Obama’s Highly Misleading Claim About Private Sector Job Creation

Recently, President Obama has taken to claiming that “our businesses have gone back to basics and created over 4 million jobs in the last 27 months —more private sector jobs than were created during the entire seven years before this crisis — in a little over two years.” This is technically true. It’s also highly misleading.

That’s because President Obama isn’t making a fair comparison. Instead, as the author of the Political Math blog handily explains, he’s carefully selecting date ranges that allow him to maximize the number of jobs he can take credit for creating while minimizing the number created under his predecessor, George W. Bush.

Obama’s claim appeared at a June speech in Cleveland. And according to the Bureau of Labor Statistics, the economy did indeed add 4 million private sector payrolls in the previous 27 months. That takes us from March 2010 to May 2012. But why start the count there? Why not count all the way back to the beginning of Obama’s presidency? Probably because if you did that, you’d also have to factor in the massive job losses that occurred in the first part of Obama’s term. It’s a highly convenient way to count. Via Political Math, here's a graph showing what that figure counts and what it doesn’t:

OK, so it’s convenient. But maybe it’s fair. After all, the recession didn’t begin under President Obama. So perhaps it’s reasonable for a president to take credit for an eventual uptick in job creation if the economy was flagging during the first part of his term. You could say he engineered a turnaround out of a downward spiral.

Except that that’s not how President Obama’s comparison treats President George W. Bush’s private sector jobs record. The seven years before the crisis that Obama’s quote refers to encompass January 2001 through January 2008, which means that Bush is stuck with all the job losses that occurred during the first few years of his presidency. 


In other words, the statement is accurate enough. But Obama doesn’t give Bush’s private payrolls record the same benefit of the doubt that he gives his own. And it turns out that if you just compare the recoveries, they look remarkably similar. 

There’s another reason Obama uses the metric he does. It relies on just one measure of employment: an establishment survey that mainly relies on data culled from businesses. But BLS also publishes a second measure of employment that relies on surveys of individuals. And on that measure, President Bush seems to have done much better

When Obama took office, his first budget director promised that this administration would play it straight when it came to the numbers. "The president prefers to tell the truth," said Office of Management and Budget head Peter Orszag, "rather than make the numbers look better by pretending." Maybe that's what the president prefers. But you'd hardly know it by what he actually says. 

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  • T||

    Really, you could use this headline as a template: "Obama’s Highly Misleading Claim About..."

    You could replace the ellipsis with anything: Hot Dogs. The Middle East. Chicken Fuckers. Furniture. Budget Issues.

    Let me be clear: if he's made a claim, chances are it's bullshit.

  • Y||

    one letter user name... I don't trust you.

  • Pro Libertate||

    Obama’s Highly Misleading Claims: The Greatest Hits, Vol. XVII.

  • some guy||

    17 Volumes? Should take us up to what? Sept. 09?

  • Pro Libertate||

    It's hard to keep up. These are high-definition albums!

  • Auric Demonocles||

    There's no time for fact checking the president! Paul Ryan said he bought a light blue shirt at a store several years ago, but it turns out that it was a dark blue shirt that his wife bought for him there. This needs to be acknowledged!

  • Dano789||

    I agree that O shouldn't include the early years of Bushy's administration to be consistent. However, if you really wanna compare apples to apples, don't you need to credit Dubya with the Great Recession job losses? If you do, his jobs record looks very, very bad.

    From 8/03 (when private sector jobs started growing again consistently) to 1/09 (until Obama could have had an impact), Bush would have a net 2.75 million private sector jobs. Those 66 months are still pretty weak compared to the last 30 of Obama's where he had 4.6 million net private sector jobs.

    And that's if you don't credit Bush with the Great recession job losses that occurred during Obama's reign. If you do, then Bushy was responsible for a net LOSS of 1.45 million. Again, that's if you start counting in in 9/03 and stop in 2/10.

    With that said, economics is cyclical. So comparing Bush and Obama isn't really that meaningful by jobs in this manner. Instead, you could compare Obama's recovery with other recoveries, which is well documented to be comparatively awful (versus, say, Reagan). Of course, O'd argue that he was dealt the worst deck since the Great Depression, and there's some truth to that claim. We can't be sure how much better another president could have done, unfortunately.

    So this sort of analysis, while fun, doesn't really provide any concrete insights for either party.

  • John Thacker||

    There's a lot of ways to do it. You can do a strict calendar based comparison, whether based on inauguration or after a year or six months delay or whatever. You can also do a economic cycle based comparison, using the high or low points. Both have merits, though I think that the latter is better.

    It's true that under most methods GWB looks bad. It's just very misleading for Obama to use one method for himself that makes him look the best (economic cycle) yet switch to an entirely different method (calendar dates) to make GWB look as bad as possible.

