Is Mitt Romney's 12 Million Jobs Plan Really Doable?
Mitt Romney's plan to create 12 million jobs in his first term as president is being criticized as hyperbole, political fantasy, and pie-in-the-sky.
But is it? History can help answer the question. But, as has been brought home to us during the presidential campaign, history can be read in different ways.
Romney critics can rightly point out that the only times in the postwar era when the U.S. economy generated a net increase of 12 million or more jobs in a period of four consecutive years were during the Ford-Carter years and the Clinton years. From 1976-1979 jobs increased by 12.9 million and from 1997-2000 they rose by 12.1 million.
At first blush, such robust four-year job growth indeed seems like a rare event - happening only twice in over six decades - tough to repeat.
But is that the way to look at it?
Over the long run the economy, including the working-age population and employment, has trended upward. It's called growth.
The level of payroll jobs today is three times higher than in the early postwar years, two-thirds higher than in the mid-1970s, and about 10 percent higher than in the mid-1990s. Therefore, with a larger base, the same rate of employment growth yields a larger number of jobs today than in the past. Thus, it takes a smaller employment growth rate today to generate 12 million jobs than it did in the past. A growing giant takes bigger steps.
Take the most recent period of high job growth, the mid-1990s, in years when the average annual rate of increase was 2.6 percent. Over a four year period that would boost the number of jobs by over 10 percent. Applying that percentage to today's level of jobs yields an annual increase in payroll employment of 3.4 million jobs a year or 13.6 million over a four year period. That's 1.6 million more than Romney's 12 million. .
To meet his 12 million job goal in the next four years, Romney needs an average annual increase in jobs of 2.2 percent. Since 1948 there have been six times when jobs have risen at that rate or higher over a four year period or longer: 1950-1953, 1962-1969, 1971-1974, 1976-1979, 1984-1989, and 1994-2000.
Clearly, the fulfillment of Mitt Romney's pledge would not require an unrealistic rate of employment growth.
A four percent average annual economic growth rate for the recovery years 2013-2016 would likely be sufficient to the task, a quite feasible goal and one that could very well be exceeded. It's true that a delay in implementing Romney's economic agenda could be problematic. On the other hand, his election victory would probably provide an immediate psychological boost, wash away uncertainty, and encourage businesses to follow through on their now stalled plans to invest and hire. And in the months following, a further impetus could be expected to kick in as the economic effects of tax rate cuts, reduced federal spending, regulatory reform, and other Romney policies make themselves felt.
The critics are wrong. The Romney job plan is entirely doable.