NCPA - National Center for Policy Analysis

Public Sector Jobs Have More Advantages During the Great Recession

February 26, 2015

The compensation received by public-sector workers has raised more attention in the aftermath of the Great Recession. To compare the compensation packages between public-sector workers and their private sector counterparts, an important nonpecuniary benefit — job security — should be considered.

Some researchers have argued that working for government is always a better choice than working in the private sector because they consider it "recession proof," while others argue the private sector has always had an upper hand on the public sector. However, during the recent economic recession, there was no discernable difference between the two.

A recent study from Jason L. Kopelman and Harvey S. Rosen shows that working in the public sector is more secure during nonrecession years, and the advantage of working in the public sector improves during recessions.

During nonrecession years,

  • Federal employees are 4.2 percentage points less likely to lose their jobs than private sector workers.
  • State employees (other than teachers) are 3.3 percentage points less likely to lose their jobs compared to their private sector counterparts.
  • For local government employees, they are 4.2 percentage points less likely to be laid off than private sector workers

Their conclusion applies to both genders, all races, and different levels of educational attainment. They also separate teachers from other groups due to the idiosyncrasies of the market for teachers, with the same results.

Government employment has a sizable advantage over private sector employment with respect to job security. The advantage appears more apparent during the Great Recession.

Source: Jason L. Kopelman and Harvey S. Rosen, "Are Public-Sector Jobs Recession Proof? Were They Ever?" Cato Institute, January 21, 2015.

 

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