Job growth is slowing, but this massive employer keeps hiring

In a surprising turn of events, the U.S. government is bucking the trend of job cuts and hiring freezes seen in the private sector.

The Bureau of Labor Statistics reported a significant surge in public-sector employment, with more than 327,000 new positions created in 2023. That represents nearly 20% of all new jobs added in the country during the first eight months of the year.

This increase in public-sector employment marks a notable departure from the previous year, when government jobs represented just 5% of overall employment growth over the same period.

“After two years of very underwhelming government hiring, it’s a necessary catch-up,” said Julia Pollak, an economist at online job site ZipRecruiter.

A substantial portion of the recent hiring surge aims to fill vacancies left by teachers, police officers, and other essential public servants who departed their roles during the pandemic.

Government agencies are competing with private-sector firms that offer higher salaries and signing bonuses in a robust job market. Uncle Sam can’t pay more than the private sector, but there’s one guarantee he can offer that nobody else can.

The hidden benefits of working for the government

The increase in public-sector hiring presents a unique opportunity for job seekers. Government roles are matching what many employees want: stability, reasonable hours, and a sense of purpose.

Unlike the private sector, the government has no direct competition and doesn’t go out of business.

Last year alone, the federal government collected $4.9 trillion in taxes from Americans. A huge chunk of that goes into government agencies that continue to operate regardless of the business cycle.

According to Pew Charitable Trusts, an independent non-profit, “Government jobs are less prone to quick cuts when there’s a downturn in the economy.”

In other words, government employment is more likely to be recession-proof. This will come in handy if the U.S. enters a downturn as many economists are predicting.

In addition to recession-proofing its employees, government agencies are pulling out all the stops to make working for them more desirable.

Agencies like U.S. Customs and Border Protection have increased staffing levels and offer generous recruitment bonuses, some reaching up to $20,000, for challenging positions along the Mexican border.

Several states, including Arizona, now provide progressive benefits such as 12 weeks of paid parental leave for government employees.

Government job postings on platforms like ZipRecruiter and Indeed advertise salaries roughly 20% higher than the previous year, driven by pay raises for professions like firefighters, police officers, and social workers.

To attract more applicants, government agencies are revising job descriptions, relaxing requirements, and experimenting with innovative hiring practices, such as same-day offers.

Private sector tightening its belt

As the U.S. government splurges on new employment benefits, many private-sector companies are offering lower pay than they did last year. They’re also implementing more rigorous applicant screening.

The labor market isn’t as tight as it was during the pandemic when job hoppers got hefty pay bumps for joining new companies. ZipRecruiter data shows that the majority of its 20,000+ job titles have seen a decline in year-over-year pay.

“[A]s the job market cools and businesses become more cautious in their hiring, many companies are paying new recruits less than they did just months ago—in some cases, much less,” wrote Te-Ping Chen, a reporter for The Wall Street Journal.

Even those who got a raise last year didn’t really earn more money. According to the Census Bureau, real median household incomes fell by 2.3% in 2022 as inflation outpaced wage growth.

The labor market is cooling due to a combination of Fed rate hikes, a decline in discretionary spending, and an overall weaker economy. This environment could make steady government work more appealing.

So far, though, Americans don’t seem eager to join the bureaucracy. Public-sector job openings still receive relatively few applicants. In the first quarter of this year, one-half of all government positions received an average of just 5.5 applicants.

But if the economy continues to slow, we can expect that trend to change very quickly.