President Obama, and the Myth About 4.5 Million New Jobs
Has the U.S. job market been improving during the recovery? The Obama administration likes to point to the 22 months of consecutive job growth. The recovery itself supposedly started in July 2009. Quite frequently, the Administration has presented charts like the following, with the impressive long string of bars showing positive job growth.
Democrats are obviously right that the red columns, showing added jobs, are better than the jobs lost in blue. Still the graph makes things look rosier than they actually are. It misses out that there are now about 8 million more working age Americans than when Obama became president. With a growing population, more jobs were needed just to keep the economy standing in place.
Since the recovery started in July 2009, the working age population has grown by 213,000 people on average each month. Normally about 60 percent of the working age population is working. Thus, it would have been necessary to add about 128,000 jobs each month just to keep the share of the working age population employed from falling.
That means that a minimum of a little over 4.7 million jobs had to be created during the recovery just to keep us treading water. That growth wouldn't have done anything to make up for the huge job losses that we had suffered up to that point. In fact, only 2.7 million jobs have been added over that time period - 2 million jobs short of what we needed just to keep from falling further behind.
Understanding these monthly numbers helps provide some perspective to Obama's claims when the latest unemployment numbers were released: "That means that we've now created 4.5 million new jobs over the last 29 months -- and 1.1 million new jobs so far this year," the president asserted. Obama doesn't accept responsibility for job losses up through February 2010, a year after the stimulus was enacted, but even then the total number of jobs created is 4 million and the number necessary to keep the share of the working age population employed from falling is 3.8 million.
But whatever time period that Obama wants to point to, job growth has been extremely sluggish. 200,000 net jobs over 29 months is hardly something to brag about.
The next figure updates the numbers by accounting for the growth in the working age population (adjusted for the labor force participation rate). The results are depressing, but not too surprising. Instead of 22 straight months of growth, the current string is just one month. During those 22 months of "growth," only 13 months saw enough job growth to keep up with the increase in population, and most of those increases were quite small.
The 163,000 job uptick in July of this year becomes a net gain of only 47,000 once the population gain is accounted for.
The next two figures show how incredibly weak job growth has been for Obama by comparing his recovery to all the other recoveries since 1975. Because the size of the job market has changed so much over the last 40 years, job growth is shown as a percent of the number of people employed. A couple hundred thousand jobs being created in a month 40 years ago is a lot more impressive when you only had two-thirds as many people working.
Under Obama, job growth only made up for population growth for about half the number of months that it did during previous recoveries. Worse, under Obama, after accounting for population growth, employment shrunk by an average of -0.02% each month. During previous rebounds, monthly jobs net of population growth grew an average 0.07%.
Obama told Black Enterprise magazine in an interview published last week: "we are digging ourselves out of a deep hole." But Obama's claim of creating 4.5 million jobs that he reiterated again on Thursday is simply wrong. Not only do we have fewer jobs in the U.S. today than when Obama first became president, nothing has been done for the 8 million additional working age people. By anyone's definition, this is not a "recovery."