August Jobs Report Disappoints

This morning brought another disappointing jobs report from the Department of Labor.  According to the Bureau of Labor Statistics, the economy added a mere 96,000 jobs in August.  By contrast, in August of 1984, during the Reagan Recovery, the economy added 241,000 new jobs.  (Go to this website and insert the appropriate dates to locate this figure.)   As previously explained on this blog, the labor force was much smaller during the Reagan Recovery.    Thus, in order to replicate the rate of job growth the country experienced in August, 1984, the economy should have created over 300,000 new jobs in August, 2012.  In short, the Obama "recovery" is still sputtering, and the Reagan-Obama jobs gap is still growing.  To be precise, for the months of April, 2012 through August, 2012, the Reagan-Obama jobs gap stands at 1.7 million.  (See here for a calculation of the April through July gap).

The President and his allies often speak of the need to share the fruits of prosperity.  Many Americans likely wonder "what prosperity?"

Only 80,000 Jobs in June/Reagan-Obama Jobs Gap Widens

A few minutes ago the Labor Department released another disappointing jobs report.   The economy added only 80,000 jobs in June.  This is the third month in a row that the economy has added fewer than 100,000 jobs.  Indeed, the latest figures show that the economy added 68,000 jobs in April and 77,000 jobs in May, for a total of 225,000 in the entire second quarter of 2012.     By contrast, in July, 1984, during the Reagan recovery, the economy added 379,000 jobs after adding  308,000 in May, 1984 and 363,000 in April, 1984, for a total of 1,050,000 in the second quater of that year.   (Go to this website and insert the appropriate month and year to locate this data).

Moreover, as previously explained on this blog, the gap between the 1984 numbers and the 2012 numbers actually understates the difference between the Reagan Recovery and the Obama Recovery when it comes to job creation. After all, in 1984, the American workforce was significantly smaller than it is now.  In particular, the civilian workforce in June, 1984 was 113,817,000, while the June, 2012 figure is 155,163,000. Thus, even if the economy had added 379,000 jobs in June, 2012 as it did in June 1984, such an increase would reflect a significantly smaller rate of employment growth than the June 1984 increase. A true "apples to apples" comparison of the 2012 and 1984 figures therefore requires one to adjust the 1984 figures upward, to determine how many jobs the economy would have to add today to achieve the same rate of job growth achieved during the Reagan recovery. We can obtain the relevant conversion factor by dividing the June, 2012 labor force by the June, 1984 labor force; the result is 1.3623.

If we apply this conversion factor to the June, 1984 employment increase, we obtain 516,312. Thus, the true jobs gap between the Reagan and Obama recoveries for June, 1984 is 436,312.    Moreover, applying the same methodology reveals that the jobs gap between the second quarter of 2012 and the second quarter of 1984 is 1,205,415 jobs for these quarters alone, a stunning gap that is just one example of the underperformance of the Obama recovery.