Thursday, September 06, 2012

About those jobs by president numbers

It has been a talking point for Democrats recently that since 1961, more jobs were created under Democratic presidents than Republican ones. Wikipedia has the numbers. Does that mean that we should trust the economy to Democrats?

The methodology deserves some comment. The chart figures jobs created according to two measures. The one that the Democrats are using subtracts the number of people employed in January of a president's first term from January of his successor's first term. The second set is the same as the first except it uses September instead of January. This reflects the fact that it takes time for a president's policies to have any effect.

There are problems with this approach. The Wikipedia article mentions that Congress, not the President, controls spending and has at least as much influence on the economy.

Something that is not stressed is the size of the workforce. There were fewer than 54 million people in the workforce in 1961. By 2012 that number had grown to 132 million. While a job is a job if you are unemployed, figuring jobs added as a percentage of the workforce is a more realistic figure. It takes less than half as much additional economic growth to add new jobs today as it did in 1961. If you look at that then the top job creator moves from Clinton (2.52%) back to LBJ (3.90%).

The biggest problem with this measure is that economic downturns happen regardless of who is in office. If a downturn is going on at the beginning of a president's term then his numbers are depressed. You can see this with several presidents. The deeper the recession the more jobs have to be created just to break even. The Obama people insist on only counting the last 29 months. If you look at January, 2009-January, 2012 then he lost jobs.

A more realistic, long-term view of the workforce can be gained by looking at the chart at the bottom of the Wikipedia article. You can see it blown up here. This gives a completely different view of the workforce. Starting in 1939, the workforce has grown fairly consistently punctuated by short down-turns. The general rate of growth has been consistent although it picked up a bit in the 1980s (the Reagan years) culminating in the tech bubble crash in the late 1990s. The 1960s look so good because there were no appreciable downturns to offset normal gains.

If you look very carefully then you can see that job growth since 2000 fell off. The high point around 2007 should have been higher and come later. More important, job growth since the low point has been almost flat.

The conclusions that we can draw from this:

  1. Downturns happen
  2. Until the last couple of years the workforce grew at a consistent rate no matter who was in the White House.
  3. Job growth picked up slightly during the Reagan years.
  4. Job growth under Clinton went back to historic levels but went longer between downturns.
  5. Job growth under George W. Bush receded to the 1960s level and had one of the shortest periods of growth since 1939.
  6. Job growth under Obama has been the slowest since record-keeping began in 1939. It would be interesting if this chart went back further but I think that is as far back as reliable figures go.
Prior to the Obama administration, job growth continued regardless of which party was in the White House.

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