Can Obama really create jobs?


Published: Sunday, January 25, 2009 at 6:01 a.m.
Last Modified: Friday, January 23, 2009 at 6:23 p.m.

President Barack Obama has pledged to put America back to work. If only it were that easy.

Records going back to 1948 show that every president has presided over an increase in the absolute number of jobs. But the Bureau of Labor Statistics records, which include the complete terms of every president since Dwight Eisenhower, also lay out a larger problem: The number of jobs created hasn’t always kept pace with the expanding number of people who want to work.

Presidents don’t have much control over either the number of new jobs or the number of people looking for work. The labor force has more than doubled since 1953, driven by factors Eisenhower couldn’t have imagined, like married women looking for work and increased immigration from outside Europe.

Likewise, the number of new jobs created in a year is determined by expansions and contractions in the business cycle — cycles that begin years, even decades, before a president takes office. Economists argue about whether the current recession, and the job losses that come with it, has seeds in low interest rates while Bill Clinton was president, or deregulation under Ronald Reagan.

“Yes, good long-run policies have good effects and bad long-run policies have bad effects,” said Brad DeLong, economics professor at University of California Berkeley. “But the Bush-Clinton comparison is dominated by bad luck for Bush. … He did not make the recession.” As economic historian Michael Haines of Colgate University puts it, “Would you rather be smart or be lucky? Take lucky.”

Here are some questions and answers about presidents and job creation:

Q: How can the number of jobs have expanded under every president since Eisenhower, when we’ve seen so many periods of high unemployment?

A: Although the total number of jobs has been greater at the end of the term than in the beginning for each president since Eisenhower, many presidents saw the nation suffer months — even years — of job losses. For instance, although Ronald Reagan’s term in office is seen as a time of prosperity, the nation lost jobs for 17 straight months in his first two years in office, 1981 and 1982, as measured by month-over-month changes in non-farm payrolls.

Eisenhower had a different problem. During the years he was president, 1953 to 1961, the number of jobs expanded by more than 4 million, according to BLS statistics, while the labor force expanded by 7 million — meaning there were millions who wanted work and couldn’t find any.

Other presidents were lucky enough to be in office during a period when the number of jobs grew more quickly than the labor force. That was the case for Lyndon B. Johnson, who was in office from 1963 to 1969.

[Johnson credited the chairman of his Council of Economic Advisers, Gardner Ackley, for the economy’s growth, saying in 1968, “When Gardner took the CEA chairmanship more than three years ago, the economy was already setting peacetime records. He has kept the curve climbing, turning a youthful boom into a mature and solid eight-year expansion.”]

Q: Since the number of jobs needs to grow just to keep up with a growing labor force, is there some other way to measure the jobs situation — say, the percentage of the labor force that’s employed?

A: Unlike the ever-higher numbers for the total people in the work force, or the nearly uninterrupted climb of total people employed, the employment-to-population ratio (which economists affectionately call E-Pop) has bounced between 55 percent and 65 percent for 60 years.

Some of its biggest tumbles were in 1971, when Richard Nixon was president; in 1975, under Gerald Ford; and in 1983, under Reagan.

Q: Is there anything presidents can do to create jobs?

A: One thing above all else: Build infrastructure.

“We built a lot of infrastructure in the Eisenhower, Kennedy, Johnson era,” Haines said. “I’m sure the interstate highway system created an incredible amount of employment. We can do it again.”

Projects such as mass transit systems, bridges and harbor development not only can put people to work, they can increase productivity dramatically.

“One of the reasons India lags behind China in its growth is China has better infrastructure,” Haines said.

What’s important is that the projects are built in areas where they can truly contribute to economic growth. He points to West Virginia, which has won federal road construction projects that he jokes have done little besides smooth citizens’ trips to other states.

Q: Can government employment projects like those we saw during the Great Depression create enough jobs to turn the economy around?

A: That’s not clear. Christina Romer, Obama’s designated chairwoman of the Council of Economic Advisers, has written that New Deal spending programs “had little direct expansionary effect on the economy.”

Instead, she points to the government printing more money in the years between 1933 and 1937.

Behind the increase in the money supply was something no president could control: As political tensions rose in Europe before World War II, nervous Europeans sent their gold into the United States. As wealth moved into the country, the monetary expansion that came with it stimulated spending by lowering interest rates and making credit more widely available.

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