Four Presidents at 92 Months - Dropping Participation

This column has written numerous articles on the Jobs Report data during the past two years and nine months. One of the favorite columns is the "Four Presidents" columns.The Four Presidents columns examine the job creation and unemployment levels of the four Presidents since 1980 who have served two terms. It compares the unemployment rates and participation rates of the same four Presidents.

Presidents Reagan and Clinton Added more Jobs than Workers. President Reagan added 205,0000 jobs per month, on average, through two recessions and 92 months in office.Notice that President Obama had fewer full-time workers during January of 1983 than he had during February of 1981. This will be important later. People were jumping into the market to find jobs, mostly during the Summer, every year from 1984 through 1988. 

President Clinton Added nearly 20 million jobs by month 92. Hillary Clinton, wife of Bill Clinton, said during the second Presidential debate that President Clinton had added 25 million jobs during his Presidency. The CPS data says otherwise. We normally shed jobs during the months at the tail end of the year.The data indicates a sizable jump in the workforce population and the number of jobs at the end of his Presidency. Clinton's job growth of 214,000 jobs per month was slightly better than President Reagan's 205,000. It is still considered, to this day, that we need to add 200,000 jobs a month in order to accommodate new workers.

President Bush was Shedding Jobs during Month 92.   One of the problems is that President Bush had overseen an increase of nearly 20 million potential workers during his first 92 months in office. He did not add as many jobs as workers so his workforce participation was softening. More on this later. President Obama inherited a jobs recession from President Clinton. He also inherited an overheating housing market. Units were increasing. Sales prices were increasing. Then we had a housing bust, really a housing recession, and Hurricane Ike. The "Ike Spike" in gasoline prices unhinged the rest of the market.   President Bush had been doing very well with his worker creation. He had astreak of 53 months of non-farm worker additions. This is different from the Private Sector creation President Obama had been touting. You can see from the third graphic that President Bush did not add as many jobs as workers. You can see that his job creation was cresting during July 2007 to July 2008. The pre-recession record of combined full-time and part-time jobs was set during July of 2007. Note that he inherited a recession from President Clinton and left one for President Obama.

It took President Obama Seven Years to recover all of the Full-time lost during the Great Recession. We have crested for Job Creation this year. This is the reason why seasonally adjusted data is created. It we want to compare January to September job creation is has to be seasonally adjusted. This column normally compares non-seasonally adjusted data to non-seasonally adjusted data. This column tends to compare same month data to avoid the manipulation of the data by seasonal factors.

President Obama has not added 15 or 19 million jobs to the Economy. The Democrats like to cherry-pick the data. President Obama had to lose 5 million jobs to add 16.5 million jobs. He has only added a net 11.5 million jobs to the economy. That number will decrease between now and the time that his successor is inaugurated. He has added 125,000 jobs per month. This is better than President Bush and much worse than either Reagan or Clinton.  Next month may be the most important jobs report we have seen during the past eight years.

President Obama is in Third Place for Unemployed Workers. There are nearly 8 Million Unemployed workers, officially. I say officially because the unemployment rate, or unemployment number, is only part of the equation, just as the job creation number is only part of the equation. Not too long ago there was a White House tweet saying that President Obama was proud of the FACT (False Assertion Considered to be True) that he was proud to been the second President to cut the number of unemployed workers in half during his Presidency. The problem here is that he had to oversee an elevation of the number of unemployed workers not seen during the past 36 years.

President Obama has more unemployed workers than either President Reagan or Clinton. This should be anticipated because he has a larger workforce population than any of his predecessors.  The problem is that President Obama is in Third place for Job Creation and Third Place for Unemployment.

President Obama is in Fourth Place for Participation. When the factors of employment and unemployment are combined we see that he is in fourth place for participants created. He is the only person who lost participants during his jobs recession.  We have a failure to participate.

Participation should be a headline discussion during this Presidential Cycle. The labor force participation rate was not widely mentioned during the Reagan, Clinton, or Bush races. Participation reared its head during the 2012 cycle. It was not well explained then, and it is being ignored 29 days of the month this year. Participants are employed or unemployed workers. If you are not employed or unemployed then "you are not participating" in the economy.

