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Jobs In America, In Two Different Universes

Update, 8:30 a.m.: The number of private-sector jobs in the U.S. increased by 172,000 in July, according to the jobs report. The number of government jobs fell by 9,000.

When you compare government jobs and private-sector jobs over the past several years, you see two different universes.

As the U.S. went into the recession, government jobs held steady as huge numbers of private-sector jobs disappeared. Since the recovery started, the reverse has held true: the private sector keeps adding jobs, and the government keeps cutting.

There are a few reasons for this. For one thing, governments don't fire (or hire) as quickly as private companies. For another, the federal stimulus program gave hundreds of billions of dollars to the states in 2009, which helped them avoid layoffs for a while.

Eventually, though, the recession finally caught up to state and local governments, in the form of lower tax revenues. Local governments, which rely heavily on property taxes, were particularly hard hit.

Cuts in government jobs have been slowing lately. A report out yesterday said state tax revenues are now above where they were at the start of the recession.

Friday's big July jobs report may not be an especially helpful indicator for the state of government jobs; Jim O'Shea of High Frequency Economics told me that the July data are notoriously noisy, because lots of people leave education jobs at the end of the school year.

Whatever happens with government jobs, when you look at the big picture, it's clear that the story of jobs in America is mainly a private-sector story.

The private sector is so much bigger than the public sector, and the job cuts during the recession were so massive, and the recovery has been so slow. The jobs picture won't get much better, and the economy won't really get back to normal, until the private sector adds millions more jobs. That may take years.

Note: The numbers for government jobs in all graphs exclude temporary federal workers hired for the 2010 Census.

Update: The graphics have been updated to reflect the numbers of this morning's job report.

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Lam Thuy Vo
Jacob Goldstein
Jacob Goldstein is an NPR correspondent and co-host of the Planet Money podcast. He is the author of the book Money: The True Story of a Made-Up Thing.