On Monday (February 25) I reported that during the depth of the recession, Wyoming suffered from the weakest economic growth in the country. We are the only state that had two years back-to-back of shrinking state GDP during the 2009-11 period. While most states suffered one year of shrinking GDP, no other state came close to our tepid performance.
The Wyoming economy practically stood still for three years.
One of the most important, and most obvious, consequences of this is that the private sector has not created that many jobs. According to recent state employment data from the Bureau of Labor Statistics, private employers in Wyoming had fewer people on their payrolls in 2011 than in 2009: 212,400 vs. 214,800.
Job losses are to be expected in a recession, and generally it takes longer for employers to increase their payroll in a recovery than to reduce it at the beginning of a recession. However, if there is going to be a recovery with new jobs, private employers will have to see a need to hire more people. With basically zero growth in the state’s economy, very few businesses will see that need.
Not surprisingly, preliminary numbers from the Bureau of Labor Statistics for 2012 show just that: last year the private sector in Wyoming had 213,900 employees, a meager 0.7 percent uptick from 2011.
Our productive sector has been at a practical standstill for four years.
As if that was not bad enough, during that time our government sector has been growing steadily. While private employers had almost 1,000 fewer employees in 2012 than in 2009, state government and local governments added 3,000 people to their payrolls during the same period.
This is an ongoing phenomenon. Figure 1 shows changes in private, state government and local government employment over the past ten years:
Since 2008, the state and our local governments have added employees much faster than the private sector. The private-government employment discrepancy has become so large, in fact, that Wyoming takes yet another national trophy. According to aforementioned Bureau of Labor Statistics data, Wyoming has the highest ratio of government-to-private employees in the country.
In 2012 this ratio was the highest on record for annual data: 312 state and local government employees in Wyoming per 1,000 private workers. Here is the same ratio for annual numbers, in Wyoming, over the past five years:
Preliminary data for other states are not yet available, but based on historic, slightly less solid monthly data we can expect that Wyoming will be leading the pack. New Mexico, the runner-up state, has historically never reached an index number of 300.
The continuous expansion of government payrolls compared to the private sector is a cause for serious concern. Each of us in the private sector must pay for more and more government employees, a fact that is not mitigated by the volatility in severance tax revenues. Even a small decline in severance taxes over a few years would give rise to immediate budgetary problems, both in the state budget and in our counties, cities, towns and school districts.
Add to this the significant risk of cuts in federal funding in the next couple of years. What will our elected officials do then? Will they scramble for new taxes to replace lost revenue?
Or are they prepared to reverse the relentless growth in government employment and devise a strategy to help the private sector thrive again?