When considering the role of government in economic development, much of our attention focuses on tax incentives, corporate attraction, workforce readiness, and infrastructure development. But what about the role of the public sector as employer or direct supporter of jobs?
We created a publicly driven employment index that includes both direct government jobs (federal, state, local, and military) and jobs in sectors that receive substantial public funding (education, social services, and health care).
We find a wide variation in the share of total jobs that are publicly driven across the 100 largest US cities. At the low end is Paradise, Nevada, with just 8.6 percent of all jobs publicly driven, while Sacramento, California, is the highest, with 51.6 percent.
We next examine how publicly driven jobs are associated with city total job growth over time. Publicly driven employment in 2010 has a weakly negative association with total job growth over the next decade. But the role of a strong publicly driven sector spurring urban economic growth is mixed and, often, dependent on place and context.
We also considered the relationship between the change in publicly driven jobs and overall job growth. We find a small positive correlation between job growth and change in share of publicly supported jobs from 2010 to 2019 but, again, considerable variation across cities.
What should those interested in broadening prosperity in the US make of the role of the publicly driven sector in job growth? We find that a large publicly driven sector is not necessary and it is not sufficient for overall job growth. But neither is it irrelevant—it can be helpful. For some cities, publicly driven sector employment is an economic life support even if employment is not growing or is growing slowly (e.g., Baltimore, Maryland; Norfolk, Virginia; and Newark, New Jersey). For other cities, the publicly driven sector is a springboard that generates private market expansion (e.g., Durham, North Carolina; Austin, Texas; and Miami, Florida). Some cities unfortunately cannot count on even the publicly driven sector as an advantage and are not attracting private industry either (e.g. St. Louis, Missouri; Detroit, Michigan; and Memphis, Tennessee). And, finally, some cities find pathways to job growth without the publicly driven sector (e.g., Charlotte, North Carolina, and Seattle).
Cities can seek to leverage jobs that are either directly or indirectly funded by public expenditure to position themselves for spillover benefits and to spur further job growth. Direct and indirect public employment is an oft-overlooked governmental resource that can be used more intentionally.
