Job Growth Still Weak, Like the Recovery

Last week brought more mediocre news about the Nation's economy. According to the Bureau of Labor Statistics ("BLS"), the economy added a seasonally-adjusted 223,000 jobs in June, 2015, the 73rd month of this economic recovery.  (The current recovery started in June, 2009.)   The BLS also revised downward the employment growth figures for April and March.   These results follow prior reports that the economy grew a mere 0.2 percent in the first quarter of 2015, "nearly grinding to a halt," as a report in the Washington Post put it.

The New York Times, for instance, claims these latest employment figures show "healthy" job growth, consistent with its prior claim that May job growth (now revised downward) was "strong." (To be fair, another Times analyst opines that the June numbers are "weaker than they look.")  Analysis of the historical record, particularly that of the nation's recovery from the 1981-82 recession, suggests that June job growth, like that throughout this recovery, was quite disappointing.

As noted above, June, 2015 is the 73rd month of the recovery that began in June, 2009.  By comparison, the so-called Reagan recovery began in November, 1982.  The 73rd month of that recovery, November, 1988, saw job growth of 339,000, about 52 percent larger than that of June 2015.  (Go to this website and insert the appropriate dates to generate these figures.)    Moreover, this 52 percent figure actually understates the gap between job growth in these two months. After all, the workforce and thus total employment was significantly smaller (106,277,000) in October, 1988 than it was this most recent May (141,619,000).   Hence, employment grew at a rate of just over three tenths of one percent in November 1988 compared to the prior month's level, slightly more than double the June 2015 rate of growth. The significant disparity between these two months is not an anomaly: total employment increased by nearly nine tenths of one percent in the combined months of September, October and November of 1988, compared to less than five tenths of one percent in April, May and June 2015.     Previous posts on this blog have reached similar conclusions about the relative strength of employment growth during the Reagan recovery and the Obama recovery.  (See here and here, for instance.).  The left-leaning Center for American Progress apparently agrees.  In a recent essay about the state of the employment market, the CAP concludes that: "job growth remains weak compared to previous recessions."  (By "previous recessions" the essay apparently means "recoveries from previous recessions."). 

Such disappointing employment growth should not be surprising, given the slow pace of economic growth during this recovery which, as noted above, began in June, 2009.  Here are the annual rates of GDP growth for the last five years, according to the World Bank, beginning with 2010, the first full year of recovery from this most recent recession:


2010:   2.5

2011:   1.6

2012:   2.3

2013:   2.2

2014:   2.4

Thus, annual GDP growth averaged 2.2 percent during this period.

Here, by contrast, are the annual rates of GDP growth during the Reagan recovery, beginning with 1983, the first full year of recovery from this recession:

1983:  4.6

1984:  7.3

1985:  4.2

1986:  3.5

1987:  3.5

1988:  4.2

Annual GDP growth averaged 4.6 percent during this period, more than twice that during the Obama recovery.  (Note that excluding the 1983 figure results in the same rate of average annual GDP growth, namely, 4.6 percent). 

Economists and others will no doubt spend decades debating why the Obama recovery is so weak.  However, there can be no doubt that, judged by the rate of economic expansion and employment growth, this recovery is a disappointment that still leaves millions of Americans without the economic opportunities they deserve.   

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.