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APPENDIX 15.-PRODUCTIVE ACTIVITY OF GOVERNMENT1

Some appreciation of the extent, though not necessarily a measure of the importance, of the economic activity of government in the United States can be gained by reference to data showing how many people work under the administrative control of governmental agencies, what functions they perform, and the results of this activity in terms of income produced. Since statistical data relating to the economic activity of governmental agencies in this country are incomplete in many respects, only the main highlights can be shown in this analysis. If available data permitted, it would be interesting also to disclose quantitatively the range of goods and services produced by governmental agencies and the quantities of capital goods and land utilized, in addition to the manpower consumed, in producing these goods and services. Data on these points, however, are too fragmentary to provide a complete or detailed description of the productive activity of government.

The Number of Public Employees

According to the Commission of Inquiry on Public Service Personnel, the United States comprises some 175,418 separate political jurisdictions: the Federal Government and the District of Columbia, the 48 States, 3,053 counties, 16,366 incorporated municipalities, 127,108 school districts, and 28,842 towns, townships, and other civil divisions.2 The number of employees of each jurisdiction ranges from only elected officials and no appointive administrative employees in a few jurisdictions, or a single school teacher in many rural school districts, to many thousands in the larger cities and states, and over a million in the Federal service. No direct enumeration of all public employees in the United States has ever been made. However, estimates are available based upon (1) sample questionnaire returns from various jurisdictions, (2) division of the estimated or actual total of governmental salary and wage-payments, including payments to temporary and part-time employees, by the average annual compensation of permanent full-time employees, and (3) actual pay-roll records of some agencies. On these bases, the Division of Economic Research of the Bureau of Foreign and Domestic Commerce has made estimates of the total number of public employees, excluding employees on work-relief programs, for each year

1 Appendix 15 was prepared by James C. Nelson. Better Government Personnel, 1935, p. 87.

during the period 1929 through 1936, and has broken down these estimates to show employment by main governmental jursidiction for all except educational employees.

Table I presents these estimates by Federal, State, city, and county jurisdictions, adapted to include employees in public education, but excluding persons employed on emergency work-relief projects. This table shows that the largest number of government employees, exclusive of work-relief, are employed by municipalities. Since 1929, however, the number of municipal employees and the proportion of all nonrelief government employees which they represent, has declined, while Federal and State employment has increased. Whereas Federal nonrelief employees constituted 27.0 percent of all government employees in 1929, they amounted to 32.2 per cent in 1936. If workrelief employees were included, the Federal employees would, of course, comprise a much greater proportion of the total. The total number of nonrelief government employees increased by 13.7 percent during these 7 years. The bulk of this increase came from 1933 to 1936.

In table II, the number of government employees, (excluding work relief) is compared to the total gainfully employed in the United States. The proportion represented by government employees was 7.1 percent in 1929 and 8.7 percent in 1936. The increase in the proportion of employees by government was greater than the absolute increase in government employment during these years owing to the decline in private employment. At the low point in total employment, 1932, government employees amounted to 9.2 percent of all gainfully employed persons. Charts II and XVII in the text have shown the relation of Government employment to employment in specific segments of the economy in 1935.3

An accounting of all government employment in the United States requires analysis of the work-relief employees of recent years as well as the persons engaged in performing what might be regarded as the ordinary functions of government.

During 1935 an average of approximately 2,540,700 different persons received some work-relief employment on the various works programs financed chiefly by the Federal Government and operated by various agencies of the Federal, State and local governments.

See pp. 61 and 75.

The average number of persons employed by all governmental jurisdictions under the various workrelief programs in 1935 is shown in table III and is compared to the total employed in performing ordinary government functions. It is not possible to convert this figure for work-relief employment into the equivalent of full-time employment. The figure arrived at by adding the total of these employees to the total 3,442,800 full-time equivalent employees estimated as engaged in performing the ordinary functions of government in 1935 gives only a rough estimate of the total number of persons employed in this year. On the basis of this estimate it appears that on the average nearly 6 million persons were employed in full-time or parttime work by government in 1935, of which 57.5 percent represented employment resulting from ordinary governmental functions and 42.5 percent work-relief employment. If the work-relief employees had been converted to full-time equivalents, the percentage representing employment arising from performing ordinary governmental functions would doubtless have been considerably higher, and the percentage represented by work relief lower. It was not possible to break down the volume of employment on the various work-relief programs to show the number of persons employed by each main governmental jurisdiction, as in the case of employment resulting from the ordinary activities of government.

