Number, Cost of Government Workers Growing Fast, Study Says

Published April 1, 2006

The nation’s 16 million state and local government workers form a large, growing, and well-compensated class in society. State and local workers earned $36 per hour in wages and benefits in 2005, on average, compared to $24 per hour for U.S. private-sector workers, according to the U.S. Bureau of Labor Statistics’ Employer Costs for Employee Compensation Summary, published December 9, 2005.

Government workers also have more than four times the level of union representation. Unions represented 9 percent of private-sector workers and more than 40 percent of state and local workers, according to the Bureau report.

Soaring Numbers

Table 1 shows the number of state and local workers by budget area. The largest area is kindergarten to grade 12 schools. The number of school teachers and administrators climbed 22 percent between 1994 and 2004, even though public school enrollment grew just 9 percent during the period, according to the U.S. Bureau of the Census.

Another fast-growing area is public safety. Police, fire, corrections, and legal staffs have grown an average 21 percent in the past decade. One contributing factor has been the jump in state prison populations in recent years.

Table 1. State and Local Government Employment
  1994 2004 Change
U.S. Total 13,912,227 15,788,784 13%
Education 7,098,807 8,538,180 20%
K-12 schools 5,310,339 6,473,425 22%
Higher education 1,586,663 1,848,997 17%
Other 201,805 215,758 7%
Safety 1,925,986 2,323,323 21%
Police 749,308 892,426 19%
Corrections 584,387 701,905 20%
Judicial and legal 321,168 409,944 28%
Fire 271,123 319,048 18%
Welfare 2,1223,500 2,038,584 -4%
Hospitals 1,053,356 912,496 -13%
Public welfare 492,387 498,092 1%
Health 360,694 424,158 18%
Housing & development 123,173 114,281 -7%
Social insurance administration 93,890 89,557 -5%
Services 1,701,548 1,766,101 4%
Highways 544,233 542,642 0%
Parks and recreation 239,605 262,815 10%
Transit 205,994 231,897 13%
Natural resources 187,432 186,006 -1%
Water supply 153,143 162,251 6%
Sewerage 121,594 126,136 4%
Solid waste 110,391 108,882 -1%
Other 139,156 145,472 5%
Other 1,062,386 1,122,596 6%
Source: U.S. Bureau of the Census. Full-time equivalents.

State and local health bureaucracies have also grown as Medicaid spending has exploded. In health and other areas, the growth in bureaucracy has been fueled by growing regulatory paperwork that has accompanied expanded federal funding of state and local activities.

Some areas of the state and local bureaucracy, such as hospitals, have not grown. That may be due variously to budget reforms, a shift of work to the private sector, or other changes. In the case of public welfare, the number of state and local administrators has remained steady at about half a million. Meanwhile, the number of welfare recipients has fallen 66 percent since 1994 as a result of federal and state welfare reforms during the 1990s.

Wide Variety

The size of state and local bureaucracies varies widely by state. Table 2 shows the number of government workers in each state as a share of employment in the state. Along with the District of Columbia, the largest bureaucracies are in Alaska and Wyoming–states that have an image of rugged individualism. Some of the other states with big bureaucracies also lean conservative in their politics, including Mississippi and Alabama.

Nevada has the smallest bureaucracy, with a state and local workforce only about half the relative size of Alaska’s.

Numerous factors affect the size of state bureaucracies, including demographics, crime levels, and the differing propensity of states to contract out or privatize services such as prisons and solid waste collection.

Differences between states also reflect bureaucratic efficiency levels. For example, while high-bureaucracy D.C. and Louisiana have deep-seated problems of waste and corruption, low-bureaucracy New Hampshire is known for its more effective government. Some states, such as Alaska and New Mexico, have high levels of bureaucracy across many budget areas. Other states, such as Pennsylvania and Rhode Island, have consistently lower levels of bureaucracy.

Chris Edwards ([email protected]) is director of tax policy studies at the Cato Institute. This article was adapted from “State Bureaucracy Update” in issue No. 29 of the Cato Institute’s Tax & Budget Bulletin. Used with permission.

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