The exchange commenced immediately after Krugman made the point that, had government employment in the current recovery followed the same path it followed under previous recessions in the Bush and Reagan years, unemployment now would be slightly above 6 percent:
CARLY FIORINA: I think it’s important to remember, when we talk about the economy, that a private sector job and a public sector job are not the same things. They’re not equivalent. I’m not saying public sector jobs aren’t important. But a private sector job pays for itself. A private sector job creates other jobs. A public sector job is paid for by taxpayers. [...]
PAUL KRUGMAN: But when we say public sector jobs, it is not a bureaucrat in Washington, D.C.
FIORINA: Oh, it is, actually.
KRUGMAN: When we talk about public sector jobs — when we look at the ones that have been lost in large numbers in this — it’s basically school teachers. Don’t think about bureaucrats. It’s school teachers. What we’ve laid off hundreds of thousands of school teachers. And when we talk about the cuts in public spending that have happened, they are not, you know, some god awful who knows what. It’s actually public investment. It’s largely fixing potholes and repairing bridges.
So, you know, you have this image of these wasteful bureaucrats doing god knows what. What we’ve seen is an incredible drought of basic infrastructure, and laying off hundreds of thousands of school teachers.
FIORINA: It is a fact that virtually every department in every organization in Washington, D.C. has seen its budget increase for the last 40 years. That money is being paid to hire people. The number of people who are — of course there are some teachers…
Public sector jobs at the federal level have actually remained pretty stable over the last forty years. They began and ended the period around approximately 2.8 million, with a bounce to about 3.1 million circa-1990. Public sector jobs at the state and local levels increased significantly over those forty years, peaking at a bit over 19 million total when President Obama entered office. (They’ve fallen since, accounting for the decline in overall public employment.) But nearly all of that growth was in teachers and support staff for the education system, who now total nearly 7 million of those state and local workers.
The other major categories of jobs in state and local public employment are, as Krugman noted, police, firefighters, health care workers, and maintenance workers and drivers for the country’s transportation infrastructure. And the overall population of the country has also been growing, so even though the raw number of state and local workers increased significantly, the ratio of those workers to the overall population did not — 59 per 1000 in 1980 versus 65 per 1000 today.
In fact, the hit the U.S. economy took in the fourth quarter of 2012 was almost entirely due to a drop in government spending, and the economy is in for another blow should the sequester cuts kick in. We’ve been cutting jobs that provide demand in the economy and invest in the country’s potential for future economic growth, at a time when both are sorely needed to help the economy recover.