Obama Has Failed To Create Jobs
Sunday, September 23, 2012 at 10:50PM Audio Link to this article (Part 1 and also Part 2)
Obama Has Failed to Create Jobs
by Henry W. Burke
9.2.12
Excerpts from this article by Henry W. Burke:
"Fact-Checking" of Obama's speeches suggests that he is overstating the results on jobs created during his term.
Obama said from March 2010 to December 2011, "We created 3 million jobs in 22 months" or 136,000 jobs per month. Not so. The number should be 84,000 jobs per month.
Obama said from March 2010 to July 2012, "We created 4.5 million jobs in 29 months" or 155,000 jobs per month. Again, not so. The number should be 113,000 jobs per month.
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[Part 1 of 2]
INTRODUCTION
It is important to evaluate Obama's performance at creating jobs. Of course, most knowledgeable people understand that the government does not create jobs (except jobs for government employees); rather, jobs are created by the private sector. However, government policies can have a huge influence on job creation!
Obama and the Democrats like to talk about all of the jobs they have created since he took office. To verify or refute these claims, I will look at the current job picture and compare it with the job situation when he was inaugurated in January 2009.
I will also analyze Obama's job creation rhetoric for accuracy and provide a tool to gauge the results. Finally, I will discuss the success or failure of the Stimulus Bill.
The following subjects will be covered:
A. Current Job Picture
B. Comparison between January 2009 and Current
C. New Jobs Required to Keep Pace with Population Growth
D. Obama's Rhetoric on Creating Jobs
E. Stimulus Bill -- Success or Failure?
F. Stimulus Bill and Construction Jobs
A. Current Job Picture
The recession that began in December 2007 officially ended in June 2009 but we would never know it. Employment has fallen by over 7 million jobs since the recession began. The labor market remains stagnant and unemployment remains above 8 percent. The unemployment rate has now been over 8 percent for 42 months (Obama's full time in office).
This is the longest period with unemployment over 8 percent on record!
The current "recovery" is the weakest recovery of the post–World War II era.
The Bureau of Labor Statistics (BLS) released its Employment Situation Summary for July on 8.03.12. It showed that unemployment increased from 8.2 % to 8.3 %, with 12.8 million people unemployed. Only 163,000 new jobs were created during July, far below the number needed for real growth. (This data is shown in the table under the next section.)
http://www.bls.gov/news.release/pdf/empsit.pdf
There are 12.794 million unemployed workers and 155.013 million people in the civilian labor force. [12.794 million / 155.013 million = 8.3% unemployment rate] The number of unemployed workers increased from 12.749 million in June to 12.794 million in July (an increase of 45,000). [12,794,000 - 12,749,000 = 45,000]
The number of long-term unemployed (those jobless for 27 weeks or more) was little changed at 5.2 million persons; this group accounts for 40.7% of the total unemployed.
The number of persons employed part time for economic reasons (sometimes referred to as involuntary part-time workers) was essentially unchanged at 8.2 million in July. These individuals were working part time because their hours had been cut back or because they were unable to find a full-time job.
In July, 2.5 million were marginally attached to the labor force. The number of "underemployed" people increased in July to 23.6 million; the "underemployment rate" is 15.2%. "Underemployed" includes unemployed, part-time for economic reasons and marginally attached. [12.794 + 8.246 + 2.529 = 23.569 million]
The labor force participation rate dropped slightly from 63.8% in June to 63.7% in July. (There are 155.013 million in civilian labor force and 243.354 million in civilian non-institutional population.) [155.013 million / 243.354 million = 63.7%]
The employment population ratio dropped to 58.4% in July. (There are 142.220 million employed and 243.354 in the civilian population.) [142.220 / 243.354 = 58.4%]
B. Comparison between January 2009 and Current
Obama took office on January 20, 2009. How does the unemployment situation compare between his inauguration and today?