Functional Distribution of Public Employees

The various governmental jurisdictions in the United States are engaged in performing a wide variety of functions, such as regulation of traffic; general law enforcement by the prosecuting attorneys, police, and courts; carrying the mails; the construction and maintenance of public roads and streets and the provision of harbor facilities and ship channels; the operation of public schools; the maintenance of an army and navy for the national defense; fire protection; the provision of facilities for recreation and parks; sewage disposal; and the regulation and promotion of industry and commerce.

Data are not available in a central source from which to build up a complete distribution of public employees by specific functions performed. However, the large majority of public service personnel (78 percent) is engaged in furnishing a few basic services. Fairly complete data regarding the number of employees engaged in producing this group of services are available and are shown in table IV for the year 1935.

Over one-third of the total, or 1,152,400 persons, were engaged in producing public educational services.

4 The Works Progress Administration reported that it would be very difficult to convert work-relief employment into full-time equivalent man-years, owing to the fact that there was no standard work month in the various communities. The length of time that each person worked was determined by dividing the maximum wage allowed by the average wage per hour paid by each community.

in 1935. This number includes all educational personnel in the public schools, including administrative and operation employees, employees of school boards and State and county education departments, as well as teachers. It does not include the teaching staff of the United States Naval Academy at Annapolis, the United States Military Academy at West Point, or of the Coast Guard Academy at New London. These educational employees are treated as military employees by the Department of Commerce.

Approximately one-fifth, 647,300, were employed in the construction and maintenance of public roads, highways, and streets. The proportion of public employees engaged in performance of this function would doubtless have been higher if it had been possible to include all of the employees of the municipal governments engaged in maintaining and constructing city streets. An attempt was made to secure information relating to these employees outside of the emergency work-relief programs of the recent years and forceaccount employment on projects financed by Public Works Administration." The estimate of 647,300 persons employed on public roads in 1935 includes a total of 1,100 employees engaged in city street construction on projects financed by the Public Works Administration. If to this total is added an estimated 740,100 persons employed by governmental agencies on a work-relief basis in 1935 to work upon public roads and streets, a total of 1,387,400 is derived as the aggregate number of persons engaged in constructing and maintaining the public highways in this year. While these estimates are rough and do not convert employment to a fulltime equivalent basis, it is clear that the construction and maintenance of public roads is one of the largest economic activities of government in the United States.

The military services ranked third among the various functions performed by government employees. An average of 268,700 persons were engaged in the Army and Navy during this year, or 7.8 percent of the total. Included in this total are the active officers

The Bureau of Public Roads has no data that could be used as a basis for making even the roughest guess.

6 Work-relief road employees were estimated by multiplying the total number of persons employed in work-relief projects under the Federal Emergency Relief Administration each month during 1935 by the average ratio of highway, road, and street employees to the total found by this agency for the 4 weeks ending January 17. February 21, March 21, and April 18, 1935. Then, the average number of employees engaged in street and highway construction projects of the Works Progress Administration for each month during the months of July through December, 1935, was computed. The Works Progress Administration supplied data showing the manhours worked on a force-account basis on highways, roads, and streets under its Works Program and total man-hours worked on all projects. The ratio of man-bours of highway work to all Works Progress Administration work each month was applied to total number of employees engaged in all projects to find the number employed on Works Progress Administration streets and highway projects. The average number employed on both programs was derived by adding the employees on the Works Progress Administration highway projects each month during the last half of 1935 to the Federal Emergency Relief Administration employees for the corresponding months and averaging all monthly figures for the year.

7 An average of the 12 monthly figures reported by the War and Navy Departments to the Bureau of Labor Statistics, plus the average number of West Point cadets.

and men of the United States Navy, the United States Marines, and the Coast Guard; the commissioned and warrant officers, enlisted men, and the nurses of the regular army; the enlisted men of the Philippine Scouts; and the midshipmen of the Naval Academy and the Coast Guard Academy; and the Cadets in training at West Point. Persons retired from the service and the reserve officers of the Reserve Officers' Training Corps are not included in this total.

