The Myth of Big Government Michigan

A common story about Michigan’s economic woes is that we have a big and growing public sector that is discouraging/preventing private sector growth. Think again!

In the new work by UM economist George Fulton and Don Grimes is a comparison of government job growth in Michigan compared to the US from 2001-2008. (The statistics are for public sector employment at all levels of government: local, state and federal.) Here are the facts: government employment grew 6.3% nationally, in Michigan it fell 5.8%. That’s right, in an economy where public sector employment nationally added nearly 1.3 million jobs, government employment in Michigan fell by 37,000. If the public sector in Michigan had mirrored the country we would have added 40,000 public sector jobs.

So the perception that Michigan has been growing its public sector this decade, while the private sector is declining is malarkey. And the perception that policy makers have not made real cuts while the Michigan economy declines is also untrue. The process of making real cuts is often ugly, but the results are real. As the Michigan economy has declined, its government sector has as well.

So where do we stack up in terms of the size of the public sector compared to the nation? This too will surprise many. Government employees in 2008 are a little less than fifteen percent of the Michigan workforce, nationally its sixteen percent. That’s right a smaller proportion of the Michigan workforce is in the public sector than nationally. Or, put another way, we have a larger proportion of our workforce in the private sector than nationally.

So much for big government being the reason Michigan has lagged the nation this decade!

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