The Economy and Five U.S. Presidents
This labor force participation chart is a simple, yet deeply revealing mini-compendium of the U.S. economy covering the last 30 years and five Presidents: Reagan, GH Bush, Clinton, GW Bush and Obama.
Given that the economy is the #1 issue of the 2012 election, a closer look at it may surprise a lot of voters and sway the way they see the role of presidents in shaping the U.S. economy.
What is Labor Force Participation?
It is simply the percentage of eligible workers who have jobs. Persons who are employed are said to be “participating” in the workforce. Those not employed are not participating.
Its a concept of the U.S. Bureau of Labor Statistics (BLS). The above chart is built from yearly BLS summary data based on the current population survey.
According to the BLS the total number of Americans employed last month was 140.7 million. Peak employment hit 146 million in 2007 just before the Great Recession struck with devastating effect.
As of February 2012, labor force participation stood at 63.6%… thats less than the 2011 average!
As of right now, there are 88.3 million eligible Americans “Not in labor force” (BLS Rpt. LNU050000000).
If you are out desperately seeking work to feed your family then you are painfully aware what “Not in labor force” means.
What Does the Labor Force Participation Chart Reveal?
Put a historical perspective to the numbers in the above chart:
- It starts with the recession of 1982 at the beginning of the Reagan presidency
- The sharp rise in the early 1980s corresponds to President Reagan’s “supply side” economics
- Participation then levels and declines during GH Bush’s four years
- GH Bush does not react effectively to the recession of 1989 and is defeated by Bill Clinton in 1992
- There is a ragged rise and leveling of participation under Bill Clinton
- Participation peaks then declines because of the tech bubble collapse of 1999
- In 2001 and 2003, the GW Bush tax cuts were passed to fight the resulting recession
- Participation leveled off after the final Bush tax cuts took effect in 2003
- Participation plummeted because of the Great Recession of 2008
- President Obama’s “stimulus” had no effect
- Labor force participation has not yet stopped falling under Barack Obama
Surprise! Presidents do not control the economy, they react to it! Voters just react.
Reagan implemented “supply-side” economics to fight the recession of the early 1980s. It appears it worked.
There was another recession in 1989, also reflected in labor force participation, that GH Bush did not effectively react to. He was defeated by Bill Clinton in 1992 under the campaign slogan, “It’s the economy, Stupid!”
Bill Clinton was lucky. He presided over an economy without recession. It averaged a job growth rate of 230,000 per month. He got out just in time as the tech bubble burst at the end his presidency.
There were about 19 million jobs steadily created under Clinton as labor force participation leveled off at its highest peak of the last 30 years… and probably the highest in American history.
To fight the tech bubble recession (clearly reflected in labor force participation) GW Bush got two tax cuts passed… one in 2001 and the other in 2003. The decline in labor force participation stopped.
Then the sledgehammer fell in late 2008! TARP, passed under GW Bush in reaction to that, prevented a full fledged 1930s style depression. However, it left President Obama still saddled with a desperate situation.
President Obama has had no control whatsoever over the economy. He only reacted to the Great Recession with an ineffective $840 billion dollar, poorly designed “stimulus”.
Today, President Obama desperately latches onto every tiny scrap of good economic news he can find while millions of Americans suffer in an economy still down by 10 million jobs.