Private-Sector Employment in Jobless Recoveries
I still think Obama is toast—a result of his own making, since he’s really the apotheosis of a government-hating Republican who never tries to do anything because he’s afraid it would succeed. He’s basically Jon Huntsman, economic policy and all, with a slightly better social policy—or at least a willingness not to try to compete globally in the 21st century using employment policies that were outdated in the 19th. (Short version: you might be able, in general, to exclude 55% of your potential workforce—women and gay men—if you have the population of an India or a China. You can’t do it when you have 1/3 or less of their population; you need a market that is open to everyone, which means you need social policies to match.)
But there are way in which he is a Bad Republican (traditional definition—think Gerald Ford’s Presidency), and those, as much as anything else,are what has destroyed his re-election chances. Not to mention U.S. employment data.
I’d like to think I’m wrong, but let’s look at the data, comparing the last three recessions: the ones with so-called “jobless recoveries.” In the grand tradition of Mitt Romney, let’s look at job growth over the following 24 months.* First, the Private Sector:
The first thing we notice is that The George W. Bush-Mankiw-Hubbard “Recovery” Really Massively Sucked for U.S. Private Sector Employment.** Two-thirds of those post-recession months were negative, and the negatives were more than 1/3 again worse than the gains. Even the 24 months that follow the 1980 recession—half of which were the first 3/4 of the 1982 recession—show a net positive gain in Private Sector Employment.
But the second thing is that the Obama Administration really isn’t doing that poorly in Private Sector Employment. It’s rather similar to the George H. W. Bush Administration.*** The loss months are slightly more severe than the gain months (about 5%), but there are 2 gain-months for every loss-month. It’s still a “jobless recovery”—as was the post-1991 era—in that producing slightly over 1,000,000 jobs in a 24 month period is falling behind the growth in available workers, but it’s not a disaster, if the criterion is the recovery of private-sector hiring.
Sadly for BarryO—again, I consider this what the tennis-playing Brad DeLong calls an “unforced error,” a direct result of the errors of his priors—there is also employment in the non-private sector. Which both Bushes knew that, the “small government Democrat” appears not to:
On a proportionate basis, George H. W. Bush oversaw as large a post-recession expansion of Government workers as Barack H. Obama has overseen a reduction in those workers. This is even before one considers that at least three of those six positive months—a figured dwarfed by W’s 15 months of public-sector worker increase, let alone his father’s 19 months—are due to temporary hiring of U.S. Census workers. March, April, and May of 2010 show net gains because of Federal hiring that is more than completely reversed by September. Great “Recovery Summer,” that was!
But if we really want to be fair to Barack Obama, we would have to break this down further. After all,while the data is national, the breakdowns are not always so:
Federal government employment—now including the ever-expanding Department of Homeland Security, and with a military that continues to fight (at least) three wars—has been essentially flat during the “recovery”period. The damage has been done extensively at the State and, especially, Local levels.
Part of this is simply that the 2007-2009 recession was longer and deeper than the other two (18 months long v. 8 for each of the previous two; more than 7.5 million private-sector jobs compared to just over 1 million in 1991 and just under 2 million in 2001). That’s a lot more time and a lot less money flowing into taxes and budget-balancing requirements.
But if I were Barack H. Obama, and if I really wanted to be re-elected, the speech I would be giving tonight wouldn’t be about extending tax credits or capital amortization credits—with or without the idiocy of budgetary offsets—but direct state aid. Billions of dollars of it. Without offsets. The speech would run something like this:
The latest few years have been difficult for you. Almost every state in the Union has to balance their budgets, and with record levels of unemployment and job losses, that’s not easy to do. So they made decisions that affected you, your children, and your friends. They laid off police officers, firefighters, teachers, librarians, surveyors, road repair personnel, and trash collectors. They’ve cut back hours at the DMV, Social Security, and Employment Offices. They’ve made it more difficult to get an appointment to get health insurance for your children, support to buy healthy food for you and your children. Your classrooms are more crowded, your property taxes are higher, and you’re getting less for your money while you have to put in more effort.
The Federal Government doesn’t have to balance its budget, and the bond market has given us a rare opportunity to borrow money for less than it will cost us. I plan to take full advantage of that now, so that your children will have food, your streets will be safer, your opportunities for education will be greater, and the services for which you pay will be more available.
The private sector is rebuilding and restaffing, but that will—as it has in the past, as it almost always does—take time. But they cannot rebuild if there is no demand, and you cannot demand things if you cannot pay for them. So, along with $1T in infrastructure improvements to be made over the next 15 years, I will tomorrow send a bill to Congress to triple the total of the two previous grants-in-aid to the States that were made as part of the ARRA.
