A Perspective On Job Creation
With the Bureau of Labor Statistics(BLS) announcement that over 200,000 jobs were created in December, the main stream media has taken to reporting the favorable opinions of administration officials and politicians that fell mostly into the “stay the course” and the “ we’re on the right track” type of comments. Lacking from the reports was any comparison to the recovery directed by Mr. Obama and the recovery directed by Mr. Reagan, both Presidents who had to overcome severe economic downturns.
Ronald Reagan and Barack Obama are polar opposites in their opinions of the value and the role of the federal government. Reagan viewed the federal government, with disdain, as an entity who’s power and reach into the lives of ordinary Americans needed to be restrained, while Obama, a Saul Alinsky socialist, believes the federal government should be an implement of control and the redistribution of wealth where he decides the “haves and have nots.” And their policies reflect their beliefs.
Reagan and his allies in Congress passed two of the most important revisions tax revision laws in history during his administration. The Economic Recovery Act of 1981(Kemp-Roth) slashed marginal tax rates for individuals and accelerated depreciation schedules. The Tax Reform Act of 1986 continued to cut top marginal tax rates and changed the method for taxing capital gains. During Reagan’s terms in office, the top marginal tax rate for individuals was slashed from 70% to 28%, thereby putting thousands of dollars of earned income back in the pockets of individuals and businesses to save, invest, purchase new inventory and equipment, and, most importantly, hire new workers.
The economic expansion that resulted from these acts created one of the greatest economic expansions in history as detailed by the Ronald Reagan Foundation web site(www.reaganfoundation.org):
“The numbers tell the story. Over the eight years of the Reagan administration:
- 20 million new jobs were created
- Inflation dropped from 13.5% in 1980 to 4.1% by 1988
- Unemployment fell from 7.6% to 5.5%
- Net worth of families earning between $20,000 and $50,000 annually grew by 27%
- Real gross national product rose 26%”
But for a direct comparison, the Bureau of Labor Statistics(www.bls.com) report entitled “Employment, Hours, and Earnings from the Current Employment Statistics survey(National) records the official job creation statistics. The BLS lists the jobs created during the 8 years of the Reagan administration(1981-1989) at 17, 873, 000 jobs. The average number of new jobs created per month for the entire term, then, including those months directly following the transition from Jimmy Carter’s recession enveloped economy, was officially 186,177.
How does Mr. Obama’s job creation record compare to that of Mr. Reagan? The Bureau of Labor Statistics lists the official job creation statistics(in thousands) for the three years of the Obama administration as:
Total jobs created in the 3 years(36 months) of the Obama economy are a negative 2,483,000. The American economy has lost almost two and a half million jobs since Mr. Obama and his pro-government, pro-wealth redistribution administration took office. Even looking just at the most recent year, 2011, the Obama led American economy created an average of 136,000 jobs per month, almost 37% less jobs per month than President Reagan’s policies generated for the entire length of his presidency.
Same year to same year comparisons are no less favorable to Mr. Obama. The third year of Mr. Obama’s economic plan created 1,640,000 jobs compared to 3,454,000 jobs in the third year of Mr. Reagan’s administration, or less than half as many jobs as Reagan’s pro-business agenda.
So by any statistical measure, the job growth performance turned in by Mr. Obama and his economic policies pales in comparison to that achieved by Mr. Reagan. While the existing conditions for both presidents at the time of their taking office was surely different, with each facing unique challenges , they implemented strikingly opposite economic strategies generating markedly different results for American business and for the millions of unemployed and underemployed citizens.
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