President Obama is losing Participants. You can see that Presidents Reagan and Clinton saw a slight decline in participants during the Fall of their final years in office. Both saw participation increase  during October and November as Christmas Helpers were hired. President Bush saw an upward tick during October and then a sizable drop off through his final days in office. There is no practical way that President Obama will add 5 million participants during the next 4 months in office.

If workers aren't employed aren't they effectively unemployed? This column produced an article last month that showed that while the workforce population is increasing the jobs are not. There is a drop in participation in every age group between 16-64 and an increase in workers and participation for those over the age of 65, 70, and 75. It has been worrisome for a long time that we have seen declining unemployment and declining participation.

President Reagan was able to decrease the unemployment rate and increase the participation Rate. Someone will say that President Reagan had an unemployment rate over 5% (5.23%) and that President Reagan is under 5% (4.80%) so that means that we are at full-employment and President Obama is doing better than President Reagan. President Reagan took the participation rate from 63.22% to 65.87%  during his first 92 months.  This cannot be said for President Obama.

President Clinton pushed the participation rate to higher heights. President George H.W. Bush inherited a recession from President Reagan and did not have eight years to recover. We read his lips and he was fired when he ran against Clinton and H. Ross Perot. The participation dropped under President Bush 41 nad improved under Clinton. He also saw unemployment fall to levels that President Obama wants, increasing participation and decreasing unemployment. President Clinton oversaw the period of time where inflation was low and unemployment was low. This violated the Phillips Curve. It was called the "Greenspan Curve."  Notice that Participation was peaking while he was in office. The July 2000 participation rate was lower than the July 1999 level.

President Bush had a Participation Rate  Higher than President Reagan during his 92nd Month. This often goes unmentioned. There were many Internet memes that were haranging President Bush for screwing up the workforce participation rate.  His unemployment rate during this point in his Presidency was under 6%. Those same critics have been silent with the dismal levels of participation under President Obama.

President Obama is in Fourth Place for the Participation Rate Battle. This is not good. I am stating the obvious, I know. We need people to be participating in the  economy so that they can afford houses, cars, furniture, electronics, appliance, services, and food. The retail numbers will be published this week for the month of September. We have seen participation and unemployment drop in almost lock-step. The problem is that a participation rate drop of 1% does not equate to an unemployment rate drop of 1%. If 1% of  160 million participants is a drop of 1.6 million jobs. A drop of 1% of 8 million unemployed is a drop of 800,000 workers. This is the fallacy of what Donalad Trump has been promoting with a "real" unemployment rate closer to 15-20%. It is bad. It just isn't that bad.

We are Missing Between 7.7 and 9.8 Million Participants. If we compare the jobs created under the four Presidents and compare the number of participants a different picture is painted.  If we just compared the number of participants created under the four Presidents the Presiden Obama is missing between 6 million and9 million participants. We are not participating at the same rate as we were prior to the recession. This makes a big difference. If we had the same participation rate as any of the prior three two-term Presidents then we would have between 7.7 and 9.87 million more participants. Employed or unemployed, 7 to 10 million more participants would fuel this economy to new heights.

Are there more unemployed workers now than January 2010? Are we missing 7 to 10 Million Unemployed workers? If we are missing unemployed workers what is the effective unemployment rate. If we add those missing participants to the official unemployed workers we would have between 15.4 million and 17.4 million unemployed workers.President Obama had 16.147 million unemployed workers at the worst of the recession. If we have a comparable number of people unemployed now as the worst of the recession where is the improvement?

Do we have an unemployment rate of 4.80% or 9.66% or higher?  If we factor in the participation rate and the missing participants we have tens of millions of unemployed workers. The workforce population has increased through the decades so even if we had the same unemployment rate we would have more unemployed workers. It is simple math.

What difference does it make? Is it 4.80% or 11.77%?  If you are unemployed and looking for work it makes a huge difference. Too many people chasing too few jobs means wages will not rise. If wages do not rise people may not choose to chase after those jobs.