IT’S NOT WHAT POLITICIANS TELL YOU
What industry would you guess is the biggest employer in South Carolina? Listening to State House politicians, you might think the answer is one company, Boeing. Or you might think tourism is the number one employer in the state.
In reality, government is the single largest employer in South Carolina, according to a May news release by the South Carolina Department of Employment and Workforce (DEW) that gives jobs numbers for eleven major industries in South Carolina. Government in South Carolina employs some 356,800 individuals as of April 2013, or roughly 19 percent of the entire state non-farm workforce.
Moreover, the growth of government has been an essential factor in the recent celebrated fall in South Carolina’s unemployment rate since it spiked following the beginning of the recession in December of 2007. Another relevant factor has been decline in the state’s labor force participation rate – that is, the working age population actually employed or seeking employment. That rate has declined steadily since the start of the recession, falling from 63.6 percent in 2007 to only 58.9 percent as of April 2013. These factors provide a grim counterpoint to the initially cheering news of a falling unemployment rate.
What the recession didn’t stop was the steady growth of government. Bureau of Labor Statistics (BLS) data shows that government employment in South Carolina grew by 22,700 jobs since 2003, with 8,200 of those jobs created since the onset of the recession in December 2007.
Of the eleven major industries for which the BLS data provides job numbers, government’s growth of 8,200 positions since the start of the recession represents the 2nd largest total number of jobs added over that time period by any of the industries. Seven of the eleven industries for which there is data provided (mining and logging, construction, manufacturing, trade transportation and utilities, information, financial activities, and other services) saw net decreases in their number of jobs since the beginning of the recession.
The only industries to outstrip government in the number of jobs created since the recession (by 1,100) are education and health services. Clearly, however, these industries consist heavily of government jobs and are substantially affected by government spending – spending that has grown at a fast rate over the last decade. In fact, South Carolina government has adopted an explicit policy in recent years of expanding the number of people on the state’s Medicaid rolls.
Why is all this important? Simply because, for all the optimistic cheerleading of politicians, the actual numbers present a much less attractive economic forecast for the state’s economy. Government growth and favoritism – government officials’ increasing tendency to choose certain companies as beneficiaries of special treatment – are crowding out organic economic growth in the South Carolina economy. This is part of the intrinsic nature of government: government does not create value; it can only redistribute it. Government doesn’t create wealth through voluntary transactions in the marketplace, but only acquires it through taxation.
Government doesn’t have to create value for citizens in order to receive their money. Even government enterprises that attempt to mimic the practices of businesses, such as the post office, lose millions every year because of the incentives that come from knowing that profit loss can be erased and that competition is no real threat.
Politicians like to talk about what they’re “doing” about jobs, but usually “doing” involves the very thing that hampers economic expansion – government. Until what they’re “doing” involves cutting the actual size of government, we can expect more of the same.