Comparison between 2009 and Present*
(All figures are millions of persons)
|
Category |
Jan. 2009 |
Jul. 2012 |
Change |
|
Civilian non-institutional population |
234.739 |
243.354 |
+ 8.615 |
|
Civilian labor force |
154.140 |
155.013 |
+ 0.873 |
|
Employment |
142.221 |
142.220 |
- 0..001 |
|
Unemployment |
11.919 |
12.794 |
+ 0.875 |
|
Unemployment Percent |
7.7 % |
8.3% |
+ 0.6% |
|
Labor force participation rate |
65.7% |
63.7% |
- 2.0% |
|
Employment population ratio |
60.6% |
58.4% |
- 2.2% |
|
Not in labor force |
80.599 |
88.340 |
+7.741 |
|
Persons who currently want a job |
5.643 |
6.837 |
+1.194 |
* All figures in the table are seasonally adjusted.
http://www.bls.gov/news.release/pdf/empsit.pdf
Between January 2009 and the present (July 2012):
The civilian non-institutional population increased by 8.615 million (8,615,000) yet the civilian labor force has only grown by 0.873 million (873,000) people.
[243.354 - 234.739 = 8.615 million]
The civilian labor force has grown by 873,000 workers.
[155.013 - 154.140 = 0.873 million = 873,000 people]
The number of employed workers has dropped by 1,000.
[142.221 - 142.220 = 0.001 million = 1,000]
The number of unemployed people has increased by 875,000.
[12.794 - 11.919 = 0.875 million = 875,000]
The unemployment rate has gone from 7.7% to 8.3%, an increase of 0.6%.
[8.3% - 7.7% = 0.6%]
The civilian labor force is the sum of the number of employed workers plus unemployed people. For July 2012, this is 155.013 million.
[142.220 + 12.794 = 155.014 million or 155,014,000] (BLS has 155.013)
The civilian labor force participation rate is the civilian labor force divided by the civilian non-institutional population. In January 2009, this rate was 65.7%.
[154.140 / 234.739 = 65.7%]
For July 2012, this rate is 63.7%.
[155.013 / 243.354 = 63.7%]
A 63.7% labor force participation rate is very low! In fact, it is the lowest rate since 1984, and the lowest in this cycle. For many years, a participation rate of 65.8% was the standard. If our labor force participation rate was at its historical level of 65.8%, we would have 160.127 million workers in the labor force.
[160.127 / 243.354 = 65.8%]
C. New Jobs Required to Keep Pace with Population Growth
The civilian population has grown by 8.615 million people since Obama took office in January 2009, but the labor force has increased by only 873,000 (0.873 million) in the 3.5 years. In this 42-month period, the population expanded by 205,000 (0.205 million) per month while the labor force grew by only 21,000 (0.021 million) per month.
[8.615 / 42 months = 0.205 million per month; and 0.873 / 42 months = 0.021 million per month]
The U.S. population has grown by 205,000 per month in the last 3.5 years. With the historical labor force participation rate of 65.8%, we need to add about 135,000 new jobs per month to just break even with population growth. [65.8% x 205,000 = 134,890]
With a current population of 243.354 million, and the historical labor force participation rate of 65.8%, we would expect the current labor force to be 160.127 million. The labor force is 5.114 million (5,114,000) smaller than expected.
[65.8% x 243.354 million = 160.127 million; and 160.127 - 155.013 = 5.114 million]
With the population increasing by 205,000 per month, the number of workers in the labor force should increase by 134,890 per month.
Thus, Obama needs to add about 135,000 new jobs per month to just break even with population growth; but during the time that Obama has been in office, he has added a net total of zero jobs.
Unemployment will not improve significantly unless the economy is producing about 200,000 new jobs per month.
Employment has been essentially flat since Obama took office (a drop of 1,000 workers). During that time, the population has increased by 8.615 million. With the historical labor force participation rate of 65.8%, the current labor force should be 160.127 million. Because the current labor force has only 155.013 million workers, it is 5.114 million workers lower than expected.
Obviously, many workers are discouraged and have left the workforce. According to the BLS, 7.7 million persons have dropped out of the labor force. Obama has killed millions of jobs and has failed to create many new jobs. His weak job creation has not kept up with the population growth.
