Federal Employment

Another frequently used measure of the size of the federal government is the share of federal civilian employment (including civilian employment by the Department

FIGURE 26.2

The Ratio of Federal Civilian Employment to Total Civilian Employment, 1929-2010

Source: Historical Statistics of the United States, Millennial Edition, table EaS94-903. Statistical Abstract of the United States, 2012, table 496.

Of Defense) in total employment, shown in Figure 26.2. This series ratchets upward dramatically in the 1930s because of the many new federal agencies created by the New Deal. (Federal emergency workers, however, are not included.) It ratchets up again in the 1940s largely because of the expansion of civilian employment at the department of defense and the Veterans Administration. The share of federal employment in the total labor force peaked briefly above 4 percent during the Korean War, and then began a steady decline. In recent years it has reached a level about the same as that reached in the late 1930s, around 2 percent. How can the share of federal spending in GDP increase or remain stable, while the number of employees relative to the labor force falls? Recall that the dynamic element in the growth of the federal government was transfer payments. This source of growth did not require an equally large expansion of the federal bureaucracy. One bureaucrat can write many checks.