Now you have heard many people—and to my shame, I am one of them—who live in fear of deficits. They pretend that the government “has to be like a family”—a family that never takes out a mortgage, never borrows to buy a car, never needs a loan to pay for schooling or training, and never uses a credit card. I’ve seen families like that. They live on the streets of Honolulu and New York City and Chicago and Washington, D.C., and Richmond, Virginia, and Cincinnati, Ohio, and Detroit, Michigan, and Paint Creek, Texas. They’re impoverished.
The United States is not impoverished, and I will not allow it to become so. We will rebuild opportunity now and build our superhighways—information and otherwise—for life in the 21st and 22nd Centuries. The bankers—grateful for the bailouts that have been heaped upon them by my predecessor and myself—are willing to loan us money for less than the cost of inflation. We would be foolish not to borrow. Even as those of you who can are refinancing your houses, the U.S. government will—as families do and should—borrow now to make a better life for our children and their children.
We have a unique opportunity. We have massive unemployment because the states do not have the money to employ and hire workers—workers who help keep our streets and homes safe, who keep our roads in good condition, who educate our children, who find us opportunities for work and ways to keep us healthy so that we can do that work. And the bankers are telling us, “We will give you that money for free!” And some people are telling you that we should not take that money.
We have given the bankers enough. Now, they are willing to Pay It Forward, to give some small portion of that money back to us for less than it will cost them to do it. I intend to take that money and use it to make a better present—and the chance for a better future—for the American family.
Yeah, I want a pony, too.
*All data following derived from FRED(R).
**Let us leave aside whether this was a feature or a bug of that Administration
***It is left as an exercise that GHWB was a one-term president.
sounded good to me, too.
not absolutely sure those states couldn’t raise their own taxes to pay for the services they need. but as long as Americans won’t pay taxes… we are going to live in a poor country.
From a political perspective, yours is a much better speech than the one Obama gave.
Problem is, no one cares what Obama says in his speeches anymore. Whatever merit that is in his proposals is overshadowed by his incompetence.
coberly actually as a good idea for a change. Why couldn’t a blue state (like Illinois/Massachusets/California) just crank up their taxes and pay for this without the Feds being involved? (and taking their pass-through fee). Or why isn’t California borrowing at negative real interest rates? They could lead the way to a high tax/high debt/high growth America by showing us how its done.
To be honest why have they already not done this? If raising taxes, huge debts, and spending prolifically is the key to high growth then why arn’t at least 1 Blue state growing like crazy under a high tax/debt model? Heck this could easily have been implemeted in at least a few Blue states over the last decade. The R’s may have been in ascendance at the national level but there are more than 1 blue state basically controlled by the D’s.
Then we could all be pointing at say Illinois or California as the way a high tax, huge government state can lead the nation in job growth.
But wait, which state leads the way in job growth? Oh that would be the low tax, small gov. state of Texas.
Something’s wrong with your model…
Islam will change
Buff in June 2011 Texas had 8,778.9K employed in the private sector and 1,846.8K in the government sector. Exactly three years earlier, the numbers were 8,893.1 and 1,763.9. So private sector employment is down 114.2K while government employment is up by 82.9K. I can’t disagree with you that this is a job-creating model that Blue States probably should have been following, rather than cutting government jobs to exacerbate private sector woes.
“as long as Americans won’t pay taxes… we are going to live in a poor country.”
So it seems. Sadly. 🙁
buffpilot: “Or why isn’t California borrowing at negative real interest rates? They could lead the way to a high tax/high debt/high growth America by showing us how its done.
“To be honest why have they already not done this?”
For one thing, because of anti-tax initiatives passed many years ago.
Min – then how about Illinois? Or Massachuasets? or heck try it on the basket cases of Ohio and Michigan???
If this works so well why isn’t at least one Blue State going whole hog into getting as much of this “rare opportunity to borrow money for less than it will cost us.”
If this is such a great idea why is no one doing it???? Is are entire elected officials throughout the land blowing a golden oppurtunity to lead the way in a high tax/high debt/high growth economy? Really everyone?
Or maybe your model isn’t working?
Islam will change
buffpilot – A very simple answer: states cannot borrow for less than it will cost us. Only the federal government has the ability to run a deficit. State governments, except for VT, must balance their budgets.
It turns out that when you add a balanced budget to your constitution, you just end up limiting your options in the future. Wish the media and politicians had talked about that more a few months ago when a federal BBA was all the rage.
