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Here's What Really Happened to Jobs During the Obama Years

Jan 18, 2017

Barack Obama leaves office this week with his legacy on healthcare in serious jeopardy. What will his legacy be on jobs?

Well, he's been lauded for outperforming Ronald Reagan in reducing unemployment after a recession—and bashed for doing too little to stop companies from moving jobs overseas. Economists are divided as to whether he should be credited for steering America to recovery after the Great Recession—or blamed for missing opportunities to create more high-paying jobs for all Americans.

So what's the real deal in terms of President Obama's success (or failure) on jobs? Here are answers to some key questions.

How Many Jobs Were Actually Added?

Civilian Unemployment Rate Bureau of Labor Statistics 

The U.S. added 2.2 million jobs in 2016, on top of 2.7 million jobs gained in 2015, according to the Bureau of Labor Statistics. In fact, there has been growth of at least 2 million jobs in each of President Obama's last six years in office, and there have been 75 consecutive months of jobs growth, a modern-day record.

As for overall net jobs growth, the White House has frequently cited the fact that "more than 15 million new jobs" have been created under Obama's watch. That figure is only accurate if you look at the number of jobs added since the post-recession economy began picking up steam, in 2010. Obama, of course, became president in January 2009, when the global economy was collapsing and hundreds of thousands of American workers were losing their jobs each month.

When you compare the number of jobs when Obama took office with the total now, the difference is a net gain of 11.3 million jobs. That's good—vastly better than the addition of 2.3 million jobs during George W. Bush's eight years in office—but not as strong as jobs growth when Ronald Reagan (15.9 million jobs) or Bill Clinton (22.9 million jobs) was president.

How Many People Dropped Out of the Workforce?

Civilian Labor Force Participation Rate Bureau of Labor Statistics 

As the end of Obama's term in office neared, the unemployment rate stood at 4.6%. That's the lowest it's been since August 2007, and a drastic improvement compared to unemployment levels hovering near 10% during Obama's first two years as president.

Yet critics say the unemployment rate is misleading because it only measures those without jobs who are actively seeking employment. What's overlooked is the huge population of workers who have simply dropped out of the labor market.

For nearly every month over the past three years, the unemployment rate has been below 6% and the workforce participation rate has ranged between 62.5% to 63%. That's significantly lower than the 66% rate before the Great Recession. Workforce participation hasn't been as low as it's been lately since the Jimmy Carter-era economic malaise of the 1970s. How many people have given up on seeking jobs? In 2014, FiveThirtyEight estimated that 8 million working-age Americans were not employed but also not counted in the unemployment rate because they'd stopped looking for jobs.

Roughly one out of every six prime-age American males (ages 25 to 54) has either dropped out of the workforce or is otherwise unemployed. Obviously, if all of these men, plus all the others who have given up on the labor market, were counted in the unemployment rate, it would be a higher than the sub-5% levels of 2016.

On the other hand, Donald Trump's claim that the "true" unemployment rate is more like 42% because more than 90 million Americans don't have jobs is nonsensical. Why? He's including high school students, people with disabilities, stay-at-home parents, retirees in nursing homes, and millions of others who would not be working in any economic climate.

What's Happened to Wages & Income?

"Wages have grown faster over the past few years than at any time in the past forty," President Obama wrote recently in an exit memo addressed to the American people. Could this really be true?

Average hourly wages increased 2.9% in 2016. That's better than 2015 (2.3%) and 2014 (2.1%). But wage growth of 2% is essentially no wage growth at all once inflation is factored in. Wages generally grow 3% to 4% during normal (non-recession) years. According to the Economic Policy Institute, if wages had grown at a consistent 3.5% annually since the Great Recession, the average worker would be making $29.07 per hour, versus the actual average of $26 an hour today.

From 2014 to 2015, America's real median household income (which factors in inflation) saw its biggest increase since such data started being recorded, in 1968. The median household earned $56,500 in 2015, an increase of 5% over the prior year—amounting to an extra $2,800 in income. This data, we suppose, is what Obama was focusing on with his comments concerning the pace of wage growth in recent years.

In the grand scheme, household income has been pretty stagnant. Census Bureau data shows that when everything is converted into 2015 dollars, the median household income in 2007 was $57,423. In other words, typical American households have been earning more lately than they were a few years ago, but still less than they were before the recession.

What Kinds of Jobs Are We Talking About?

Among the many reasons unemployment is historically low yet income hasn't exactly been skyrocketing is that more people are working part-time and/or low-wage jobs. Roughly 17% of workers were part-timers before the recession. That proportion shot up to an all-time high of 20.1% in 2010, before slowly retreating over Obama's next six years in office, measuring 18.3% recently.

Some workers elect for part-time status voluntarily—it's been easier to do so in the age of Obamacare, after all, when health care is less tied to one's job. The ranks of involuntary part-time employees, who want full-time work but can't find it, rose from 8 million in 2008 to a high of 9.2 million in 2010, before falling to 6.6 million in 2015.

The so-called gig economy, which may supplement or serve as a worker's only source of income, has flourished during the Obama years, to no surprise. Many gig jobs, like Uber driver or Task Rabbit handyman, were born around the time Obama came into office.

As for more traditional employment, work in the health care industry has grown faster than any other industry. Some 422,000 jobs in the field were added in 2016, on top of an increase of 472,000 health care jobs in 2015. Overall, there has been a net gain of about 2 million health care workers during Obama's two terms. The Bureau of Labor Statistics projects that health care occupations will increase 19 percent from 2014 to 2024, adding another 2.3 million jobs over that span.

The ranks of union workers—who are generally paid better than those not in unions—has been on a decline for decades. The union membership rate, measured at 20% of all workers in 1983, fell to 13.4% in 2000, and down further to 12.3% in 2009. It's continued to inch downward throughout the Obama years, hitting 11.1% in 2015.

The state of American manufacturing jobs was a sensitive and controversial one throughout the 2016 presidential campaign. Have manufacturing jobs disappeared with Obama in the White House, like Donald Trump and the Republicans said?

During the Carrier plant episode—when Trump intervened and took credit for saving roughly 700 jobs in Indiana that would have been shifted to Mexico—the White House made note that 805,000 manufacturing jobs had been created while Obama was in office. That's true when comparing the number of manufacturing jobs in late 2016 with that of February 2010, the recent low point for the industry. Manufacturing employment has taken off since then, at the fastest rate since the 1990s.

Over the full course of the Obama years, though, there's been a net loss of about 300,000 manufacturing jobs. It's unclear if anything could have been done to stop manufacturing jobs from being cut in the darkest days of the Great Recession, when Obama took office. It's also unclear if, during an era of increased automation and heightened global competition, anything can be done to stop it from happening again.

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