Was the Bush “Job Boom” Merely Hype?
Was the Bush “Job Boom” Merely Hype?
The economic downturn that began in March of 2001 has differed dramatically from other business cycles of the past 60 years. Most troubling has been the extended period of declining employment levels (continuing for 31 months from the beginning of the downturn or for a period about three times longer than the average of other business cycles during the past 60 years) and the weakness in the pace of job recovery after employment levels finally hit bottom in August 2003. It was not until this spring that the labor Department began to report significant employment gains with 353,000 jobs added in March and somewhat slower growth in April and May.
Vice President Dick Cheney extolled the monthly job figures, "American businesses have created jobs for nearly a million workers in the last 100 days alone, and we’ve added over 1.4 million jobs since last August."
Supporters of administration tax policies were even more enthusiastic about the job numbers. Writer Jerry Boyer stated, "For the month of March, the Bureau of Labor Statistics has reported a massive increase of 308,000 new jobs in the payroll survey … now the payroll survey is booming too," and The Washington Times ran a headline "A Jobs Boom Bounce."
Supply-side economic commentator Lawrence Kudlow reported, "At his rate, budget deficits will evaporate rapidly as the economy quickly marches toward full employment."
Scholars at The Heritage Foundation also joined in the exaltation:
This is the first time in years the labor markets show universally positive gains in every area — job growth, wages, and hours — in almost all sectors and across all demographics. The U.S. economy is moving from recovery into a self-sustaining expansion.
A Web site supportive of the administration used the jobs data to go on the attack:
Contrary to Kerry’s hyperbolic claims the economic conditions under which we currently live should be heralded by the mainstream press as a Golden Age … Take for example the extraordinary news released May 7, 2004, about jobs from the Department of Labor. The great American job creating engine added 288,000 new jobs in April alone.
There were of course a number of other statistics that were left out of these reports including the continuing decline in real wages and the decline in average hours worked. But another question that escaped scrutiny was how big this "boom" really was compared to job growth before the "golden age."
One reason for the enthusiasm for the spring employment numbers is the almost unprecedented decline in employment that occurred during the previous three years. But how do these months compare to other periods over the past half century?
During the first six months of 2004 employment grew from 130,035,000 in December to 131,301,000 in June or by 0.97%. Is that significantly better than previous six month periods? The answer is no. When compared to the first and last six months of each year for the last 50 years, this past six months ranks 59th out of the 100 — in other words not only not great, but not even quite middling.
Does the performance improve if we examine only the last quarter? The second quarter was a little better than the first and certainly was the best of this administration. But a very similar comparison emerges for the second quarter when compared to the 199 other quarters in the last 50 years. The 0.51% increase in employment in the second quarter of 2004 was exceeded by 116 of the 199 other quarters. Again, a performance that did not reach the median for job growth.
Even so March was a very good month, 353,000 jobs — right? To answer that question we calculated the percentage growth of the labor force in every month for the last 50 years and sorted the months from best to worst. We also color coded the months based on the administration that was in office at that particular time. Eisenhower is light blue; Kennedy is orange and so forth. The Bush II administration is yellow. Of the 600 months analyzed, only 225 are represented in the graphs but all are represented in table at the end of the report.
Scott Lilly is a senior fellow at the Center for American Progress.
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