D. Obama's Rhetoric on Creating Jobs
Democrats have their standard talking points about the number of jobs that Obama has created. Obama delivered his 2012 State of the Union Address on January 24, 2012. He stated:
In the last 22 months, businesses have created more than 3 million jobs. Last year, they created the most jobs since 2005. American manufacturers are hiring again, creating jobs for the first time since the late 1990s. The state of our Union is getting stronger.
In a more recent example (on 8.03.12), Obama said the following:
This morning, we learned that our businesses created 172,000 new jobs in the month of July. 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.
http://www.whitehouse.gov/the-press-office/2012/08/03/remarks-president-tax-cuts-middle-class
When a person first hears these statements, he thinks Obama's policies must really be working. (That is his desired goal.) Let us examine these talking points.
Fact-Check:
If I wanted to maximize the number of jobs created, I would select a month with high unemployment as the base. Under Obama, the highest unemployment month was October 2009, with 10.0%; March 2010 was close behind, with 9.7%. I think this is why the Obama staff selected March 2010 as the base and not January 2009 (the month he started his term). January 2009 had 7.7% unemployment.
The base month or starting month in both cases is March 2010. (January 2012 minus 22 months yields March 2010; July 2012 minus 29 months yields March 2010.)
A speech delivered on 1.24.12 would use December 2011 unemployment figures; a speech given on 8.03.12 uses July 2012 unemployment figures. I first analyzed these numbers by comparing the December 2011 unemployment figures with the March 2010 numbers. I did the same thing with the July 2012 numbers.
The results for the July numbers are summarized in the following table:
Comparison Between March 2010 and July 2012*
(All figures are millions of persons)
|
Category |
Mar. 2010 |
Jul. 2012 |
Change |
|
Civilian non-institutional population |
237.159 |
243.354 |
+ 6.195 |
|
Civilian labor force |
153.895 |
155.013 |
+1.118 |
|
Employment |
138.952 |
142.220 |
+ 3.268 |
|
Unemployment |
14.943 |
12.794 |
- 2.149 |
|
Unemployment Percent |
9.7% |
8.3% |
- 1.4% |
|
Labor force participation rate |
64.9% |
63.7% |
- 1.2% |
|
Employment population ratio |
58.6% |
58.4% |
- 0.2% |
* All figures in the table are seasonally adjusted.
http://www.bls.gov/news.release/pdf/empsit.pdf
My Figures (based on BLS data):
In the above table, I will focus on the "Employment" line. During the period from March 2010 to July 2012, employment increased by 3.268 million persons.
[142.220 million - 138.952 million = 3.268 million]
The period from March 2010 to July 2012 is 29 months. Thus, the average number of jobs created per month is 113,000.
[3,268,000 / 29 months = 113,000 jobs per month]
I prepared a similar table to compare the period from March 2010 to December 2011. (To save space, I will not include that table here.)
During that period, employment increased by 1.838 million.
[140.790 million - 138.952 million = 1.838 million]
The period from March 2010 to December 2011 is 22 months. Thus, the average number of jobs created per month is 84,000.
[1,838,000 / 22 months = 84,000]
Obama's Figures:
Obama's January statement equates to about 136,000 jobs per month. [3,000,000 / 22 months = 136,000 jobs per month]
Obama's August statement equates to about 155,000 jobs per month. [4,500,000 / 29 months = 155,000 jobs per month]
Obama's figures and my figures are summarized in the following table:
Comparison Between 2012 and March 2010
(Jobs per month)
|
Speech Date |
Months to Base |
Calculated from Obama's Statement |
Calculated from BLS Data |
|
Jan. 2012 |
22 |
136,000 |
84,000 |
|
Aug. 2012 |
29 |
155,000 |
113,000 |
Comparison Results:
In Obama's January 2012 speech, his statement implied the period from March 2010 to December 2011. For this period, Obama's statement that "we created 3 million jobs in 22 months" equates to 136,000 jobs per month. My calculations (based on BLS data) show 84,000 jobs per month. This is a huge difference!
