Government jobs have been recession-proof

In their column America's Hidden Austerity Program, Ben Polak and Peter Schott make the following observations:

But there is something historically different about this recession and its aftermath: in the past, local government employment has been almost recession-proof. This time it’s not. Going back as long as the data have been collected (1955), with the one exception of the 1981 recession, local government employment continued to grow almost every month regardless of what the economy threw at it. [emphasis added]

To some commentators, the loss of government jobs during the current recession has been an argument in favor of sending more money to the states to hire or retain more government workers. In fact, Polak and Schott's findings are a remarkable confirmation of my Thesis 1:

Government always gets bigger and more centralized.

That is, in the past local government employment has been, generally speaking, recession-proof and immune to any kind of job reductions.

As I have already done in many blog posts, let me describe the cycle of ever-increasing government borrowing and spending once again:

Hard times hit. Government engages in Keynesian stimulus. Good times return. Government does not withdraw the Keynesian stimulus because political and legal pressures from government unions prevent it from doing so and because, during good times, there is no incentive to borrow and spend less. Thus, a new permanent plateau of government employment, government borrowing, and government spending is achieved.

This is why since 1955 there has never been a significant reduction in the number of government employees come rain or come shine.

This cycle repeats itself over and over again with government becoming more burdened by debt with each iteration, more enfeebled by that burden, and less able to deliver a potent, effective stimulus during hard times. Finally, the government reaches the point of exhaustion: it still is obligated to pay all the financial commitments it has made (for example, in the form of high salaries, pensions, and benefits to workers and retirees in government unions), but it cannot borrow anymore (for example, because its debt rating has gone to junk, as has California's). At this point, when recession strikes, the only alternative state and local governments have is to cut back on the number of current employees since they cannot cut back on salary levels or on pension and benefit payments.

Thus, the fact that we have reached the point where government is cutting back on government employees is not an argument in favor of having the federal government pump more money into supporting government jobs, rather it is a sign that state and local governments have reached the point of exhaustion, the point where their borrowing and spending is unsustainable. To give more money to states to hire more government employees would simply transmit the disease at the state and local level to the Federal level.

The only real solution to the problems at the state and local levels is to pass reforms to curb the growth of salaries and the cost of pensions and benefits for government union workers. This is precisely what Republican governors like Mitch Daniels, Chris Christie, and Scott Walker are doing, saving jobs in the process. President Obama and the Democrats and Keynesians, on the other hand, would rather centralize and federalize the disastrous spiral of ever increasing borrowing and spending that has brought our state and local governments to the brink of disaster.