What you need to know
- In the post-pandemic era, media stories about America's economy often cite strong month-to-month growth in employment.
- In late 2024, federal government hiring dominated the new-jobs statistics.
- Is this pattern a one-time thing, or was America's supposed economic strength in 2021-2024 built on government hiring?
Since the COVID pandemic, official reports show strong job growth in America. However, jobs data released in mid-2024 led some financial analysts to argue that much of the increase was due to hiring by the federal government. If this is true, then the apparent strength of the American economy does not reflect actual business conditions. Rather, it is the result of federal government actions that artificially create the illusion of economic strength.
Measuring job growth
As of January 2024, the civilian federal workforce (excluding contractors, military personnel, and the Postal Service) was about 2.9 million people, or just over 2% of the private sector workforce (135 million people). The figure below compares total federal employment to employment in other levels of government and several economic sectors. The data is from FRED (Federal Reserve Economic Data).
The figure shows that federal employment is lower than employment in major economic sectors and in state and local governments (the latter includes K-12 teachers and staff). The largest sector, services, contains a large majority of the private non-farm workforce.
Everything Policy’s analysis of federal and private sector hiring uses official monthly job growth data from the Bureau of Labor Statistics (BLS). The data is based on a survey of about 119,000 businesses to determine the number of employees on their payrolls (excluding agriculture). The data is adjusted to subtract seasonal changes, such as temporary jobs created during the holiday season. The BLS also surveys federal agencies (but not state and local governments) to assess their hiring rates.
There is no doubt that federal government hiring sometimes dominates job data. For example, in August 2024, total jobs growth was 37,000, but federal hiring totaled 45,000 – meaning that without government hiring, the economy would have lost jobs. Similarly, in October 2024, total job growth was -28,000 due to the impact of Hurricanes Helene and Milton. However, at the same time, the economy added 40,000 federal jobs, so the change in total employment without government hiring would have been -68,000
The chart below shows average monthly private-sector and federal government new jobs for 2010 - 2024. The solid line shows the average job growth for the entire American economy. Because of the COVID pandemic, job creation was sharply lower in 2020 and markedly higher in 2021 and 2022. Excluding these years, the average total job growth is about 180,000 per month and does not vary significantly across years. The dotted line shows the average change for new federal government jobs. Again, excluding the pandemic years, the average is about 30 thousand per month, with declines in some years and increases in others.
How do these yearly changes add up to long-term trends? The chart below uses FRED data to compare the growth of the federal workforce from 2014 to 2024 to the growth of employment in major economic sectors and state and local governments. (We start in 2014 to avoid bias due to the employment losses caused by the Great Recession of 2007 - 2010.)
The chart shows that federal employment has grown slightly more than in state and local governments and more than in the retail and manufacturing sectors – but much less than in the construction and services sectors.
The Take-Away
Excluding the pandemic years, job growth in the overall American economy over the last 15 years averaged about 170,000 per month. Federal government hiring averaged about 30,000 per month, making up about 18 percent of the new jobs created.
Over the last decade, growth in the federal workforce has outpaced growth in state and local governments as well as the retail and manufacturing sectors. However, federal job growth was considerably less than overall private sector job growth.
Employment is only one measure of the federal government’s size and overall economic and societal impact. The more important question is, what are these employees doing? Our policy briefs (link) offer detailed analyses of government policies and actions.
Further reading
FedWeek (2024). What Does the Federal Workforce Look Like? https://tinyurl.com/537mjmm2, accessed 12/1/24.
Our Public Service (2023). A Profile of the 2023 Federal Workforce, https://tinyurl.com/47njvjtu, accessed 12/1/24.
Sources
FRED: Federal Reserve Economic Data (2024) https://fred.stlouisfed.org/, accessed 12/16/24
BLS: Bureau of Labor Statistics (2024a) Comparing employment from the BLS household and payroll surveys, https://tinyurl.com/3amdypep, accessed 11/25/24
BLS: Bureau of Labor Statistics. (2024b) Current Labor Statistics. https://www.bls.gov/ces/, accessed 12/15/24.
Contributors
John Arnold (Intern) Is a sophomore at Binghamton University majoring in Political Science and Economics
Dr. Robert Holahan (Content Lead) is Associate Professor of Political Science and Faculty-in-Residence of the Dickinson Research Team (DiRT) at Binghamton University (SUNY). He holds a PhD in Political Science in 2011 from Indiana University-Bloomington, where his advisor was Nobel Laureate Elinor Ostrom.
Dr. William Bianco (Research Director) received his PhD in Political Science from the University of Rochester. He is Professor of Political Science and Director of the Indiana Political Analytics Workshop at Indiana University. His current research is on representation, political identities, and the politics of scientific research.
