Commentary: Even in Texas, government keeps growing

By one measure, government has been shrinking. Since the economic recovery began two years ago, more than half a million government jobs have been eliminated nationwide.

Then there's Texas, where 39,000 government workers were added during the same period.

That's far more than other states, and that will surprise some people who see Texas as a small-government haven devoted to the private sector. In fact, a higher share of Texas workers are employed in government than in the country at large.

Private hiring still grew at a faster rate in the state, but government added a significant bump. And in the Fort Worth area, government accounted for more than a quarter of the new jobs added since the recession ended, based on data from the Bureau of Labor Statistics.

On this side of the Metroplex alone, government added 3,900 jobs. That's a 3.2 percent increase, twice as high as private employers.

Statewide, almost three-fourths of government hires were in local education -- public-school teachers, counselors, administrators and the like. The Defense Department added another big chunk to federal government in Texas.

Most states have lost government jobs in the past two years as temporary census hiring ended, the federal stimulus wound down and state budgets contracted. California eliminated 121,000 government positions; New Jersey, 36,000; and Michigan, almost 24,000, according to statistics bureau data. Last week, the Commerce Department reported that GDP growth had slowed to a crawl in the first half of the year. One factor was a sharp decline in spending by state and local governments, down 3.4 percent in the three months that ended in June. That follows the same decline in the first quarter and a 2.7 percent cut in the fourth quarter of 2010.

By comparison, state and local spending never fell by more than 0.2 percent annually from 2002 to 2008.

Few areas have added many government workers over the past two years. Washington, D.C., is up 7,700; Kentucky, 4,400; Montana, 2,100. But Texas stands apart with a net gain of 39,000.

There are good explanations for this: Over the long term, Texas' population has been growing at roughly twice the national rate, it has been leading the nation in job creation, and it has a higher proportion of young families.

All these extra people need more local services, especially teachers.

"If Texas is one of the few states that keeps growing total employment, it makes sense that government would grow, too," said Cheryl Abbot, a regional economist with the statistics bureau in Dallas. "And if other states are losing workers, they're probably losing government workers, too."

In North Texas, only two sectors have created more jobs than government since June 2009: professional and business services, and private education and healthcare.

Government accounted for more new jobs than trade and transportation, finance and real estate, and leisure and hospitality. Other categories lost jobs, including manufacturing, mining and construction, and information providers such as newspapers and telecommunications firms.

If you look at the data for the past 12 months, the government sector declined sharply. That's primarily because the temporary census hiring spiked in 2010.

Abbot said that government employment tends to lag behind the economy. In a recession, the private sector cuts jobs quickly, but government hiring often continues. As private employers start to gear up again, government is often retrenching, because state and local tax receipts have declined and forced budget cuts.

The economy has generally followed that arc, except that the recession was much deeper and the recovery has been much slower. Private hiring nationwide has been too limited to make a dent in the unemployment rate, and government cuts are proving to be another drag on the recovery.

Fears of a double-dip recession are growing amid a slowdown in consumer spending and the weak GDP report. That's why the stock market has been tanking despite the debt ceiling agreement in Washington.

Meanwhile, Abbot and others are watching Texas to see whether government jobs start to decline. On a month-to-month basis, total government jobs have moved within a narrow range this year. They rose in half the months and fell in half, ending June a bit higher than the start of the year.

Local government has followed the same trend.

When the Legislature was considering deep cuts in the state budget, many school districts braced for the worst and planned for layoffs. But an analysis by a Dallas Fed researcher shows that the deepest cuts will come in healthcare, not education.

If so, government will keep growing, even in Texas.

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