On Reagan’s 100th Birthday Remember Prosperity

The Labor Department published its December jobs report Friday.

Presidents Reagan and Obama both inherited severe recessions.  But they chose opposite strategies in response.  The chart compares employment losses and gains during and after those two worst recessions since the Great Depression.
Facts from the January jobs report:

• Employers created 36,000 new jobs in January, the 37th month since recessionary job losses began.  This was pathetic compared to previous, post-recession recoveries.  In month 37 of the 1980s recession-recovery employers added 311,000 or eight times as many jobs, even though US population was 40% smaller than today.

• Over the past twelve months  job growth averaged 85,000 per month.  At that rate it will take 91 more months to replace all the jobs lost in 2008 and 2009.  Even then the misery won’t be over because by then the number of working age Americans who want jobs will have grown by 7 million.

• The unemployment rate dropped from 9.4% to 9.0% mostly because 431,000 people who were part of the labor force in December dropped out of the labor force and quit looking for a job in January.  To be counted as officially “unemployed” one must be actively looking for a job.
  

• The Bureau of Labor Statistics revised  its seasonal adjustment factors and restated the number of jobs for each month of 2010.  The net result was that total jobs created in 2010 decreased from the previously reported 1,124,000 to 945,000.

After thirty-seven months the Bush-Obama strategy of bailouts, massive government spending and lots of new regulations has failed, spectacularly.

The Reagan approach, lower taxes, deregulation and greater liberty succeeded spectacularly.

Democrats now challenge the new Republican Congress to “do something” to create jobs.  The best thing they can do is reduce government intervention in the economy.  Unfortunately for the unemployed, the Democratic Congress of 2009-2010 left a mine field that must be cleared:

• The Obama EPA is working on new barriers to domestic energy production that will increase prices and depress job creation;
• ObamaCare legislation is a severe drag on job creation with its 51 new  bureaus, commissions and bureaucracies that are just beginning to roll out thousands of pages of new, complex regulations and price controls, effecting every employer in ways that are not yet known.
  
• New bureaucracies created by the Democrats’ financial regulation law are beginning to write thousands of new regulations, mostly designed to reduce business lending.
  

Regulations are a barrier to higher employment.  They increase the cost of creating a job far beyond the wage  paid to the employee.  Some regulations are intentionally designed to become more costly when additional employees are hired, providing a powerful incentive to business owners to stay small.