The Postal Service accounted for about the same number of employees as the Military Service in 1935. An average of 260,300 persons were engaged in distributing the mail in this period, of 7.6 percent of the total.

The four services of public education, construction and maintenance of public roads, national defense, and carrying the mails, accounted for over two-thirds of the entire public personnel in 1935. When the important services of police and fire protection are included with this group of basic services approximately three-fourths of the entire public personnel, excluding the work-relief employees, are accounted for. The remainder of the public employees are engaged in performing a wide range of services, including the provision of water supplies, sewage disposal and parks, reclamation and conservation, and performing the legislative, executive, judicial, and regulatory functions of government.

It should be noted that work-relief employees are not included in the functional distribution given in table IV. However, a rough impression of the functions performed by the work-relief employees in 1935 can be obtained from the distribution of Federal Emergency Relief Administration work-relief employees in January 1935 and Works Progress Administration employees in December 1935. These are shown in table V. Federal Emergency Relief Administration employees are shown on the basis of number of persons employed. Works Progress Administration employees are shown. on the basis of man-hours. In January 1935, Federal Emergency Relief Administration projects included 87 percent of work-relief employees. In December 1935, Works Progress Administration included 85 percent of work-relief employees.9

The Civilian Conservation Corps accounted for most of the remaining work-relief employees in 1935. Data showing the number of employees engaged or man-hours worked by type of function performed are not available for this agency. The Civilian Conservation workers are chiefly engaged in various types of activity relating to the national and State parks, national forests, wildlife preserves, and other public domain. These activities include building park roads, 10 trails, bridges, and utilities; flood-control, irrigation, and water conservation activity; erosion control, forest culture, and fire control.

Income Produced by Government

In the absence of adequate data with which to appraise the capital goods and land used by government and the value of the product of government activity, estimates of the share of the total national income which is produced by government may be used to supplement data on government employment.

About 75 percent of the water systems are municipally operated. Cf., Hartwell, Ronald P., "Water-A Growing Utility," Magazine of Wall Street, vol. 46, June 28, 1930, p. 398. In its report of December 1, 1934, p. 332, the National Resources Board stated that an analysis of 67,000,000 water customers shows that about 80 percent are served by public supply systems.

The Works Progress Administration began its operation as of July 1, 1935. Over a period of some months it replaced the Federal Emergency Relief Administration program. In January and December the distribution of work-relief employment was as follows:

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• Source: Statistical Summary of Emergency Relief Activities, January 1933 through December 1935, Federal Emergency Relief Administration, table 8, p. 21. 22. The figures shown herein relate to the number of different cases receiving some emergency work relief earnings and not the average number of full-time equivalent employees on the Federal Emergency Relief Administration programs. A certain amount of duplication exists between the reports for emergency work relief programs and Works Frogram employment under the Works Progress Administration, because of the transfer of workers from the former programs to the latter. These duplications have not been subtracted from the Federal Emergency Relief Administration employment shown herein. The number of students receiving work-relief employment under the Federal Emergency Relief Administration student-aid program is not included herein.

Source: Special tabulations, Division of Research, Statistics, and Records, Works Progress Administration and Division of Construction and Fublic Employment, Bureau of Labor Statistics. The figures herein shown relate to the work programs operated by the Works Progress Administration and were compiled from actual records kept. These projects are planned and sponsored by the States and localities and financed by both Federal and State funds. However, except for a few technical and supervisory employees furnished by sponsors, all of the workers are carried on the Federal pay roll. The figures shown represent the number of different persons employed, not the average number of full-time equivalent man-years represented by the employment figures. The number of persons receiving work-relief employment under the National Youth Administration is not included herein. Persons employed on the Federal construction projects supervised by various Federal agencies, excluding the Bureau of Public Roads, but financed by the Works Progress Administration are included. They are estimated on the basis of the maximum number of employees reported in any one week during the month of the Bureau of Labor Statistics. Source: Special tabulation submitted by letter of Sept. 14, 1937, from Herman B. Byer, Division of Construction and Public Employment, Bureau of Labor Statistics.

