So, you want to be president. Are you a job creator? Or a job destroyer?
Presidential candidates these days seem compelled to make dubious claims about opponents as “job destroyers,” compared to their own record as “job creators.” This has been Mitt Romney’s theme song about himself and President Obama from the beginning. We can expect no less in the presidential debate this week.
Do presidents create jobs? Yes, indirectly, as a result of policy decisions, but how would we measure that? When Obama took office in January, 2009, jobs were in free-fall (Figure 1), with 4.4 million jobs lost since the start of the recession a year earlier, and with monthly losses stuck at their maximum of 700,000 to 800,000 through March. It wasn’t until July that the monthly drop slowed to somewhere below 300,000, reaching zero only in March, 2010, when losses turned to gains. So where does Obama’s responsibility begin? And, when he leaves office, where will it end?
These are not the only questions we must consider if we’re going to take the measure of presidential job creation since the end of World War II. That’s the goal here.
Here are three questions we must answer:
- When does a president’s responsibility begin, and when does it end?
Presidents arrive in office in the middle of whatever their predecessors leave behind. Later, their successors will have to deal with whatever they leave behind. So, was Richard Nixon responsible for the recession that Lyndon Johnson left him with? Was Gerald Ford responsible for the recession that Nixon left him with? Clearly the answer is no, they didn’t cause the troubles they inherited. But they were responsible for what they did, or failed to do, to steer the economy out of recession.
So let’s allow each president some time for his policies to gain traction, and say that a president’s responsibility begins in July, at the start of the third quarter in the year when he is inaugurated. Or in the sixth month after inauguration if he becomes president at an unusual time—following a death in office (FDR/Truman), assassination (JFK/ Johnson), or resignation (Nixon/Ford). This also means that responsibility ends six months after a president leaves office.
- If presidents serve terms of different lengths, how do we compare their performance as job creators?
This one is easy: just divide the net number of jobs created during a president’s time in office by the number of years served. Then we can compare average yearly net job growth. Some presidents serve for four years, others for eight—the usual one or two terms. As already noted, still others serve broken terms, for instance, Truman (7.75 years) and Ford (2.42 years).
Table 1 is a chronology of presidents from Truman to Obama, with their time in office and the time we’ll say they are responsible for. [Note: Table 1 errors were corrected October 5, 2012; the errors had no effect on calculations.]
- As the U.S. population and the labor force continue to grow, does the same number of job gains in different years have the same significance?
Population growth is a kind of inflation, and we need to correct for it. In 1985 the civilian labor force averaged 115.5 million, and the net gain of 2.5 million jobs that year was 2.2% of the labor force. So far in 2012, the labor force has averaged 154.8 million and the same net gain of 2.5 million jobs is just 1.6%. That’s the distortion we have to correct for.
With each president, we’ll take the net job gain during his time in office and divide it by the average size of the civilian labor force over the same period. That will give us a percentage that’s adjusted for population growth. Then we’ll divide that by the number of years in office, giving us an adjusted average yearly percentage. Finally, to make the resulting small numbers readable, we’ll multiply them by 10.
Table 2 displays results taking these three question into account. Each president’s responsibility for the situation he inherits from his predecessor begins six months after inauguration and ends six months after he leaves office. Of course this doesn’t mean a president has a free ride during those first six months. He has already campaigned on his policy outlook, and he will be working to implement policies from the start even though they may not begin to take effect until after six months have passed. Then, later, his policies will have their own momentum and it’s assumed that their effect in the six months after he leaves office is his responsibility.
In this view Ronald Reagan, whom conservatives tout as the champion job creator of all time, comes in seventh out of twelve—behind Johnson, Truman, Ford, Carter, Clinton, and Kennedy. Yes, Jimmy Carter, whom Paul Ryan ridiculed last month as looking “good” now that Obama’s record is so much “worse,” although Carter clearly was a more effective “job creator” than every Republican president except Ford. And, yes, Gerald Ford, a Republican president who worked with a Democratically controlled Congress to pass a tax-cut bill that benefited mostly middle- and lower-income households, increasing demand and boosting the economy to full job recovery from the 1974-75 recession in just 19 months. Compare this with George W. Bush’s tax cuts, benefiting mainly the rich, and the then unprecedented 48 months that passed before jobs recovered their pre-recession level, 2001 to 2005 (the blue line in Figure 1).
Do Republicans really want to play this game?
The same data is graphed in Figure 2.
George W. Bush is the only Chief Job Creator in 65 years to preside over a net loss of jobs during his presidency. No wonder Republicans didn’t invite him to their convention in Tampa.
Finally, the average job scores by political party, from 1945 to the present, puts Democrats ahead of Republicans almost two-to-one (20.7 to 10.7).
And yet, so much depends on luck and the conditions of the moment. While LBJ never had to deal with a recession in over five years in office, Dwight Eisenhower contended with three recessions during his eight years, and the difference surely had an effect on their job creating scores. Also, by any coherent jobs logic, the recession of 2000 is more Clinton’s responsibility than George W. Bush’s. And no president since World War II has had to face anything as close to an actual depression as Obama faced when he took office. The real question is how a president plays the hand that is dealt him, and Obama is vulnerable to criticism that he didn’t push for a large enough stimulus and give job recovery at least as much attention as health care reform, although in both cases an unyielding Republican opposition has made it nearly impossible to achieve anything. As Senate Majority leader Mitch McConnell memorably put it in 2010, “Our top political priority over the next two years should be to deny President Obama a second term.”
So, do presidents create jobs? Not directly. But a president does have an effect as chief policy maker, regulator, negotiator, persuader, team leader. We should expect the president to know something about how a national economy works—how it works for everyone, not just the top 1% —and how it works in a global context. We should expect a president to understand, and act on, the responsibility of the federal government to maintain and regulate the economy in good times and bad. We should expect the president to recruit people for his administration who understand these matters too. At the very least, the president and his team should actually run the federal government, not spend their time in office trying to dismantle it as most Republicans, in Congress and the White House, have done since Reagan.