BY MENCKEN'S GHOST | JULY 14, 2010
Creating jobs that destroy the economy
A new financial reform bill will soon be on President Obama’s desk. As a result, statisticians at the Bureau of Labor Statistics will be busy revising the employment projections for accountants and auditors that they made in 2008.
That year, the Bureau projected that the employment of accountants and auditors would grow by 22 percent by 2018, or an increase of 279,400 such jobs over the decade. Since the average salary of these jobs is $67,430, the total payroll cost would be over $18 billion in today’s dollars.
The Bureau went on to say that most of the growth in accountants and auditors would be in the private sector and the result of new financial laws and regulations. They didn’t anticipate that a new financial reform bill of over 2,000 pages would be passed two years later and spawn tens of thousands of additional accountants and auditors.
Let’s assume for discussion purposes that 50,000 additional accountants and auditors will be spawned from the new reform bill. When added to the projection of 279,400 made in 2008, that would result in a revised projection of 329,400 new accountants and auditors, for a total annual payroll cost of over $22 billion.
Here’s another way to look at this cost: Since the average pay of full-time workers in the U.S. is about $40,000 per annum, the cost would be equal to the average pay of over 550,000 workers.
Meanwhile, the intelligentsia, professoriate, and mainstream commentariat wonder why the wages of non-degreed workers have stagnated while the salaries of degreed specialists have skyrocketed. Memo to these geniuses: Do you think it has something to do with the growth of the regulatory state? Do you think?
The additional accountants and auditors will in turn spawn additional bookkeeping, accounting, and auditing clerks, which, according to the Bureau of Labor Statistics, comprise “one of the largest growth occupations in the economy.”
Tragically, the growth in accountants, auditors, and clerks would not have been necessary if the government had done its job of financial regulation in the first place and had not created a housing bubble and financial meltdown with easy money, laughable down payment requirements, and perverse tax and housing policies. After all, there are already over 100 federal agencies, bureaus, boards, and commissions that are supposed to oversee the financial industry. There are also about 6,000 financial examiners on the payroll of the federal government. At an average wage and benefit cost of about $150,000 for each examiner, their total cost is $900 million per annum.
In addition to the 6,000 financial examiners, there are 97,850 compliance officers in the federal government, 34,650 in state government, 26,640 in local government, and 16,710 in industry.
Another growth occupation is federal tax examiners, collectors, and revenue agents. There are 72,700 of them, and their ranks are expected to grow 13 percent by 2018.
Other growth occupations are social workers (16 percent increase), health and safety technicians (14 percent), medical records and health information technicians (20 percent), probation officers and correctional treatment specialists (19 percent), and human resources, training, and labor relations managers and specialists (22 percent).
Perhaps the most telling and infuriating statistic is this: There are 119,500 government workers whose job is to interview applicants for government programs. Their ranks are projected to grow by 9 percent.
Unless you’re a member of the intelligentsia, professoriate, or mainstream commentariat, you understand the economic implications of the shift from productive work to regulatory work. It would be nice if we could, but we can’t reduce our trade deficit by selling our accountants and auditors to the Chinese.
Equally troubling is what the growth in regulatory work is doing to our politics. As more people hold jobs dependent on the regulatory state, fewer people will vote against the regulatory state, including Republicans who hold such jobs but rail against big government.
Moreover, it is shortsighted for conservatives to focus on cutting government spending without also focusing on eliminating the regulations that spawn regulation-related jobs in the private sector, where the cost doesn’t show up on the government’s books.
The corrupting influence of the shift can be seen in the Arizona race for the U.S. Senate between John McCain and J.D. Hayworth. When he was a U.S. Representative and a talk-radio host, Hayworth had portrayed himself as a staunch small-government conservative. Yet he starred in an infomercial by a shady company that was in the business of charging people to learn how to get free government grants.
Actually, Hayworth is an ideal candidate. He embodies the new American economy.