Source: Special tabulation, Division of Construction and Public Employment Bureau of Labor Statistics.

Source: Estimate by Public Works Administration on basis of reports from the cooperating agencies. Average number of persons employed on force account basis on projects financed by Public Works Administration for year on both Federal and non-Federal projects, exclusive of employment on streets and highways included in the figures shown for the public roads function.

10 An impression of the road building activities of the Civilian Conservation Corps workers during the period April 1933 to April 1937, can be gained from the following tabulation showing the miles of roads and trails constructed or maintained in this period:

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Table VI shows the estimates by the United States Department of Commerce of the income produced by government annually during the period from 1929 through 1936, and the ratio of income produced by government to the total income produced for each year during this period. It will be noted that while total national income produced dropped from 81 billions of dollars in 1929 to a low of 40 billions of dollars in 1932, income produced by government during this period remained very stable. As a result, the proportion of the national income produced by government increased from 8.1 percent in 1929 to 16.8 percent in 1932. Since 1932, the proportion produced by government has decreased, but it has remained well above the proportion of the earlier years, and amounted to nearly 15 percent in 1935 and 1936.

Although the above data on employment and income produced are sufficient to indicate that government must be regarded as one of the leading factors in the structure of the economy, they are only suggestive of the significance to the economy of government activity. Full understanding of government's role would require careful analysis of the governmental function of providing a framework for individual activity as well as of the activities of government as a direct producer and distributor of wealth. The effects of government controls in each industrial segment of the economy would have to be measured, and extensive data on governmental operations which result in direct production of goods and services in each industry would have to be assembled, before the role of government in the economic system could be fully described.

TABLE I.-Number of employees in government service in the United States, excluding employees on work-relief programs, by main governmental jurisdiction, 1929–36 1

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Total..

3, 189, 100 100. 0 3,316, 500 100.0 3,373, 700 100.0 3,271, 400 100. 0 3, 200, 100 100.0 3, 302, 800 100.0 3, 442, 800 100.0 3,625, 200 100.0

Source: Adapted from special tabulations by the National Income Section of the Bureau of Foreign and Domestic Commerce, U. S. Department of Commerce. Since the Department of Commerce tabulation does not distribute employees in public education by governmental division, except in the case of the Federal Government, it was necessary to estimate the number of this class of employees that should be distributed to State, city, and county jurisdictions. A tabulation of the number of educational employees in the United States, excluding operation employees, maintenance employees, bus drivers, full-time health officers, and local attendance officers, reported to the Office of Education in 1934 shows that 4.9 percent of these employees are employed by State governments, 52.93 percent by city governments, and 42.17 percent by county and other local governments. The total number of employees in public education shown by the Department of Commerce for each year during the period 1929-36 was then multiplied by these ratios to find the number of employees in public education to be distributed to each governmental jurisdiction, other than Federal.

Wherever available data permitted, the number of public employees reported to the Department of Commerce were converted to a full time equivalent basis.

3 Cities are defined by the Department of Commerce as all incorporated places. This definition has been followed herein.

TABLE II.-Comparison of number of persons employed by government, excluding employees on work-relief programs, to total number employed by all industrial divisions in the United States, 1929-36 1

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Adapted from special tabulations submitted by the National Income Section of the Division of Economic Research, Bureau of Foreign and Domestic Commerce, Department of Commerce.

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Full-time equivalents. See table I.

Not converted to full-time equivalents. Includes the number of persons employed on works programs projects operated directly by the Works Progress Administration, on work-relief projects of Federal agencies financed by the Works Progress Administration, on work-relief projects financed and supervised by the Federal Emergency Relief Administration, on projects of the Civilian Conservation Corps, and on Federal and non-Federal projects, other than streets and highways, financed by the Public Works Administration. Where the projects involved construction in which some of the work was done by contractors, as in the case of the Public Works Administration projects especially, only the force-account work of governmental agencies has been included. Accordingly, the number of persons employed shown herein relates to persons on governmental pay rolls, not the entire volume of employment deriving from expenditures of governmental funds. The source of the data are as follows: For the figures relating to the Works Program of the Works Progress Administration and the Federal Emergency Relief Administration projects, special tabulations by the Works Progress Administration based upon pay-roll records and reports from participating agencies; for the data relating to work-relief projects of Federal agencies financed by Works Progress Administration, a special Bureau of Labor Statistics tabulation of estimated force-account_employment based upon monthly reports of employment received direct from the Federal agency supervising the projects; for the Civilian Conservation Corps projects a special Bureau of Labor Statistics tabulation showing revised monthly employment in the calendar year 1935; for the projects financed by Public Works Administration, an estimate by Public Works Administration of the force-account employment based upon reports from participating agencies.

