[R-G] [BillTottenWeblog] The Fading American Economy

[Bill Totten]

Government is the Largest Employer

by Paul Craig Roberts

CounterPunch (April 09 2008)


According to the Bureau of Labor Statistics, the US economy lost 98,000
private sector jobs in March, half of which were in manufacturing. Today
13,643,000 Americans are employed in manufacturing, of which 9,849,000
are production workers.

Government employs 22,387,000 Americans, 8,744,000 more than
manufacturing. Even the category leisure and hospitality employs
13,682,000 Americans, slightly more than manufacturing. There are as
many waitresses and bartenders as production workers.

Wholesale and retail trade employ 21,467,000 Americans. Professional and
business services employ 18,036,000 Americans of which 8,368,000 are in
administrative and waste services. Education and health services employ
18,699,000 Americans.

Financial activities employ 8,228,000 Americans. The information sector
employs 3,010,000. Transportation and warehousing employ 4,532,000.
Construction employs 7,338,000, and natural resources, mining and
logging employ 751,000. Other services such as repair, laundry, and
membership associations employ 5,516,000 Americans.

This is the portrait of the US economy according to the Bureau of Labor
Statistics. It is an economy in which government is the largest
employer. Manufacturing employment comprises just under ten percent of
total employment and about twelve percent of private sector employment.
Everything else is services, and not particularly high level services.

Is this a portrait of a super economy?

To help answer the question, consider that US imports in 2007 were
seventeen percent of US GDP, according to the National Income and
Product Account tables provided by the Bureau of Economic Affairs. In
contrast, the BEA industry tables show that in 2006 (2007 data not yet
available) US manufacturing comprised only 11.7% of US GDP.

If US imports actually exceed total US manufacturing output by five
percent of GDP, it does not seem possible that the US can close its
massive trade deficit. Even if every item manufactured in the US was
exported, the US would still have a large trade deficit.

The NIPA and industry tables from which the percentages come are not
calculated identically, and I do not know to what extent differences
might exaggerate the differences between the percentages. However, it
seems unlikely that mere calculation differences would account for US
imports exceeding US manufacturing output.

If the US cannot close its trade deficit, it is unlikely that the US
dollar can remain the world reserve currency. If the dollar were to lose
the reserve currency role, the US government would not be able to
finance its annual red ink budget by borrowing from foreigners, as the
US saving rate is about zero, and the US would not be able to pay its
import bill in its own currency. The rest of the world continues to hold
depreciating US currency, because the dollar is the world reserve
currency. The dollar is certainly not a good investment having declined
dramatically against other traded currencies.