How many people work for government?

The following is a re-post of an attempt to estimate how many people work for government at all levels. I would argue that the estimate is vastly under-counted since so many people in private corporations are employed meeting federal, state and local mandates. But it is true that they don’t “work for” the government but only because of government mandates and laws.

Iain Murray wrote the following:

How many Americans work in government? That’s a difficult question to answer. Officially, as of 2009, the federal government employed 2.8 million individuals out of a total U.S. workforce of 236 million — just over 1 percent of the workforce. But it’s not quite as simple as that. Add in uniformed military personnel, and the figure goes up to just under 4.4 million. There are also 66,000 people who work in the legislative branch and for federal courts. That makes the figure around 2 percent of the workforce.

Yet even that doesn’t tell the full story. A lot of government work is done by contractors or grantees — from arms manufacturers to local charities, from environmental-advocacy groups to university researchers. A lot of the work they do is funded nearly entirely by taxpayers, so they should count as part of the federal government. Unfortunately, we can’t ask the Office of Personnel Management (OPM) how many government contractors and grantees there are. They don’t keep such records.

Instead, we can ask Prof. Paul Light of New York University, who has estimated the size of these shadowy branches of government. As he points out, while there are many good reasons for the government to use contractors (should the feds really be in the business of making dentures for veterans, as they were until the 1950s?), the use of contracts and grants also hides the true size of government:

[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.

OPM’s failure to keep records of the number of quasi-governmental employees indicates a lack of accountability, as Professor Light says:

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.

Nevertheless, Professor Light was able to come up with some useful estimates by using the federal government’s procurement database. When he added up all the numbers, he found that the true size of the federal government was about 11 million: 1.8 million civil servants, 870,000 postal workers, 1.4 million military personnel, 4.4 million contractors, and 2.5 million grantees.

However, this turned out to be a low-water mark. Over the next few years, even before 9/11, the true size of government increased significantly, almost all in the “shadow” sector. By 2005, the federal government employed 14.6 million people: 1.9 million civil servants, 770,000 postal workers, 1.44 million uniformed service personnel, 7.6 million contractors, and 2.9 million grantees. This amounted to a ratio of five and a half “shadow” government employees for every civil servant on the federal payroll. Since 1999, the government had grown by over 4.5 million employees.

Professor Light’s figures are from 2006, but there can be little doubt that the size of the federal government has increased still further since. There are those new contractors and grantees working on “stimulus” projects to add. Then there are the employees of bailed-out and partially nationalized firms: General Motors (still owned in large part by the government despite the sale of stock in November 2010), AIG, and a large number of banks. GM alone employs 300,000 people. In addition, government has increased its mandates and general spending.

All of which suggests a significant expansion in “shadow” government employment since 2005. Even if it grew at the same rate as it did between 1999 and 2005 (a conservative assumption), that would suggest a further 4.7 million employees dependent on taxpayer funding since 2005, bringing the total true size of the federal government to just under 20 million employees.

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.

— Iain Murray is vice president for strategy at the Competitive Enterprise Institute in Washington, D.C.

Well, when the great federal bankruptcy comes, that 20% or so is going to make it just that much more difficult to weather the storm. Baton down the hatches!


18 thoughts on “How many people work for government?

  1. Pingback: American Oligarchy | Jeremiah on America

  2. Hey Mark, I’ve wondered the very same thing. However, I think the bigger question is the total number of persons who work for the whole government, state federal and local. FRED puts that figure at around 22 million. This figure does not count the US Military or the estimated defense contractors estimated at around 2 million. There are the usual problems with estimating the number of “private” contractors, road builders etc who are listed as private even though the vast majority of the funding for their work is tax revenues. I am guessing the real figure for total government personnel approach a 25-30% of an estimated workforce of 160 million.

    Considering the likely economic hardships that lie ahead for the American People, the important thing to keep in mind is how persons who have aligned their personal career plans around receiving a government paycheck and future retirement income stream will fight to keep them politically and worse given that the group as a whole is both well organized and well armed. They don’t require any peculiar ideology to intuitively align their interests and act jointly to defend them.

    • Yes, good points all. The total of number of people who work for government or depend on government welfare are all “government employees” in effect. We have reached the point where it will be darn hard to ever “reduce the size of government”. No politician even mentions such heresy any more.

  3. In addition, private employees have to spend long hours dealing with government regulations, rules and laws, most of which are nonsense.

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  5. The US government doesn’t own the banks or auto industry. And without the rescues the country would have gone bankrupt or something approximating it because the entire financial system and the 55 trillion of credit that keeps the US economy functioning would have seized up. Exactly what happened in 1929-33.

  6. I just asked google. It said this:

    What percent of American workers work for the government?
    Federal, state, or local government employs 17% of U.S. workers nationally. WASHINGTON, D.C. — Seventeen percent of U.S. workers say they work for federal, state, or local government, ranging from 38% in Washington, D.C., to 12% in Ohio.Aug 6, 2010
    Gov’t. Employment Ranges From 38% in D.C. to 12% in Ohio | Gallup
    Search for: What percent of American workers work for the government?

  7. When I asked google, and it said that, I thought of one of my ideas. I believe there could be a 10% flat tax on all incomes, and, at the same time, a 15 dollar per hour mandatory national minimum wage increase. I believe government is too big. I’m not a democrat or republican. I don’t like politics, but they seem necessary to keep the system functioning. People then feel like they have a choice in picking their role.

  8. What I’m curious about is how many people are currently on Federal retirement. I have read the FERS system is 800 billion in the hole, who is going to pay for that? As we continue to fire and hire in the public sector are we not making this problem larger and larger? Why is it so hard to get any information about any of this?

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  14. This system is bond to implode on itself, having 5 citizens making less then the people who are PUBLIC SERVENT’S paying the way. Our government is now shut down and I am totally OK with it.

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