Arnold Kling talks about Patterns of Sustainable Specialization and Trade. Richard Florida has made note of the Great Reset. Tyler Cowen has highlighted zero marginal product workers.

When I dig through the data is hard to see evidence that some major technology induced changed has suddenly come upon the United States. The basic globalization factors that have been present for the last two decades are still with us, that’s true.

As I frequently try to mention, construction is in an inexplicable depression. Its extremely bad on a scale that is wholly underappreciated by the media at large. Its also a pattern that quite simply can’t be sustainable, doesn’t represent any imaginable reset in US living patterns and would seem to have very high marginal product moving forward.

However, there is interestingly enough one sector where these notions make a lot of sense: government. Here is growth in government employment since 1980. I include that to show the impact of the Reagan Revolution.

FRED Graph

You see a sharper and harder decline than at any point since 1980 unless there is a dramatic turnaround soon this will beat out the 1980s in terms of government job losses.

For transparency let me show you government employment as a percentage of all employment, though I think the graph hides a larger point.

FRED Graph

The swings, including the latest upswing are largely due to changes in the denominator. That is overall employment is more volatile than government employment. So here is government employment as a fraction of the civilian, over 16, non-institutionalized population. That is, people who could legally have a full time job.

FRED Graph

From the peak just after the 2000 recession until now, we are looking at a drop approaching 1%. That is, at the peak nearly 10% of all legal working age Americans worked for the government. Now, its closing on 9%.

That may not sound like a huge drop but there are roughly 240M legal working age Americans, so that’s closing in on 2.4M government jobs that are not there.

Now we could see a dramatic bounce back as we did in the 1980s. However, I don’t see the seeds of that. The biggest structural change in the US economy looks to be away from government employment.

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