Monday, November 5, 2012

Excuses

The Obama campaign defends the President's track-record on job creation: 

“Before President Obama took office, the economy was losing 800,000 jobs a month. Now, we've seen 32 consecutive months of job growth”

The President has been in office 46 months, not 32 months. We all know that the President has failed to bring the economy back to pre-recession employment numbers, but this underestimates the problem. A functioning labor market also has to add enough jobs to keep up with population growth, as the American successfully did for decades. The working age (20-64) population has increased by close to five since the President entered office. This is why despite some limited job growth the employment rate was lower in October 2012 than it was when Obama took over.

Here is a graph with the working age population and the number employed among this group during the last two decades. Not only have we not returned to the raw employment number, the labor market has not been able to keep up with population growth.


Paul Krugman explains why adding jobs is not enough:  

“campaign ads boast that 1.5 million jobs were added in the last 10 months, as if that were a remarkable achievement. It isn't. During the Clinton years, the economy added 236,000 jobs in an average month. Those 1.5 million jobs were barely enough to keep up with a growing working-age population.”

This is a 2004 interview, and Krugman is talking about Bush, not Obama. Needless to say economic principles do not change because the party of the President changes, so I am sure Professor Krugman would apply the same criticism to the Obama campaign ignoring population growth. Krugman makes the same point eloquently in this interview:

-Krugman: “Jobs have been created over the past year but only just about fast enough to keep up with population growth. This is a situation in which a lot of people are hurting. This is a much worse labor market than we had when he came into office and people feel that….”

-Reporter: “Paul, the White House keeps saying is that he inherited this really unusual kind of merger of really terrible situations…”

-Krugman: “You know, you can always find an excuse.”

3 comments:

  1. Another really great post. If only Republicans had people like Tino to provide their intellectual base.

    ReplyDelete
  2. If we look back at history I'm not sure that republicans would have achieved better,

    http://funancials.biz/are-republicans-or-democrats-better-at-reducing-unemployment/

    http://www.thepragmaticpundit.com/2012/05/democrats-v-republicans-debt-and.html

    http://www.forbes.com/sites/investopedia/2012/08/31/gop-vs-democrats-whos-best-for-americas-economy/

    ReplyDelete

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