Tax Burden: 40 Million Government Workers

That means that about 17 percent of the American labor pool ­ one in every six workers ­ owes its living to the taxpayer.

Tax Burden: 40 Million Government Workers
Written by Gary North on April 6, 2012

How many people work for governments in the United States. Let's look at the numbers.

The usual estimate of the number of employees of the U.S. government is 2.8 million. The estimate is fake. This does not count military personnel. But most important, it does not count contract workers paid by the federal government.

The Office of Personnel Management does not keep track of these workers. That would give the game away.

One man has estimated the total: Prof. Paul Light of New York University.

[The federal government] uses contracts, grants, and mandates to state and local governments to hide its true size, thereby creating the illusion that it is smaller than it actually is, and give its departments and agencies much greater flexibility in hiring labor, thereby creating the illusion that the civil-service system is somehow working effectively. . . .

Contractors and grantees do not keep count of their employees, in part because doing so would allow the federal government . . . to estimate actual labor costs.

Here is his estimate: 11 million, broken down as follows: 1.8 million civil servants, 870,000 postal workers, 1.4 million military personnel, 4.4 million contractors, and 2.5 million grantees. These figures are from 2006.

Yet the federal government isn't all. Despite its huge budgets, state and local governments dwarf Washington in direct employment. According to the U.S. Census Bureau, there are 3.8 million full-time and 1.5 million part-time employees on state payrolls. Local governments add a further 11 million full-time and 3.2 million part-time personnel. This means that state and local governments combined employ 19.5 million Americans.

When we add up the true size of the federal workforce ­ civil servants, postal workers, military personnel, contractors, grantees, and bailed-out businesses ­ and add in state- and local-government employees ­ civil servants, teachers, firefighters, and police officers ­ we reach the astonishing figure of nearly 40 million Americans employed in some way by government. That means that about 17 percent of the American labor pool ­ one in every six workers ­ owes its living to the taxpayer.

There is going to be a government default at some point. Tens of millions of these people will lose their jobs. The private sector will have to absorb them.

Think of the Great Depression, when government was a small percentage of the labor market. There was 25% unemployment in 1933.

Think of what will happen in the Great Default. There will be a spurt in unemployment, but then these people will at long last be forced to become productive. There will be an increase in national productivity. These people will suffer sharp declines in their income. But taxes will fall for the rest of us.

It will be the turning point for America's comparative decline. This nation will rebound. No nation is better positioned for economic growth as a result of bankrupt governments. But the pain will be excruciating for the people who are on government payrolls today. As for government pensions, forget about it. Gone. As for government labor unions: also gone.

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