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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
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Unemployment Compensation and Trade Adjustment Assistance for Workers: CBO's Baseline and Estimates of the President's 2013 Budget

data or technical information

March 20, 2012

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related publications


  • Comparing the Compensation of Federal and Private-Sector Employees

    January 30, 2012

  • Comparing Wages in the Federal Government and the Private Sector

    January 30, 2012
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Comparing Benefits and Total Compensation in the Federal Government and the Private Sector

working paper

January 30, 2012

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Abstract

This analysis integrated Current Population Survey data from 2005 through 2010 with data on a wide range of employee benefits to compare the cost of those benefits for federal employees and for workers in the private sector who have certain similar observable characteristics. In that comparison, we found that the average cost of benefits was about 72 percent higher for federal employees than for their private-sector counterparts among workers with no more than a high school education, was about 46 percent higher in the federal sector among workers with a bachelor’s degree, and was about the same in the two sectors among workers with a professional degree or Ph.D. Overall, federal benefits were about 48 percent higher, on average, than the benefits received by measurably similar private-sector workers. The most important factor contributing to differences between the two sectors in the costs of benefits is the defined-benefit pension plan that is available to most federal employees. Such plans are becoming less common in the private sector.

Benefits accounted for about 39 percent of total compensation (the sum of wages and benefits) in the federal sector versus 30 percent of total compensation at large firms in the private sector. We found that the average of total compensation was about 36 percent higher for federal employees than for their private-sector counterparts among workers with no more than a high school education, was about 15 percent higher among workers with a bachelor’s degree, and was about 18 percent lower among workers with a professional degree or Ph.D. Overall, total compensation for federal employees was about 16 percent higher, on average, than total compensation for measurably similar workers in the private sector.

These estimates do not show precisely what the compensation of federal workers would be if they were employed in the private sector. The difference between federal employees’ compensation and what that compensation would be 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. These estimates of the costs of benefits are much more uncertain than the estimates of wages, primarily because the cost of defined-benefit pensions that will be paid in the future is more difficult to quantify and because less-detailed data are available about benefits than about wages.


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Civil Service Retirement and Disability Fund - March 2012 Baseline

data or technical information

March 13, 2012

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Small Firms, Employment, and Federal Policy

report

March 12, 2012

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Highlights

New Small Firms Account for a Disproportionate Share of Net Job Growth

Small firms, widely believed to promote job growth, both create and eliminate jobs at higher rates than large firms do. Although small firms account for a disproportionate share of net job growth, that greater growth is driven primarily by new small firms.

In Recent Years, Small and Medium-Sized Firms Suffered Disproportionately Greater Job Losses Than Large Firms

Firm Size, by Employee CountChange in the Number of Workers Between December 2007 and December 2010
Fewer than 50 workers-7.1 percent
50 to 499 workers-8.1 percent
500 or more workers-5.4 percent

Varying Policies by Firm Size Has Advantages and Disadvantages for Job Growth

Policies that help reduce the cost to small firms of complying with federal regulations could promote employment growth. But policies favoring small firms could also discourage them from growing in order to retain that preferential treatment. Moreover, easing some regulations for small firms could cause certain problems, such as pollution, to persist more than if regulations were applied uniformly across firms of different sizes. 

Current Federal Laws and Regulations Give More Favorable Treatment to Small Firms Than Larger Firms in Many Ways

Small firms receive more favorable treatment than larger firms through:

  • A reduced capital gains tax for investments in small firms,
  • Tax provisions having the effect of allowing small firms to immediately deduct a larger share of their costs for certain capital investments,
  • Assistance from the Small Business Administration, and  
  • Exemptions from some regulatory policies, such as the Family and Medical Leave Act of 1993.


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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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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 (18)
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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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