By Hugh, who is a long-time commenter at Naked Capitalism. Originally published at Corrente.
The Bureau of Labor Statistics announced a 386,000 adjustment to its 2012 jobs figures, putting Obama in positive (+125,000) jobs territory for the first time in his Administration. This will no doubt make for good cheering material for the Obama campaign, but it rather misses the larger and far more important point that we still have a jobs deficit since the January 2008 jobs peak of nearly 11 million. That positive 125,000 is achieved by ignoring two major factors: job losses in 2008 before Obama became President (recessions are impolitic and don’t wait for Presidential Inaugurations to begin) and 4 1/2 years of population growth in the labor age population.
The Obama story runs something like this. When Obama took office in January 2009, employment (jobs) stood at 133.561 million. Job numbers fell 4.317 million to a low of 129.244 million in February 2010. Since then they recovered to 133.300 million in August. Add in the 386,000 from the latest announced adjustment (which won’t be officially added to this year’s tally until February of next year) and you get 133.686 million. That gives us the 125,000 jobs more than when he started, or 4.442 million from the February 2010 trough. As we are 30 months out from the trough, that yields a job creation rate of 148,000/month.
It’s a good story as far as it goes, but that isn’t very far. Indeed it is so incomplete as to be meaningless. Obama came to office halfway down the cliff of job losses. Between January 2008 (with jobs peaking at 138.023 million) and January 2009 (133.561 million) when Obama assumed office, the economy lost 4.462 million jobs. When Obama assumed the Presidency, he did not just take on the responsibility for those job losses which occurred on his watch but all of them. As I said at the start, recessions do not wait on the convenience of Presidents. Neither do Presidents get to pick and choose which parts of a recession they wish to own. Obama’s story touches none of the 2008 job losses.
A common problem with all these stories that start at point X and eventually after much wandering return us back to it is that all the time this journey is taking place, our population is growing. Jobs are covered in the Establishment survey, but we can use data from the Household survey (people) to estimate how many jobs are needed to keep up with population growth in the working age labor population (also known as the non-institutional population over 16). From January 2008 to August 2012, the last month for which we have data, the non-institutional population over 16 increased by 10.950 million. Multiplying this by the average of the employment-population ratio over this period (59.4) gives us our estimate of jobs needed to keep up with population growth: 6.504 million.
Add the uncounted 2008 part of the cliff and jobs needed just for population growth and credit Obama with his net 125,000 jobs and you arrive at a jobs deficit from January 2008 through August 2012 of 10.837 million. This is the size of the story that the BLS announcement doesn’t tell.
And perhaps I am piling on here but if we apply population growth to Obama’s Presidency his small jobs surplus quickly turns into a jobs deficit. Looking at his time in office, the non-insitutional population over 16 increased by 8.827 million and the average of the employment-population ratios was 58.7 or a figure of 5.181 million needed to keep up with population growth. Applying Obama’s 125,000 jobs surplus to this still leaves us with a jobs deficit of 5.056 million for his time in office alone.
Context is everything and so easily overlooked. 5 million for Obama to date. Nearly 11 million to take us back to a situation similar to January 2008. But even this is not the end of the story because January 2008 was a peak but a peak after 8 years of crappy job growth. And during those 8 years the population did not stop growing either. Nor did the number of people who would have worked if jobs had been available to them. Finally, beyond the numbers, there is the question: what kind of jobs? What kind of jobs have been lost? What kind of jobs have been created?
It is a lot to keep in mind, but when we forget all these levels of context, it is precisely then that a miniscule fluctuation in the data can be portrayed as a great victory and significant change.