What *will* end up happening is yes, states will start ratcheting up their taxes just to stay afloat. Illinois is doing that right now. But even Blue states often have a Republican minority that resists any tax raises.
Buff: “But wait, which state leads the way in job growth? Oh that would be the low tax, small gov. state of Texas.”
PJR: “So private sector employment is down 114.2K while government employment is up by 82.9K.” Net loss = 31.3K jobs.
So what am I missing here? Are these two statements not contradcitory? How is a loss of jobs an indicator of job growth? Are we talking about two different time periods? Or, is PJR wrong regarding the job numbers for Texas? Or is Buff simply wrong to repeat the BS of a demogogue?
Sammy: “Whatever merit that is in his proposals is overshadowed by his incompetence.”
If one can say that Obama is incompetent it can only apply to how he has addressed the persistent obstructionist incompetence of the Republican leadership in the Congress. What is all of this talk regarding the President doing somethiing about the dismal economy and the resultant dismal employment situation? Does the President do any more than propose legislation and then make an effort to promote such legislation? In the final analysis all legislation is controlled by the Congressional leaders. It is the Congress that determines the tax policies and the regulatory structure of our government. The Executive can only administer those policies and regulations. After that it is the business community that determines the strength of the economy by investing and hiring. The states and municipalities function as business entities in this regard.
We need to stop focusing on the President as the mover and shaker of economic activity. That position has no more than an ideological influence and even that is subject to the cooperation and coordination of the Congress. It is only to the extent that the President can coerce the legislature to accept and implement his plans and policies that that President can be seen as having a hand in creating jobs and/or improving the economy. The current President has had no such influence over the Congress and only in that regard can he be said to be incompetent. And even in that case he has had a politically corrupt congressional leadership to contend with.
Jack the numbers are from the BLS database. And I have quadruple-checked them for you. Like the country, Texas has not yet recovered from the the recession’s impact on its employment levels, which peaked in 2008. Recall that employment declines began well after the official start of the recession and ended well after the official end of the recession–the recession is defined by GDP changes. You or I can make Texas look better if we play with dates. Texas looks better if you take a longer view, to include growth prior to the peak year. Or if you take a shorter view, starting from the nadir of employment levels (Jan 2010 for the private sector) to exclude the recession-induced period of job declines. But regardless, Texas does not look like some small-government “miracle” if you look at the private sector numbers; Texas has done better in overall numbers than many states primarily because Texas did not make the unforced error depicted in this post, and instead did the opposite.
States can, and have borrowed lots of money. See California for a prime example. Yes they have to balance their budgets but they can borrow all they want and just service the debt.
The botom line is this could have easily been tested out in any of the Blue states. They could raiase taxes to their hearts content, pass stringent rules to make unions mandatory, including passing statewide card-check and by-passing actually having to vote on a union, Heck go after the banks within their borders, and go as anti-business and big government as they want.
Yet none have done so….and the ones closest to the model you propose at teh National level are the oones in the deepest trouble.
Its your model that wrong…
Islam will change
So you obviously beleive that Bush was a much better President than the current occupant. You know Bush who got HUGE bi-partisan majorities for all his initaitives? About the only thing that he didn’t passs with widespread populartiy was his effort at SS. That failed but it seems Obama has taken up the cuase.
And nice to know you think all of Mike’s work on Presidents really means nothing. Face it, the Dems voted in a total incompetant into the Whitehouse. He’s way over his head and had no background to actually be able to do the job. Heck Carter is looking better and better in comparison every day…
Islam will change
No Buff, I wouldn’t agree with your analysis. An assessment of Obama as incompetent depends upon one’s point of view. He presented himslef as a progressive, or at least many progressives got the mistaken impression that Obama is a progressive, to the left side of the center. A people’s President rather than a business leader in political garb. It is the Congress that is responsible for the enactment of laws which change the course of both economic and social policies. It is the Congress that has proved itself to be either incompetent or intransigent. Either way you view the Congress it is that third of the government that bears the greatest responsibility for the country’s current condition. When the far right and the center fail to come to any agreement regarding a legislative agenda then the country gets stuck in the mire.
Much of the blame for the inadequacy of the Congress can be laid at the feet of those representatives from the corporate sector that have financed a decades long campaign of miscommunication regarding political, economic and social issues. At the same time those same ideologues have financed the political growth of the right wing know nothing party. Unfortunately the centrist know too little party has shown little effective intention to combat that miscommunication campaign and the misconceptions that it has generated into mythic truths.