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Employment and Labor Markets

The level of employment has a direct effect on people's well-being and the government's finances. When employment is higher, incomes and federal revenues are higher, while federal outlays for income support programs are lower. CBO analyzes the causes and consequences of unemployment, the effects of the unemployment insurance program, the impact of various policy proposals that might affect employment, and other issues concerning labor markets such as people's participation in the labor force.

Sub-Topics:

  • Federal Personnel
  • Labor Markets
  • Economic Stimulus
  • NAFTA

monthly archive

  • May 2013 (2)
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  • January 2013 (11)
  • December 2012 (4)
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  • October 2012 (4)
  • September 2012 (6)
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  • June 2012 (8)
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What Is the Role of Small Firms in the Labor Market, and How are Small Firms Affected by Federal Policy?

blog post

March 12, 2012


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H.R. 3262, Government Results and Transparency Act

cost estimate

February 22, 2012

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monthly archive

  • May 2013 (2)
  • April 2013 (14)
  • March 2013 (22)
  • February 2013 (10)
  • January 2013 (11)
  • December 2012 (4)
  • November 2012 (10)
  • October 2012 (4)
  • September 2012 (6)
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CBO's Estimates of ARRA's Economic Impact

blog post

February 22, 2012


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Estimated Impact of the American Recovery and Reinvestment Act on Employment and Economic Output from October 2011 Through December 2011

report

February 22, 2012

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Understanding and Responding to Persistently High Unemployment

report

February 16, 2012

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Highlights

The United States is Experiencing the Longest Stretch of High Unemployment Since the Great Depression

The rate of unemployment in the United States has exceeded 8 percent since February 2009, and CBO projects that it will remain above 8 percent until 2014.

  • Slack demand for goods and services is the primary reason for the persistently high levels of unemployment observed today.
  • When demand ultimately picks up, structural factors—such as mismatches between employers' needs and workers' skills and locations, the erosion of unemployed workers' skills, and the stigma of being unemployed—may continue to keep unemployment higher than normal.

Some Policies Could Increase Demand for Workers

In analysis of a number of tax and spending policies designed to increase output and employment in 2012 and 2013, CBO found the largest increases in employment per dollar of budgetary cost would be produced by:

  • Reducing the marginal cost to businesses of adding employees and
  • Targeting people most likely to spend the additional income (generally, people with lower income).

Other Policies Could Also Reduce Unemployment

Lawmakers could aim to reduce unemployment by:

  • Improving workers' skills,
  • Modifying the unemployment insurance program, or
  • Facilitating transitions to work.

Such policies could be implemented using mechanisms ranging from federal block grants to direct federal operation. But they would probably not have a significant effect on unemployment over the next two years because of the difficulties of scaling them up in that span of time. Nonetheless, by reducing the extent of unemployment and long-term unemployment in the future, they might have longer-term benefits.



monthly archive

  • May 2013 (2)
  • April 2013 (14)
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  • January 2013 (11)
  • December 2012 (4)
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The United States is Experiencing the Longest Stretch of High Unemployment Since the Great Depression

blog post

February 16, 2012


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Unemployment Compensation—January 2012 Baseline

data or technical information

January 31, 2012

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Deficit or Surplus With and Without Automatic Stabilizers—2012

data or technical information

January 31, 2012

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related publications


  • Comparing the Compensation of Federal and Private-Sector Employees

    January 30, 2012

  • Comparing Benefits and Total Compensation in the Federal Government and the Private Sector

    January 30, 2012
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Comparing Wages in the Federal Government and the Private Sector

working paper

January 30, 2012

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Abstract

This analysis used Current Population Survey data from 2005 through 2010 to compare the hourly wages of federal employees and workers in the private sector who have certain similar observable characteristics. In that comparison, we found that the arithmetic average of wages was about 21 percent higher for federal employees than for their private-sector counterparts among workers with no more than a high school education, was about the same in both sectors among workers with a bachelor’s degree, and was 23 percent lower in the federal sector among workers with a professional degree or Ph.D. Overall, federal wages were about 2 percent higher, on average, than wages of similar private-sector workers.

We found that the wages of federal employees were much less dispersed than those of employees with similar characteristics in the private sector—particularly among workers with more education. That aspect of the data causes semilog regressions to generate inconsistent estimates of percentage differences in arithmetic means. Consistent estimates of differences in arithmetic means—obtained using a quasi-maximum likelihood estimator that is robust to distributional misspecification—are substantially smaller than differences in geometric means estimated by semilog regressions. The differences in arithmetic means are more relevant for answering questions about how federal spending would change if federal workers were paid wages equal to those of measurably similar workers in the private sector.

The estimates do not show precisely what federal workers would earn if they were employed in the private sector. The difference between what federal employees earn and what they would earn in the private sector could be larger or smaller depending on characteristics that were not included in this analysis because such traits are not easy to measure. The results apply to the cost of employing full-time full-year workers. The analysis focused on those workers—who accounted for about 93 percent of the total hours worked by federal employees from 2005 through 2010—because higher-quality data were available for them than for other workers.


monthly archive

  • May 2013 (2)
  • April 2013 (14)
  • March 2013 (22)
  • February 2013 (10)
  • January 2013 (11)
  • December 2012 (4)
  • November 2012 (10)
  • October 2012 (4)
  • September 2012 (6)
  • August 2012 (5)
  • July 2012 (11)
  • June 2012 (8)
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How Does the Compensation of Federal Employees Compare with That of Workers in the Private Sector?

blog post

January 30, 2012


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