On Friday, after the negative Bureau of Labor Statistics’ jobs report, the Administration asserted on their web site that 8.2 million jobs have been created since August 2003. I contend this confuses goals and that, even with the 8.2 million jobs, the nation’s job creation is worse now than it was four years ago.
The average time to jobs recovery from the end of a recession for the nine recessions prior to 2001 was one month. The 2001 recession officially was over in November 2001, but it wasn’t till August 2003, 21 months later, that the jobs recession ended. That is almost 19 standard deviations away from the previous one-month average. That extended jobs recovery is peculiar to this administration. And since August 2003, job creation has been well below average compared with the prior 53 years.
The working-age, 18-64, population data is highly correlated with the jobs data (which the BLS refers to as the Current Employment Statistics or CES). The correlation coefficient between the monthly payroll and population data, January 1948 through December 2000, is 0.994. By definition, it cannot get much better than that.
In order to give the numbers context, it’s helpful to take population growth into account when we look at job creation statistics. We can do this by calculating the ratio of the number of net new jobs relative to the working age population for each month. Doing that and then averaging over all months from 1948 through 2000, we get a ratio of 1.1. In other words, across 53 years and 10 presidents, Truman through Clinton, on average 1.1 new jobs were created each month per 1,000 adults.
Given the strong relationship between the two data series, population and CES, it is then reasonable to use the population data multiplied by the 1.1 average, to estimate expected job growth going forward from January 2001. For example, according to the BLS the 18 through 64-year-old population in August 2007 was 186,726 adults (expressed in thousands). This times 1.1 gives 205,400 new jobs, whereas the preliminary BLS estimate was a net loss of 4,000 jobs. So the difference between expected and actual for August 2007 is 209,400 jobs.
For the bigger picture, first the numbers of expected and actual jobs created are each separately summed over the months, beginning with January 2001 through last Friday’s payroll numbers. Then these two cumulative series are charted.
From this chart we see that last month the difference between the expected and actual number of new jobs created is greater than it was in August 2003, which then was at the worst of the jobs recession. It is greater now than it was four years ago by two-thirds of a million jobs (10,444,000 – 9,767,000 = 677,000).
To assert that 8.2 million jobs have been created over the last four years embraces the wrong goal, like a deluded runner who even while falling further behind in a race believes he’s doing well because of the distance he’s covered.
Surely among a president’s goals should be one that furthers the nation’s work opportunities for its citizens. And surely in pursuance of that goal a president ought to strive to do at least as well as the previous presidential average. Sadly, we’re not even close.