  • Romulus Augustus||

    Or you can do a chart that shows number of jobs gained/lost from Jan.2006 when the Democrats took over both houses of Congress through Jan.2010, and compare it with results since then when GOP took over House.

  • Romulus Augustus||

    Sorry, Jan.2007 and Jan.2011.

  • John Thacker||

    Heck, throw in the fact that the Democrats took over the Senate shortly after Jan 2000 and the GOP won in back in 2002, and you can make a pretty impressive pro-GOP jobs claim, if you say that Congress matters more than the President.

    Biased in its own way, but like pretty much any consistent way, still better than Obama.

  • Auric Demonocles||

    Here's a quickly thrown together example. I estimated the values from the every 6 months in the two graphs in the article, held the jobs constant for the gap between the two charts (mid 2008), and highlighted the times when the Democrats had Congress (Dem is red).

  • John Thacker||

    However, if you really wanna compare apples to apples, don't you need to credit Dubya with the Great Recession job losses?

    Not really, not until we know what the next recession at the end of the current economic cycle will look like, or at least until more time passes. It's not really apples to apples in either a calendar or economic cycle sense to compare 7 years of GWB, one (weak) recovery plus one (severe) recession to 2-3 years of Obama, one (weak) recovery only.

    Of course, O'd argue that he was dealt the worst deck since the Great Depression, and there's some truth to that claim.

    There's some truth to that claim. OTOH, there's also some truth to the claim that at least the job loss was half over by the time Obama took office, and there's also some truth to the claim that sharp recessions have traditionally had faster recoveries, whereas mild recessions have had shallower recoveries. So while this economic situation that Obama was dealt was very bad, history would also lead us to expect that the current recovery from a much lower point would be a lot faster than the 2003-2007 recovery. (Although I think that monetary policy has had a lot to do with it.

  • Auric Demonocles||

    Of course, O'd argue that he was dealt the worst deck since the Great Depression, and there's some truth to that claim.

    No sympathy for someone who campaigned for the job, promised ~6% unemployment right now if we only spent all of this stimulus money, then when it horribly failed to do anything besides put us way into debt claim "But it was way worse than I realized." No it wasn't worse. You did the wrong thing. I realize you avoid even the blame for your own wardrobe, but take some responsibility.

  • Red Rocks Rockin||

    I get in arguments with Obamabots who tell me, "But at least he's trying!!" I always tell them that statement is typically said by parents whose child isn't living up to expectations.

  • Dano789||

    Nor do I. It was either a grave error or pure hubris to promise 6% unemployment. Of course, I'm unconvinced anyone could have got unemployment that low in four years, given the depths of the economic problems. Again, not saying that someone other than O couldn't have done better. Simply that superficial job record comparisons don't really tell us much. So my criticism here is that the Obama campaign shouldn't be relying on fundamentally flawed comparisons of success/failure.

    Better to look at specific policies, like what did the Obama stimulus, Obamacare, and Dodd-Frank do to help or hurt the economic situation. I'd argue the first might have been a tiny net positive (though not justified by its outrageous cost) and the latter two a net negative. So overall, someone else probably could have done better, but forming concrete counterfactuals are hard too.

  • Auric Demonocles||

    So overall, someone else probably could have done better, but forming concrete counterfactuals are hard too.

    Unfortunately they're impossible, which is why we should hold him to the standard he himself set.

  • R C Dean||

    Of course, I'm unconvinced anyone could have got unemployment that low in four years, given the depths of the economic problems.

    Actually, I'm pretty sure that a program of (a) radical revenue-neutral tax simplification, (b) serious deregulation, and (c) entitlement reform would have gotten us there pretty quickly. Tax simplification is job-positive because it removes economic distortion, deregulation is job-positive because it removes disincentives, and entitlement reform would remove incentives to not work, and give the capital markets some badly needed hope for the future.

  • The Hammer||

    ^This^

  • Dano789||

    Your pretty sure, eh? The economy lost 8.8 million jobs in 25 months. A fair few of those jobs were structural losses -- like construction of finance jobs that aren't coming back for a very long time. Now bear in mind that over the past 55 months since those job losses started, to keep the unemployment rate around 5%, you would have needed an additional 6.9 million jobs even if no jobs had ever been lost. Add back 1.6 million workers to get us from 5 percent to 6 percent.

    So you're pretty sure that some tax reform, deregulation, and entitlement reform would have created 14 million new jobs? That's nearly 520k per month for 27 straight months since jobs started growing again. I agree with you that those reforms would be helpful. I just don't think you fix this problem quickly. It would be a long road -- which would ultimately lead to a better destination -- but the road would still be long.

  • ||

    14 million new jobs

    Where the fuck are you getting this 14 million jobs bullshit?

  • Dano789||

    8.8m net job losses during the downturn. Since that time began it was 55 months. You need 125k jobs per month to keep up with population growth. That's another 6.9 million more. That would be 15.6 million jobs needed for 5% unemployment (like beginning of 2008). But for 6% unemployment, you would still have 1.6 million more unemployed, so subtract 1.6 million from 15.6 million and you get 14 million.

