Thursday, November 10, 2011

I Found The Jobs, Mr. Speaker!

One of the more frequent Republican talking points is that President Obama has failed to create jobs in our economy.  Speaker John Boehner invoked a message asking "where are the jobs, Mr. President" in the run-up to the 2010 mid-term elections as a rallying cry for the conservative cause.  This message is amplified by an often lazy mainstream media that tends to look at top line data and fuse it with sensational headlines to convey the message that our economy is stalled, jobs are not being created (or not being created fast enough) and when you put it all together, things generally suck.  And to a certain extent, they are right - things do suck - 1 in 6 Americans live in poverty while the gap between rich and poor are near pre-Great Depression levels and our unemployment rate remains high.  It is convenient to point the finger at the man in the Oval Office and say "HIM" - blame HIM for all of this while, conveniently dodging any of your own responsibility, and that's essentially what Republicans have done and the media has generally permitted them to do as they stonewall proposals and seek major concessions in making permanent the very tax cuts that have helped contribute to both our debt and wealth inequity. 

Of course, Republican orthodoxy is rarely internally consistent and the irony of criticizing government (which they loathe) for failing to do enough to promote private sector job growth is lost on them.  Moreover, our media culture relies, to a great extent, on conflict, creating it, dissecting it and feeding off it to fill endless hours of cable news programming, garner website page views and column-space in newspapers.  Regardless, because the economy is our top priority as a nation and comparing ideas to fix it will animate political discourse leading up to Election Day 2012, Mr. Boehner is right, we should be asking "where are the jobs" but in doing so, I do not think the Speaker will like the answer.

Any rational discussion of our economy and job creation must start with the acknowledgment that the financial collapse triggered by the Lehman Brothers default in September 2008 triggered an enormous contraction in our economy.  Final government statistics for the 4th Quarter of 2008 indicate that the nation's gross domestic product (GDP) shrank at an annual rate of 8.9 percent[1], the greatest reduction in GDP since The Great Depression.  The 1st Quarter of 2009 saw GDP shrink at an annual rate of 6.7 percent[2], which, but for the drop in the previous quarter, would have been the largest quarterly drop in GDP since The Great Depression.

The job picture also demands some reflection.  Consider that in just four months between December 2008 and March 2009 our monthly job losses were as follows: December 2008, 619,000 jobs lost; January 2009, 820,000 jobs lost; February 2009, 726,000 and March 2009, 796,000.  Those job losses were on top of nearly 1.8 million jobs lost between September-November 2008 (434,000, 509,000, 802,000). In the year between February 2008 and 2009, our unemployment rate went from 4.8 percent to 8.1 percent.  In short, our economy cratered in September 2008 and the after effects of that implosion reverberated for months afterward.  By March 2009, the country's seven month net job loss neared 5 million, a total unprecedented in modern American history[3].

Into this enormous chasm a law was passed that provided a $237 billion tax cut, $51 billion in tax incentives to corporations and $144 billion in aid to state and local government, among other things.  Pretty impressive, right?  Huge tax cuts for 98 percent of all Americans and incentives to corporations.  Surely this bill must have received broad bi-partisan support, particularly since Republicans had just helped bail out Wall Street and have never met a tax cut they did not like.  Unsurprisingly, this law, which came to be perverted and turned into a dirty word ("stimulus") received exactly ZERO Republican votes in a harbinger of many other legislative battles that animated President Obama's term in office.

So how did that stimulus bill, which every Republican under the sun labeled a failure even as many of them happily touted the benefits received in their Congressional districts and states, actually perform?  According to the Congressional Budget Office, which the Republicans touted as the gold standard for scoring and evaluation when health care was being debated, posted a lengthy analysis of the American Recovery and Reinvestment Act (ARRA) in August 2011.  The report concluded that employment was boosted by the ARRA by between 1 million and 2.9 million jobs from its passage through summer 2011. Further, when the increase in hours worked by employees is tabulated, that is, part-time employees who were able to achieve full-time employment and full-time employees who were able to get overtime work, the "full-time equivalent" job growth was by between 1.4 million and 4 million[4].

Some liberal economists both at the time and in retrospect pointed out that the ARRA was unsuited to the crisis at hand.  That is, the stimulus was actually too small, and, when the needle on unemployment (another 1.8 million jobs were lost between April and July 2009) ticked up in the immediate aftermath of the passage of the ARRA, critics savaged the program and have not let up since.  Importantly, when ARRA funding began to be employed, unemployment did stabilize and job creation started to happen.  For calendar years 2010 and 2011, we have seen net job growth in 16 of 22 months, including net positive job growth in every month since October 2010[5]

In fact, contrary to Republican talking points, the unsteady job growth we have experienced has little to do with the *private* sector, which has added more than 2.5 million jobs between October 2009 (the bottom of the recession) and October 2011. Indeed, even with the enormous job losses in the early part of 2009, total private sector employment is only down 144,000 from its January 2009 level[6]. Rather, the enormous losses in *public* sector employment, something that Republicans, at least philosophically should not be bothered by, is what has kept our unemployment rate hovering at 9 percent.  As federal assistance to states waned with the winding down of ARRA and state-level economic recovery remained tepid, more than 750,000 federal, state and local jobs (primarily state and local) were lost in 2010 and 2011[7].  

In short, job growth, while not outstanding, has been positive for two full years.  The drag on our unemployment rate has far more to do with layoffs in the public sector than the private sector.  Net job growth was nearly 1 million in 2010 and is already over 1.25 million in 2011.  But for the significant job losses in the public sector, the unemployment rate would be lower.  Of course, the current state of job growth is not enough, at this time, to significantly lower the unemployment rate; however, the idea that the private sector is not hiring is simply untrue.  Moreover, Republicans are blocking the President's agenda for injecting needed investment in infrastructure, tax incentives to small businesses, and additional aid to states to invest in education and public safety.  Taken together, it is hard to see this as anything other than crass political gamesmanship executed with the hope of dragging economic growth down as we near next year's Presidential elections particularly when not only many of these proposals are ones Republicans have supported in the past, but recent history shows are effective in getting jobs into the economy.  If Speaker Boehner wants to know where the jobs are, all he has to do, like Dorothy finding out she had it within her power to go home all along, is to look at the private sector he worships, *that* is where the jobs are.

[2]   Ibid.
[3]   .

1 comment:

  1. For the life of me, I'll never understand why Dems generally and the WH specifically don't hammer away relentlessly on this point: "When Obama took office we were losing 800k jobs per month; now we're gaining 100k per month. That's not as good as it needs to be, but it's a monthly swing of nearly a million jobs a month in the right direction." When you look at this objective reality, demagoguery like Mitt Romney saying how Obama has been an unmitigated disaster for the economy is rightly shown to be so much canal water.