Public Sector Payroll Jobs: Bush and Obama

[Travel day -- I am going to visit the St. Louis Fed for a week -- will post as I can. (The post earlier today is related to the visit. I am going to talk about potential output and the controversy that erupted on economics blogs in a talk during the visit and I wanted to clarify my thinking on a few points. I also met the president of the Philadelphia Fed Charles Plosser on Friday, and he was well aware of my view on this from the blog. He was the one who motivated me to think about how demand side shocks can produce temporary supply-side effects, and the degree to which the supply side effects pose a constraint for policy. On that point, I see I have an ally in the view that much of the current change in the natural rate of output is temporary.)]

Calculated Risk notes a difference between public sector employment during the Bush and Obama administrations. After the stock market crash, public sector employment continued to rise during the Bush administration, but after the housing market crash public sector employment declined. This made the recession worse, and it's working against the recovery:

Public and Private Sector Payroll Jobs: Bush and Obama, by Calculated Risk: This is a follow up to the previous post showing the year-over-year change in private and public sector payroll jobs. ...

The employment recovery during Mr. Bush's first term was very sluggish, and private employment was down 913,000 jobs at the end of his first term. The recovery has been sluggish under Mr. Obama's presidency too, and there are still 247,000 fewer payroll jobs than when Mr. Obama's term started (although it appears this will turn positive in a couple of months).

A big difference between Mr. Bush's first term and Mr. Obama's presidency has been public sector employment. The public sector grew during Mr. Bush's term (up 900,000 jobs), but the public sector has declined since Obama took office (down 590,000 jobs). These job losses are at the state and local level, but they are still a significant drag on overall employment.

It appears the public sector jobs losses are slowing, and it looks likely that the decline in public payrolls will probably end mid-year 2012.

That's a big difference in public sector employment -- just short of 1.5 million more public sector jobs were created or saved under Bush.