Profligacy Or Prudence? Changes in Employment and Compensation of State and Local Government Workers

As the 1990s began, state and local governments across the country found themselves in a situation of fiscal stress. That stress has been attributed to several sources. Recently, it has been suggested that governments themselves brought on the fiscal squeeze by their own profligacy —a profligacy rooted in excessive increases in employment and compensation of government workers during the 1980s. After summarizing some arguments presented for and against describing state and local practices of the 1980s as profligate, this article compares its evidence on the growth of employment and compensation and notes some different interpretations. The article concludes that a strong statement of the profligacy position has not been proved.