TABLE IV. Number of employees in government service in the United States, excluding employees on work relief programs, by major economic functions performed in the year 1935 1

2 Source: Special tabulation by the National Income Section of the Bureau of Foreign and Domestic Commerce.

3 Source: Estimates by the Bureau of Public Roads of the man-months of force account work on State roads, during the fiscal year 1935, based upon regular reports of the State highway departments and of the man-months of force-account work on local rural roads based upon an estimated expenditure of $288,000,000 for local rural roads during the fiscal year 1934-the last year for which data are available-and a factor of 70 percent of expenditures for these roads for labor and 30 percent for materials and supervision; estimates by Projects Division of the Public Works Administration of the force-account employment resulting from road construction and maintenance financed by the Public Works Administration during the fiscal year ending June 30, 1935. Except for 1,095 man-years financed by the Public Works Administration, force-account employment on city streets is not included

Source: Average for year 1935 based on monthly reports of the Civil Service Com mission.

Includes employees for the fiscal year ending June 30, 1935, of such agencies of the Federal Government as the Federal Bureau of Investigation, the Post Office Inspection Service, the Immigration Border Control of the Department of Labor, and in the Treasury Department the Secret Service Division, the Intelligence Unit and Alcohol Tax Unit of the Bureau of Internal Revenue, the Bureau of Narcotics, and the Customs Agency Service of the Bureau of Customs; the employees of the State police and highway patrol departments as of June 1, 1937; an estimate for the year 1935 of the number of county sheriffs based upon figures of the Census of Occupations for 1910, 1920, and 1930; the estimate of the Department of Commerce of the number of city police employees raised to include cities with population below 2,500; the employees of the Federal and State prisons as shown by the census report, Prisoners in State and Federal Prisons and Reformatories, for the calendar year 1935; and the figures shown in the Census of Occupations for public guards, watchmen, and doorkeepers for 1930 reduced by the number of keepers and guards in Federal and State prisons in 1935. The figures for the Federal agencies were supplied by them direct. The American Association of Motor Vehicle Administrators supplied the figures as to State police. Source: Statistical Abstract for 1936, table 400, p. 352. The data given are the census figures for 1932-the last year that a census of the electrical industry was taken. 7 Source: Census of Electric and Street Railways and Moter Bus Operations of Affiliates and Successors, 1932. The data shown are for the year 1932, the latest year available.

Source: The Commission of Inquiry of Public Service Personnel in its publication, Better Government Personnel, estimated on the basis of a sample taken by the Department of Commerce by the questionnaire method that there were 92,500 employees in municipal public utilities as of June 30, 1932. The figure shown above is derived by subtracting the employees of the municipal power plants and the street railways as shown by the Bureau of the Census for 1932.

TABLE V.-Percent distribution by type of project of persons on work-relief projects-January and December 1935

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1, 152, 400

33.4

Recreational facilities...

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647, 300

18.8

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268, 700

7.8

Sewer systems and other public utilities.

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260, 300

7.6

Sanitation and health projects...

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178,300

5.2

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79, 400

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Professional and clerical.

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TABLE VI.-Comparison of the income produced by government, including work-relief wages, with the income produced by all industrial divisions in the United States, 1929-36 1

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1 Adapted from special tabulations by the National Income Section of the Division of Economic Research, Bureau of Foreign and Domestic Commerce. See National Income in the United States, 1929-35, for explanation of the method used by the Department of Commerce in making these estimates.

Include the following amounts of work-relief wages in the last 4 of these years: $611,000,000 in 1933; $1,395,000,000 in 1934; $1,273,000,000 in 1935; and $2,058,000,000 in 1936.

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