A Bittersweet Jobs Milestone

America’s six-year experiment with progressive economic theories has proved those theories invalid.  Now is the time to replicate the successful economic strategies of the 1980s.

The Labor Department’s monthly jobs report marked a long awaited milestone that, had it occurred in 2010 would have been cause for jubilation.  But in 2014 it’s a grim reminder of continuing economic misery in year five of the most anemic economic recovery in seven decades.

The milestone: As of May the total number of jobs reported by employers finally equaled the total in January 2008, the last month before recessionary job losses began.

President Obama’s supporters blame “Bush policies” for continuous job losses extending through his first 14 months.  They insist the Obama jobs record begins in March 2010, the first month of post-recession job growth.  So, on the chart below we compare the Obama post-recession jobs recovery with each of the ten previous recoveries since World War II.  We measure each from the same starting point, the first month of job growth after a period of recessionary job losses. months-to-replace-jobsAs the chart shows, after the previous recessions all lost jobs were replaced within less than a year.  But this time it took more than four years.

But it’s even worse than it seems.  Because the working age population increases every month the same number of jobs as there were in seven years ago isn’t nearly enough today.

Back in Old Normal, before the recession, 63% of working age people had jobs.  In today’s New Normal only 59% have jobs.  The four-percentage point difference equals 10 million jobless men and women.  In other words, we’re 10 million jobs short of Old Normal.

The establishment media celebrated the latest jobs report because May was the third month in a row with an increase of more than 200,000 jobs.  Averaging 234,000 per month, March, April & May were indeed the best three months of New Normal, the painfully anemic, Obama era.  So, how long would it take to claw back to Old Normal if the working age population continues to grow at the same rate and employers continue to add an average of 231,000 jobs per month?  We did the math. It would take until 2022.

So if the best monthly job growth of the Obama era would bring us back to Old Normal in eight years, is there historical precedent for a better job creation rate?  Yes.  During the first two years of the Reagan post-recession recovery, job creation averaged 316,000 per month.  At that rate we’d reclaim Old Normal in 2018.

But the 316,000 Reagan rate was in 1983 and 1984 when the working age population was 30% smaller than today.  Adjusting for population growth it would be the equivalent of 448,000 jobs per month in 2014.  At that rate we’d be back to Old Normal by the end of 2016, just in time for the Presidential election! 

President Obama is the modern leader of the so-called Progressive Movement whose core doctrine is that economic liberty is somehow “unfair” and must be supplanted with interventionist government regulation of most economic functions.  Progressives put their faith in “experts” to steer the economy via government power.  That faith in experts is at the core of ObamaCare, with 20,000+ pages of new regulations published so far. 

Because progressives’ favored “experts” warn of looming climate catastrophe Obama’s EPA plans to manufacture an energy shortage, driving costs up and employment down.  Previous government mortgage lending regulations led to a meltdown and severe recession.  The “experts” developed new regulations that set credit standards too high for most Americans to qualify for a home loan.  The list of regulatory burdens on the economy would fill thousands of pages.

Obama and the Democrats have increased taxes, including those paid directly by the small businesses and investors who have always created most of the new jobs in America.

Like President Obama, President Reagan inherited a deep, severe recession.  But Reagan’s strategy was to deregulate and to lower tax rates, especially on the small businesses and investors who create most of the new jobs.  The chart below speaks for itself, tracking employment during the 1980s recession and recovery compared with our current distress. Reagan-VS-Obama-77-months

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