If further proof is needed that Minnesota is not a “big government” state, the U.S. Census Bureau’s annual report on public employment has provided it. Both total state and local government employment per capita and public payroll as a percent of personal income in Minnesota have fallen below the national average.
The best way to measure the level of public employment in a state is by a count of the number full-time equivalents (FTEs).
A count of FTEs takes into account the number of hours worked by an employee. For example, an employee that works only half-time is counted as 0.5 FTEs. By distinguishing between full and part-time employees, a count of FTEs provides a more accurate assessment of the level of public employment in a state than does a simple count of the number of employees.
The level of public employment in Minnesota has declined steadily over the last decade. In 1995, the number of state and local government FTEs per 10,000 population in Minnesota was 583-8.8 percent above the national average. The number of FTEs per 10,000 population in Minnesota declined steadily until 2003. In 2004 and 2005, the level of public employment in Minnesota fell dramatically. By 2006, the number of FTEs per 10,000 population in Minnesota was 527-2.2 percent below the national average and nearly ten percent less than in 1995.
Minnesota’s public payroll has also declined relative to the national average. State and local government payroll per $1,000 of personal income in Minnesota was $77 in 1995-6.3 percent above the national average. Nationwide and in Minnesota, state and local government payroll per $1,000 of personal income fluctuated over the next decade, but over this time the gap between Minnesota and the rest of the nation gradually closed.
From 1999 to 2002, public payroll per $1,000 of personal income in Minnesota and nationally were nearly the same. However, since 2002 Minnesota has fallen below the national average. In 2006, public payroll per $1,000 of personal income was $64-3.3 percent below the national average and 16.9 percent less than in 1995.
The decline in public employment and public payroll in Minnesota are consistent with the decline in the size of government in Minnesota relative to the rest of the nation as reported in a recent Minnesota 2020 report, Minnesota’s Slip Toward Mediocrity: Less Investment, Less Return. As with the decline in state and local government revenues and spending, the decline in public employment and payroll in Minnesota relative to the national average has been particularly notable since 2002.
Proponents of the “no new tax” agenda continue to complain about rampant growth in the size of government in Minnesota. Such claims are increasingly out of touch with reality. As a percentage of personal income, Minnesota state and local government revenues and expenditures are below the national average. In addition, it is now clear that the level of public employment in Minnesota has also fallen below the national average.
The debate over the appropriate level of taxes and the appropriate size of government in Minnesota should begin with clear and correct facts. Public investment and economic performance in Minnesota relative to the rest of the nation has deteriorated significantly since 2002. Claims to the contrary from disgruntled anti-tax zealots can now be safely dismissed.
Let’s focus on what really matters. Minnesotans cannot afford a continuing slide toward mediocrity.
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