The new Democratic claim about job creation

The new Democratic claim about job creation

A new claim about job creation appears to be bubbling up through the Democratic ranks. Here is the clearest statement of that claim, from Rep. Debbie Wasserman Schultz (D-FL) on Stuart Varney’s show:

On the pace that we’re on, with job creation in the last four months, if we continue on that pace, and all the leading economists say that it is likely that we will, we will have created more jobs in this year than in the entire Bush Presidency.

Ms. Wasserman Schultz is picking her timeframes carefully, in particular by ignoring the four million jobs lost during the first 11 months of a Presidency that is so far 16 months old.

Even today, after five straight months of job growth, three million fewer people are working than when President Obama took office. That’s hardly something to brag about.

And looking just at last month’s strong net increase of 431,000 jobs, we see that nine out of ten net new jobs were temporary government jobs for census takers. We all hope the pace of private job creation accelerates, but it’s too soon to declare this a strong and consistent employment recovery or to project its trend into the rest of the year.

Let’s look at how Ms. Wasserman Schultz justifies her claim.

I have colored the Bush Presidency red and the Obama Presidency blue.

You can see two yellow dots in January 2001 and January 2009, and a thin yellow line extended so we can measure the difference between the two. The red arrows show that, if you measure only endpoint to endpoint, 1.1 million net net jobs were created during the Bush Administration (I’m using the payroll survey in all cases).

But this analysis misses most of the story. We can see a steady employment decline from early 2001 through mid-2003, followed by a steady, strong, and sustained period of job growth for almost four years. This 46 month period is the second longest in recorded history for sustained job creation in the U.S., and more than eight million jobs were created during this period (the white arrows). A mild recession began in late 2007, followed by a severe contraction in the second half of 2008 and continuing into the Obama Presidency.

Compounding the chicanery, Ms. Wasserman Schulz measures the Obama job creation beginning with the first pink dot in December 2009. Her conclusion is based on the orange arrows and her guess about how they will grow throughout this year. She’s ignoring the four million decline in employment from January 2009 (despite the stimulus), and she’s ignoring that we’re still three million jobs shy of where we were when President Obama took office. If she were to apply the same methodology to President Obama as she did to President Bush, she’d be comparing +1.1 M (Bush) with -3.0 M (Obama). But that wouldn’t look quite as good for her case.

Measuring employment either presidency by observing only the start and endpoints ignores a lot of important information and tells a misleading story. Comparing the entire Bush presidency with only the good news part of the Obama presidency is absurd.

Many economists prefer to compare economic statistics from one business cycle to the next – from peak to peak, or from trough to trough. Since business cycles don’t match political terms, this means that comparisons across presidencies are analytically difficult and often misleading. When an advocate like Ms. Wasserman Schultz compounds this by choosing her window to make her point, we’re at the mercy of her choice of timeframe, which is often chosen to justify a political argument.

Since the policy and political debate force us to compare economies between elected terms, we need a better metric. The average unemployment rate is probably the best and fairest way to compare employment over time between Administrations. Since the labor force grows each year, comparing the number of jobs created in timeframes many years apart is misleading. The unemployment rate largely adjusts for these demographic trends because it is measured as a share of the labor force. And using the average unemployment rate over an entire Administration allows us to avoid endpoint biases and games and to more fairly compare Presidencies.

If Ms. Wasserman Schultz wants to use this better and fairer metric to compare the employment picture between the entire Bush presidency and the Obama presidency so far, I’m game:

President Obama’s 9.5% average unemployment rate is measured over a relatively short timeframe, and we all hope that average declines as the economy recovers and many more new jobs are created. Still, a fair comparison shows a strong 5.3% average unemployment rate for the Bush Presidency, and Obama partisans may want to wait for a lot stronger job growth before trying to compare the Obama employment record with that of President Bush.

15 responses

  1. Pingback: Tweets that mention The new Democratic claim about job creation | KeithHennessey.com -- Topsy.com

  2. I think it's only fair to admit that a lot of that job loss under Obama came at the heist of Bush's recession. Just as a lot of Reagan's struggles early on in his presidency (which are eerily similar to those of this one thus far) were the fault of Carter (he did not hesitate to make this point), a lot of Obama's early problems have been because of Bush.