In Obama's August 2012 speech, his statement implied the period from March 2010 to July 2012. For this period, Obama's statement that "we created 4.5 million jobs in 29 months" equates to 155,000 jobs per month. My calculations (based on BLS data) show 113,000 jobs per month. Once again, this is a big difference.
This "Fact-Checking" of the two speeches indicates that Obama is overstating the number of jobs created in both cases. If we were doing as well as Obama indicates, the unemployment rate would be dropping faster than it is. Currently, unemployment is stuck in the 8.2% to 8.3% range.
The next time we hear this talking point, we need to do the math. If we calculate about 150,000 jobs per month, we should be skeptical. Obama and his minions are hoping that we do not understand that our population is growing and this demands an expanding job market.
It takes at least 150,000 new jobs per month to just break even with population growth. If we consistently produce 150,000 to 200,000 new jobs per month, the unemployment rate should drop and we will put people back to work.
E. Stimulus Bill -- Success or Failure?
Obama rammed the $787 Billion Stimulus Bill through Congress during his first month in office. (He signed the measure on 2.17.09.) [The Stimulus was later increased to $862 Billion then adjusted to $814 Billion.]
To help win approval, the White House promised that unemployment would not exceed 8.0%. How should we gauge the success of the Stimulus Bill?
Instead of dropping, the unemployment rate began 2009 at 7.7% and steadily increased to 10.1% in October 2009 (average for the year was 9.3%). In 2010, unemployment ranged from 9.4% to 9.9% and averaged 9.6%. Unemployment hovered around 9.0% for most of 2011 and dropped slightly to 8.7% in November and 8.5% December. Unemployment in 2012 is running from 8.1% to 8.3%.
Obama's Stimulus Bill relied on the flawed Keynesian model of rapidly increased spending to propel the economy forward. The policy failed and we were left with huge deficits and a larger national debt.
The Keynesian theory is like trying to raise the level of water in a swimming pool by taking water out of the other end. It doesn't work very well!
By almost any economic measure, the Stimulus Bill has been a complete failure! Ask some of the 13 million unemployed workers what they think of the Stimulus Bill.
F. Stimulus Bill and Construction Jobs
Stimulus money was supposed to target “shovel-ready” construction jobs. Infrastructure spending was supposedly a big part of the measure; in reality, it amounted to only $105 billion or about 13% of the total bill.
Construction is one of our largest industries yet it gets very little media coverage. Talk with the millions of unemployed construction workers about the Stimulus, where the recession hit especially hard.
The unemployment rate in the construction industry has been much higher than the national average for all workers (often double or more). For example, the general unemployment rate in February 2010 was 9.7%, whereas, the unemployment rate for construction was a whopping 27.1% that same month! (That set a 10-year high.)
CONCLUSION
Under Obama's watch, our economy is experiencing the weakest recovery since World War II.
"Fact-Checking" of Obama's speeches suggests that he is overstating the results on jobs created during his term. Obama said from March 2010 to December 2011, "We created 3 million jobs in 22 months" or 136,000 jobs per month. Not so. The number should be 84,000 jobs per month.
Obama said from March 2010 to July 2012, "We created 4.5 million jobs in 29 months" or 155,000 jobs per month. Again, not so. The number should be 113,000 jobs per month.
Obama's $800 billion Stimulus Bill has been a complete failure! The only thing it accomplished is an increase in our national debt.
Because Obama has never had a real job, he knows nothing about job creation. His policies are not working!
Why should we give him four more years?
Bio for Henry W. Burke
Henry Burke is a Civil Engineer with a B.S.C.E. and M.S.C.E. He has been a Registered Professional Engineer (P.E.) for 37 years and has worked as a Civil Engineer in construction for over 40 years.
Mr. Burke had a successful 27-year career with a large construction contractor.
Henry Burke serves as a full-time volunteer to oversee various construction projects. He has written numerous articles on education, engineering, construction, politics, taxes, and the economy.
Henry W. Burke
E-mail: hwburke@cox.net