple way to do it: Support reforms like those put in place by Wisconsin Gov. Scott Walker to make public employees contribute something to their pensions and healthcare. Walker’s reforms saved Wisconsin taxpayers more than a billion dollars—turning a record $3.6 billion budget deficit into a $154 million surplus. And he did it while cutting property taxes and creating a business-friendly environment that has produced more than 35,000 new jobs since he took office.
The way to help state and local governments is not to send federal tax dollars to subsidize their out of control pension and health care costs—it is to support reforms that make those programs sustainable and put them closer in line with the benefits enjoyed by those in the private sector.
