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California: Making Government



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As recently as 2001, three major private-sector industries each outweighed California’s state and local government industry, as measured by the percentage of personal income that the workers in each field earn in the state.

In 2001, state and local government workers took home 9.2 percent of California’s personal income. Service-sector workers took home 26.4 percent, manufacturing workers took home 9.9 percent, and workers in the finance and information industry took home 9.5 percent.

Today, only one private-sector industry — the service sector — outweighs California’s government in state-wide earning power.

Manufacturing, as well as finance and information, lost to government in 2002. Each industry slipped to 9.3 percent of personal income earned that year, as state and local government rose to 9.7 percent.

As of 2008, government stood at 9.9 percent of statewide earnings. Manufacturing hung onto just 7.8 percent of earnings, while finance and information kept 8.5 percent. Service-sector earnings reached 27.3 percent.

The good news is that it would take 77 years for California’s state and local government to eclipse the service sector at the current growth rate.

The bad news is that the high cost of government crowds out private-sector jobs that employers can move elsewhere, and makes it harder, too, for the economy to replace the jobs lost to recession.

Nicole Gelinas, contributing editor to the Manhattan Institute’s City Journal, is author of After the Fall: Saving Capitalism from Wall Street – and Washington.



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