President Obama’s Poor Job Growth – Being Libertarian (blog)
Barack Obamas presidency has ended and many have praised his ability to turn around the economy from its Great Recession. According to Wikipedia Obamas so-called recovery supposedly created 11.4 million jobs in total. However, many conservatives and libertarians point out that the labor force participation rate has reached an all-time low. While this is true, as an economist, and libertarian, I advocate further research on why such participation rates have decreased, rather than including everyone exiting the workforce as part of the economic problem itself.
Ive already addressed that Obama had a job growth of 1.7 million Jobs in August. However, Ive further updated my methodology and way of recording such increases and decreases of job growths under a president, and this would truly reflect real job growth under a president. The changes of methodology that Ive employed are:
Now that its January, we can finalize the actual job growth of Obama. However, as a note, we do not include January this year as under Obama, as weve included January 2009 as part of Obamas job growth. January 2017 will be applied to President Trumps record. A difference of 19 days will most likely not yield a huge difference of job growth. This also helps us simplify the calculations of job growth from January 1st to December 31st as Bureau of Labor statistics do not give individual days of job growth within those months as it is not feasible, thus to do a calculation based on year start of January 20th towards January the 19th is not possible.
If we look at how to calculate the non-participant rate, we find that the two reasons which we can exclude people from what we call the true non-participant rate is people which have declared ill/disabled, and retired. Other items, such as home responsibilities, going to school, and other reasons will be included in our calculations to show changes in the true non-participant rates, rather than using the full participant rates.
This BLS article shows those reasons in 2004, and in 2014. However, changes were not recorded, and it only recorded reasons specified within those two particular years, therefore I have created a change in percentages per year when calculating the difference of reasons from 2004 to 2014. Below are the reasons on why Ive included home responsibilities, going to school, and other reasons into my calculations.
After taking into consideration why people are not participating in the labor force, we can look at the changes of reason over time in this table.
From these variables, we can derive the formula:
True non-participation rate= Recorded Non-Participation rate population less Ill/Disabled Population Less Retired Population.
With this, a table of the True Non-Participation rate on 1st of January and 31st of December of each year is provided from 2009 to 2016. January will have the effective percentage breakdown of the previous year (2009 January will have 2008 reasons, so for example, 18.01% of non-participants would have reported as ill/disabled) while December will have an in-year percentage breakdown of reasons.
After calculating the TNPR, we now have an actual reflection of those who have dropped out of the labor force due to discouragement of job opportunities. Thus, we have a more accurate way of calculating job growth by observing it from a year by year perspective rather than observing it from the beginning of a presidency to it end.
The year by year metric also disputes the claim of job growth of 11.4 million, as the job growth total is now revised to 7.526 million (Changes in Employment plus Changes in Workforce). However, we also measured those who had truly dropped out of the labor force for potential reasons of discouragement, and thus the net result is 3.055 million jobs (73.20% less than claimed).
Some might assert that 3.055 million jobs had actually come into existence, which is better than nothing. However, if we measure what categories of jobs had grown, this table shows this below:
The majority of jobs had resulted in servicing sectors such as food services, healthcare services, and retail jobs. A majority of these jobs barely contribute towards actual capital accumulation, which leads towards a scenario of capital consumption. Essentially, 54.40% of jobs have extremely small contributions towards capital accumulation. No clear indicators on what administration or professional services had been formed, thus we cannot accept it as jobs generating capital accumulation.
Furthermore, a majority of jobs have originated in the healthcare sector, most of which occurred in 2014 (1.995 million), indicating that when major provisions of the ACA took place, demand for medical healthcare products/services rose. However, because an increase of healthcare costs is recorded, this increase of medical sector individuals could not cover the actual increase of demand, as the United States currently suffers from an artificially created restriction of supply, and an artificially subsidized amount of demand.
In conclusion:
Obamas job growth record is statistically disappointing, and created deleterious effects on Americas recovering economy.
Photo: White House
This post was written by Baland Rabayah.
The views expressed here belong to the author and do not necessarily reflect our views and opinions.
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President Obama's Poor Job Growth - Being Libertarian (blog)
