The Magazine

Reagan Versus Obama on Jobs

It’s no surprise which president comes out ahead.

Mar 28, 2011, Vol. 16, No. 27 • By FRED BARNES
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Let me bore you with some numbers. Employment dipped to 137,960,000 in December 2009. That may seem like a lot of Americans with jobs, but it happened to be the low point in the recession that began before President Obama took office the prior January.

Reagan Versus Obama on Jobs

California unemployment line

Now jump to last month. Employment had risen to 139,573,000, an increase of 1,613,000 people in the workforce in 14 months. That’s pretty impressive, right? Quite the contrary. By the standard of earlier economic recoveries, that rate of pickup in jobs is very poor.

President Obama and his advisers know this. It’s why they aren’t quite sure how bullish to be when talking about the economy these days. “The stock market has come roaring back,” Obama said in his State of the Union address in January. “Corporate profits are up. The economy is growing again.” Jobs? “That’s the project the American people want us to work on,” he said. 

Obama’s reelection may depend on the success of this “project.” For most voters, jobs are a proxy for the economy. What the president faces now is a jobless recovery, and a fairly weak recovery at that. If this persists, his chances of winning a second term are bound to worsen.

President Reagan was confronted with a similar economic situation in the early 1980s. While it wasn’t exactly the same, it was at least close enough to what Obama faced to make a comparison worth looking at. As you might suspect, Reagan’s recovery comes in well ahead of Obama’s.

True, Obama’s recession (December 2007 to June 2009) lasted 19 months, two months longer than Reagan’s (July 1981 to November 1982). But Reagan’s had been preceded by a seven-month recession (January 1980 to July 1980). And you can make the case, as some economists have, that what actually occurred was a three-year recession. Then and now, there was fear the economy might plunge into another Great Depression. 

Let’s look at the job numbers. The pit of Reagan’s recession came in December 1982, when 99,032,000 people had jobs. Fourteen months later, employment had risen to 103,824,000, or job growth of 4,792,000. That really is impressive. It beats Obama’s record over a similar period—starting from the nadir of jobs—by 3,179,000 jobs.

There’s another yardstick for comparing Reagan and Obama: what’s called the “labor force participation rate.” It’s the percentage of Americans 16 years old or older who have jobs. Under Reagan, the low point was 63.5 percent in September 1981, down from 63.9 percent when he took office. Under Obama, it was 64.2 percent last month, down from 65.7 percent in January 2009.

This means just what you think it does. Percentage-wise, more people left the workforce under Obama than Reagan. Yes, both the population and the economy are larger today than in Reagan’s time. So it’s the percentages that are significant.

Here’s another angle on the workforce. When Obama became president, there were 80,554,000 people considered by the Labor Department to be “not in labor force.” Of these, 74,864,000 were “not in labor force” and didn’t “want a job now.”

This number matters because it affects the unemployment rate. Those neither working nor seeking employment are not considered unemployed for the purposes of calculating the rate. So the more of these there are, the lower the jobless rate is likely to be.

In his State of the Union speech, Obama said “more than one million private sector jobs” were created in 2010. However, he didn’t mention that, according to Labor Department statistics, 1,161,000 people departed the world of work and weren’t looking for a job.

The dropout number would appear to cancel the gain in employment hailed by the president. Nonetheless, the jobless rate fell from
9.7 percent to 9.4 percent in 2010. In Reagan’s second year, the rate grew from 8.6 percent to 10.8 percent before declining to 8.3 percent in 1983 and 7.3 percent in 1984.

One more item. Obama has often said his $814 billion economic stimulus package, passed in February 2009, kept the economy from slipping into a depression. “One year later, it was largely thanks to the recovery act that a second depression is no longer a possibility,” he said.

This is a dubious claim. The recession was officially declared over in June 2009, four months after the stimulus was signed into law. The economy was growing again (just barely) and very little of the stimulus money had been spent by then. Employment had decreased by 1,709,000 jobs between February and June.

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