    Remember, the unemployment rate of 8.1% is highly misleading, because the labor participation rate has fallen so much since the recession began due to discouraged job seekers giving up and going on disability or other entitlements. Some argue the participation plummet is just demographics with the aging population, but if you look at the actual numbers, you find that the labor participation decline is dominated by younger Americans. So those most of those people need to be kept in the picture for it to be accurate.

  • ||

    Remember, the unemployment rate of 8.1% is highly misleading

    I am sorry but what the fuck are you talking about?

    If Obama had not spent over a trillion dollars every year over budget for the past 4 years we would have at least 4 million more jobs then we do now....probably closer to 8 million more jobs.

    If that happened the unemployment rate would not be above 8% and we would not be having this conversation. Obama did not need 14 million more jobs and reaching adequate job numbers was far more easier then your claim.

  • R C Dean||

    So you're pretty sure that some tax reform, deregulation, and entitlement reform would have created 14 million new jobs?

    First, your numbers are off. I'm looking at the chart above, and we got around 6mm jobs with the economic policies that we had squatting on job creating. So I only need about 8mm jobs on top of those.

    An, yeah, I think that the damage done to our economy by overregulation, distortive tax policy, and capital destruction is probably worth the roughly 8 million jobs.

  • R C Dean||

    Fuck, I need about 10 million in addition to the 4 million already created, but that doesn't change my conclusion.

  • R C Dean||

    I looked at the St. Louis Fed's data. Given the participation rate when Obama took office (65.8%) and the current civilian noninstitutional population (243,566,000), with a 6% employment rate we'd have 150,605,000 jobs. Right now we have about 142,000,000 jobs.

    So call the shortfall 8,000,000 jobs. Since the bottom 25 months ago, that comes to 320,000 jobs in addition to those already created. I don't think its crazy to believe you could do that by removing the worst of the burdens the feds put on the economy.

  • ||

    Of course, I'm unconvinced anyone could have got unemployment that low in four years, given the depths of the economic problems.

    So we have been at or above 90% debt to GDP ratio for two years now.

    According to economic studies that is 1% GDP gutted from the economy each year.

    If say our GDP is 14 trillion and we took out 3% growth from that (1% the first year 2% the next) that means 420 billion dollars worth of growth was taken out of the economy. Or 8.4 million $50,000 a year jobs.

    Even if the 420 billion only represented half as many jobs it would be enough to drive unemployment down to historical lows.

  • ||

    No fan of Obama's record but can he really be to blame for the job loses in 2009?

  • GILMORE||

    No, but he could be blamed for spending shitloads of money pretending he was 'doing something about it' when in fact he was engaging in a giant shaft of the private sector, creating a giant fiscal hole bailing out state governments, bankrupt automakers, and public sector union pensions...

  • ||

    Yes Obama's over spending has stunted job growth.

    He is to blame for our current unemployment numbers.

  • GILMORE||

    HR posted a thing recently about how every mention of spending cuts in the media are always "Devastating!"...

    Well - this on MarketWatch just now:

    Dire warning from White House:
    'Devastating' spending cuts

    WASHINGTON (MarketWatch) -- Automatic spending cuts set to begin in January would have a "devastating" effect on both defense and domestic programs, the White House's Office of Management and Budget said in a report on Friday. Under a law signed by President Barack Obama in August 2011, spending would be reduced by $109 billion a year through fiscal 2021 if the White House and Congress can't work out a deficit reduction deal. The election-year report said that the so-called sequestration process would harm investments needed for economic growth and damage programs that benefit the middle class and children

    Its in GIGANTIC font.

    I suspect now that 'Bama's got his free-money QE3 kicked in, he's now setting his sights on the other dimension of Give Money To Constituents Approach to Governance = spendin'!

    I note no mention of the ~2% reduction to GDP estimated to result from the broad array of tax increases set to kick in. Apparently they have no problem with that?

  • John Thacker||

    I suspect now that 'Bama's got his free-money QE3 kicked in, he's now setting his sights on the other dimension of Give Money To Constituents Approach to Governance = spendin'!

    He probably is. But the correct response is to say that the monetary stimulus, and the commitment of the Fed to monetary stimulus, obviates the need for fiscal stimulus.

    So long as the Fed is willing to counteract any effect of spending cuts, economists should agree that they should not harm the economy. The Fed's announcement of QE3 weakens the case for spending and fiscal stimulus.

  • R C Dean||

    I posit that the assertion that spending cuts "harm" the economy over any longer time frame, is unproven at best.

  • ||

    I posit that having a debt to GDP ratio of 90% or more guts at least 1% from GDP and that the economic evidence for this is overwhelming.

    I would further posit that any spending cuts that lower this debt to GDP could only help improve the economy and job growth.

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