    • Did you read what Keith said about the alignment of business cycles with administration terms such correlations are fraught with analytical problems.

  3. I'm shocked shocked shocked that Ms. Schultz is playing politics with the nation's future. The point is that her point can be made in a twitter blurb whereas your point requires critical thinking and much more ink. The memes the dems have at their disposal equating ownership with "on your own" or substituting the word investment for spending are all twitter type blurbs that resonate with voters. I think that repubs need twitter like blurbs and here I don't mean calling all government action socialist I mean effective twitter type communication that appropriates good memes. Like, "The administration is creating temporary solutions to permanent problems."

  4. So allow me to summarize the primary cause behind the structural decline in private employment: You have to be insane or a masochist to hire an employee in the U.S. today."
    http://www.oftwominds.com/blog.html

    Speaking as a small business owner, the 'progressive' agenda is anti business.

  5. No doubt that Obama inheritied this recession but GWB also inherited a recession and massive stock market crash. Then came 9/11 of course. GWB pursued marginal and capital tax cuts (that some said didn't go far enough), Obama has been pursuing fiscal deficit spending (that some say doesn't go far enough), we'll see who had the greater positve effect on jobs soon enough i suppose.

    • Deficit spending? Go somewhere and review the deficit spending of the Bush 8 years. Now that's REAL deficit spending. Get a grip.

  6. Pingback: Hennessey Debunks Democrats New Job Claims | FrumForum

  7. "Measuring employment either presidency by observing only the start and endpoints ignores a lot of important information and tells a misleading story."

    When people measure that it way it also makes it difficult to manipulate the data as you and Schultz both do. You chose a time frame that shows your former boss in a favorable light by including all the jobs gained in the rise of the housing bubble but ignoring the jobs lost when the bubble collapsed.

    According to your metric the economy did better under Bush Jr then it did under Reagan. How many people do you think would agree with that assessment?

  8. Pingback: Employment | Grump Daddy

  9. This is a purely politically motivated analysis, with no focus whatsoever on the real dynamics. The real dynamics to look at — if you truly want to see what has happened — are 1) the false bubble-economy of debt (private and government), including particularly the unpaid for spending by government, during the Bush administration (fault not just of Bush, but the Republican controlled Congress); and 2) the CRASH into the abyss beginning at the end of the Bush/Republican era, beginning shortly after January 2008 — a deeper hole, relatively speaking (the most important measure), than has been seen since the Great Depression. In fact, the recovery since the present administration has taken office has been nothing short of remarkable, considering the history, properly viewed. To those who fail to see this, I say, either you are wrongheaded Republican/Right Wing Nuts (both the same); or you are simply ignorant and/or gullible. The Republican/Right Wing Nuts are masterful at the propagation of mis-information for the advancement of their own selfish interests. This interests are not, however, in the interest of our country or our society as a whole. Do not be fooled.

    • I could not agree with you more. Look at the chart itself. All of the job growth shown between 2004 and 2008 was lost overnight, beginning with the crash that started in 2008. Obviously that crash (look at it) was not caused by the administration or congress that took over in January 2009. For anyone who cannot see the free-fall already in motion, God help you.

      • Indeed; the analysis is quite simple. To properly analyze the data, it is necessary to pick the relevant beginning and ending periods. The relevant starting point to measure the Bush administration performance would be, say, January 2003 — after there was some opportunity for whatever policies were put into place to reverse the 2001-2003 declines. However, the end of the period has to be somewhere well after January 2009, as the economy was in an historic free-fall, beginning in 2008, that no-one would have been able to arrest. In fact, so analyzed (and correctly so, I maintain), the Bush era actually caused a net loss in jobs. That is the hole we are now having to dig our way out of; and it will not be accomplished by more of the Bush strategies, now proven failures. Thanks for this chart, by the way, Mr. Hennessey.

  10. You can give Bush credit for 8M jobs although it was just 1M (the losses were on his watch still), and yet 23M were created during the Clinton administration. I think if you look into personal income growth and the number of Amricans that came out of poverty under Clinton, that's where you will see a major impact. Trickle down economics doesn't work… plain and simple.

Follow

Get every new post delivered to your Inbox.

Join 6,421 other followers