Government Growth Adds To Private Sector Burden

I NVESTIGATIVE R EPORT FOR IMMEDIATE RELEASE May 13, 2009

Contact: Paul Soutar (316) 634-0218

Government Growth Adds to Private Sector Burden The most recent State employment data from the U. S. Bureau of Labor Statistics shows that government continues to expand in Kansas while the private sector is shedding jobs. Over the twelve-month period ending in March, government jobs increased by 3,600 while Kansas lost 25,300 private sector jobs. Local government employment increased by 2,300 and federal jobs grew by 1,300; state employment was unchanged. Private sector job losses do not reflect all of the recently announced layoffs, primarily in aviation manufacturing, tracked by Workforce Alliance of South Central Kansas. Government jobs also expanded across the nation as private sector employment shrank, although not at the same pace as in Kansas. Private sector losses are not as severe as the national trend (2.3% decline vs. 4.4%), but government employment growth in Kansas is outpacing the nation (1.4% vs. 0.4%). The inverse relationship between government and private sector employment does not bode well for the economy. “Economic research has consistently shown that the larger the government is relative to the economy, the slower the economy grows,” said Dr. Art Hall, Executive Director of the Center for Applied Economics at the University of Kansas School of Business. “We’ve known about that empirical data internationally and now it’s showing up at the local level.” Americans for Prosperity released a recent study by Arduin, Laffer & Moore Econometrics showing the historical negative impact of increased government spending on the private sector. According to the study, the cost of accepting federal dollars from the American Recovery and Reinvestment Act (ARRA) of 2009 will reduce real net business output by 2.5%, which translates to a reduction of 1.7 million jobs annually – of which between 17,200 and 22,200 will be lost in Kansas. Hall says adding some government jobs can help but others just cause more problems. “The more we do this in the name of trying to help, the more we’re causing damage. It’s very much like overhead in business. Some overhead adds value, too much sinks the business.”

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Paul Soutar is an Investigative Reporter with the Flint Hills Center for Public Policy. A complete bio on Mr. Soutar can be found at http://www.flinthills.org/content/view/6/5/, and he can be reached at [email protected]. To learn more about the Flint Hills Center, please visit www.flinthills.org. The Flint Hills Center for Public Policy is an independent Kansas-based think tank that provides research and initiates reform in education, fiscal policy and health care. We are dedicated to the constitutional principles of limited government, open markets, and personal responsibility, which we believe are essential for individual freedom and prosperity to flourish.

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