Despite the economy, Uncle Sam is hiring

updated 1:31 p.m. ET Feb. 2, 2009

WASHINGTON - The economic downturn has forced private industry and state and local government to shed jobs, but one major employer in the country is hiring: The federal government.

While the nation's 11 million unemployed and the millions more who fear losing their jobs may feel Washington should streamline too, economists say a strong federal work force is key to economic recovery. Were President Barack Obama to put any of the nearly 2 million federal civil servants out in the street in the middle of the worst economic downturn since the Great Depression, the consequences could be dire.

"Federal belt-tightening would worsen the problem right now," said Kevin Hassett, director of economic policy studies at the American Enterprise Institute, a conservative think tank. "Most economists agree that the federal government is a built-in stabilizer," said Hassett, a former adviser to GOP presidential campaigns.

Obama's proposed $800-plus billion economic aid plan, which includes heavy spending on public works, is expected to increase the ranks of government workers, although mostly at the state and local level.

That measure is working its way through Congress just as Microsoft Corp., Pfizer, Caterpillar, Home Depot and scores of other companies are shedding workers, and governors are asking or ordering state workers to accept furloughs, salary reductions, truncated workweeks or reduced benefits.

(Msnbc.com is a joint venture of Microsoft and NBC Universal.)

Simply letting federal workers go is "penny-wise and pound foolish," said Max Stier, president of the Partnership for Public Service, a nonprofit group that works to revitalize the government and its work force. "We had a situation where we had a single person monitoring toys coming in from abroad. The result: You get lead-tainted toys coming in to the country," Stier said. "We need people looking out for the public good."

Paul Light, professor of public service at New York University, also thinks more, not fewer, federal workers are needed on the front lines. He said other steps could be taken to trim costs. The Obama administration has suggested reducing the number of managers at the middle levels, he said.

"That would be a good thing," Light said. "What he hasn't suggested is that we reduce political appointees at the senior level. I just think you could do some things to say to the public, 'Look, the federal government is going to make its share of sacrifice and it's more than just having energy-efficient buildings.'"

AP Jobs, spending data hint at recovery In a hopeful sign for the economy, the number of newly laid-off workers filing claims for unemployment benefits fell below 500,000 last week for the first time since January. New-home sales rise to highest level in a year Consumers log stronger-than-expected rebound Durable goods orders fall unexpectedly Recovery's pace slower than first thought

The government's civilian, nonmilitary work force peaked in the late 1960s at about 2.3 million. It was 2 million or more through the mid-1990s, when the government cut more than 400,000 jobs — many through military base closings. Since 2001, civilian employment in the executive branch, excluding postal employees, has edged upward from 1.7 million to about 2 million, largely because of new homeland security jobs.

More federal job openings are on the horizon.

A report released in January by Christina Romer, head of the White House Council of Economic Advisers, and Jared Bernstein, an economic policy adviser to Vice President Joe Biden, predicted that more than 90 percent of the 3 million to 4 million jobs that Obama proposes to save or create would be in the private sector.

But the report also estimated that 244,000 government jobs — some at the federal level, but more at the state and local level — would be created or saved.

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