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Tuesday, November 24, 2009

Government Impact on the Workforce

Here is a table that shows the top 15 companies in terms of total $$ awarded in federal contracts from the US government- (http://www.washingtontechnology.com/toplists/top-100-lists/2009.aspx) – not including defense spending. For those, check out http://www.taonline.com/securityclearances/defense.asp .

So, what I did was get the total amount of the awarded contract, the 2008 total sales figure, and the total number of employees for each company- usually found through yahoo finance. With this information, I made ONE assumption- That the percentage of overall sales related to government contracts was directly proportional to the number of employees.

This means that if the government grant was 20% of a company’s over all sales, I assume that this is also responsible for employing 20% of that company’s workforce. (Or rather if this money was to disappear, the company would have to lay off a proportional amount of its workers to compensate.)

With that in mind, the US government, via contracts to private companies, is responsible for the employment of 288,250 jobs- roughly the population of Corpus Christi, Texas. Now, think of all the businesses and jobs that must exist because of these employees- grocery stores, gas stations, car dealerships, repair shops, appliance stores… well, basically every business in Corpus Christi. So, let’s say for every 100 of these “government funded” jobs, there are 3 more jobs created to serve and sell to these people. So, that’s another 8,648 jobs. For sake of ease, let’s just say that this brings everything to approximately 300,000 people dependent on these government contracts (I know it’s much more complicated than this, but I’m making a point!) So now we’re in between Pittsburg, PA and Toledo, OH- as a referece.

Let’s move on to the military. There are 1,445,000 active duty members of the armed forces in the US. Keeping with the same figure of 3 jobs per 100, that’s another 43,650 jobs. I won’t count reservists (800k) in these calculations. So, the estimate of the total count of people who rely (directly or indirectly) on the US government for jobs is at 1,788,650.

If we add civilian employees of the federal government- not including the post office-, we are at another 1,800,000, plus (using the same ratio) another 54,000. Now our total estimate is at 3,642,650. (http://www.bls.gov/oco/cg/cgs041.htm) This is in between the populations of Chicago and Los Angeles. Keep in mind this still doesn’t cover defense contractors. The post office employs another 765,100, which calls for another 22,953- bringing our total estimate to 4,430,703. The only US city with more people living in its limits in the US is NYC. This is approximately equivalent to the cities of Dallas, San Diego, Philadelphia, and Fresno all wrapped into one.

Taking a ratio of 1.9 of these workers per household, that gives us about 2,331,950 house holds. If we take the average household income of about $50,000/year, this would be responsible for $116,597,500,000 on an annual basis.

That’s $116.6 billion annually. Let’s remember this employs 4.4 million people. Now, think about the current healthcare bills that could cost $1 trillion over 10 years- or 86% per year of the entire estimated income related to all of the government contracts, the USPS, and all branches of military (excluding defense contracts).

Does this seem feasible now? How can the federal government continue to employ so many people? How can it reign in costs when a population the size of the entire state of Louisiana (the 25th most populous state) relies on your growth and spending for their livelihoods?

How has it gotten to this point?