Looking beyond the topline employment number: Public-sector jobs remain depressed

An increase of 271,000 in payroll employment is a promising sign. One month is surely not predictive of the future, but if this continues, it is good news for the economy and the people in it. While the topline employment number for October is quite encouraging, other indicators continue to paint a picture of a plateaued economy, particularly the fact that there has been no growth in prime-age employment-to-population ratio (EPOP) this year.

The share of the 25–54 year old population actually employed is arguably one of the best measures of economic health. At 77.2 percent, it remains depressed— lower than the worst of the prior two recessions before the Great Recession. The effects of such low prime-age EPOPs may be far-reaching, affecting not only the incomes but also the health of the population.

Public-sector employment also remains weak, and depressed government spending continues to be the leading cause of the sluggish pace of recovery in recent years. One thing that has been historically unique about this recovery is the unprecedented loss of and lack of recovery of public-sector jobs. The figure below compares public-sector employment in this recovery to the three prior recoveries. Recessions are marked by the lines to the left of the zero point on the x-axis, while recoveries are to the right. This graph clearly shows that the public sector has seen massive job loss in the current recovery. This is a direct result of austerity policy and a huge drag that has not weighed on earlier recoveries.

While public-sector employment eventually turned the corner and stopped actively falling, growth has been slow. Public-sector jobs are still 388,000 down from where they were before the recession began. Moreover, this fails to account for the fact that we would have expected these jobs to grow with the population—taking that into consideration, the economy is short 1.8 million public-sector jobs. Given the multiplier effect of public spending and employment, this public-sector employment shortfall has clearly been an enormous drag on growth of the entire recovery.