The Palmetto Insider

The blog of the South Carolina Policy Council

Government Jobs and Shrinking Labor Pool Hide Unemployment Reality

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New government unemployment statistics paint a misleading picture of an economic recovery for South Carolina.

The U.S. Bureau of Labor Statistics says unemployment in South Carolina fell to 10.7 percent for June—down from a record 12.5 percent in January. But the way government counts unemployment figures fails to account for tens of thousands of workers who have simply fallen off the unemployment rolls, says a new report from the South Carolina Policy Council. What’s more, these employment figures are inflated by a dramatic increase in public sector employment in the state, including temporary positions as census takers. (During the 1930s, the government did not include government relief jobs in employment statistics.)

Here’s the real employment story in South Carolina:

  • Since June 2009, more than 34,000 workers have withdrawn from South Carolina’s job market.
  • From January to June 2010, the state’s labor force shrunk by 24,376 jobs.
  • From January to May 2010, total public sector employment in South Carolina increased 3.66 percent.
  • Since December 2007, private sector employment in South Carolina has declined by 130,100 jobs, or 8.09 percent.
  • By comparison, since December 2007 public sector employment has increased by 24,500 jobs, or 7.19 percent.

Put another way, the private sector has shed 5.3 jobs for every public sector job created.

In the long run, increased government spending will ultimately have a detrimental impact on private sector job growth in South Carolina. Not only will the federal stimulus package likely lead to a state tax increase, it will also result in 24,000 to 35,000 lost private sector jobs.

These job losses will occur because government spending does not stimulate private sector growth, but limits it—precisely because government spending is fueled by taxes imposed on the private sector.


Written by Robert Appel

July 20, 2010 at 4:07 pm

One Response

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  1. […] figure when it comes to gauging the economy’s health. This is because the unemployment rate undercounts the number of unemployed, masking the state’s shrinking labor pool. It is also because it doesn’t indicate that public […]

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