Precisely the arguement I made above when others rail against gov't employees.

You need to broaden your understanding of the concept of "product." Security is a product (firefighters, police, military), education is a product (teachers, professors), recreation is a genre of products (game wardens, park rangers, etc.) So, the government itself employs many that produce products that you rely on everyday. The more people that move here to occupy the houses built by private contractors, the more products will be necessary from government employees. The more people laid off, the more product required by government.