President Obama Has Cut the Unemployment Rate More Than Any President since FDR

Today marked the last Bureau of Labor Statistics jobs report under President Obama’s watch—a time to give a final grade to the president and to look ahead to the economy under the Trump administration. The numbers showed little change in the job market in December with the economy tacking on another 156,000 jobs on top of a record seventy-five months of job creation. The unemployment rate ticked up to 4.7 percent, but this is still the eighth consecutive month that it has been at 5 percent or below.

There are still major concerns with overall health of the job market. While the labor force participation rate ticked up to 62.7 percent in December after two months of declines, it is still below the 65.8 percent participation rate when President Obama came into office. But overall, data from the report indicated that the labor market continued to tighten in December—giving workers reason to have confidence about their pocketbooks in 2017. Annual growth of weekly wages accelerated to 2.3 percent in December, up from 1.9 percent in November. More good news is that the new norm of underemployed Americans who can only find part-time work has finally started to abate: underemployment is down by 455,000 workers over the past four months.

How does Obama’s job creation record stack up? Table 1 compares the economy during President Obama’s term with other presidents over the last forty years—a period that represents the working lives of the vast majority of working American voters today.

• The largest drop in unemployment of any president since FDR. You would not know it from the headlines, but President Obama has overseen the largest drop in the unemployment rate of any of these recent presidents, and, in fact, since FDR. In actuality, he has cut the unemployment rate to a lower level than any other recent president upon leaving office—except for President Clinton.
• A solid but unspectacular job creation record: But the economy still does not feel like the booming one that voters desire. Take, for example, job creation. President Obama could not overcome the tsunami of job loss that greeted him upon entering office. When all is said and done, the economy will have nearly 9 percent more jobs than when he took office, better than either President Bush but short of the booming economies from Presidents Reagan and Clinton. This slower-than-needed jobs growth has coincided with the lowest share of adult Americans in the labor force than at any time in recent memory. While this is in part a function of the aging of the workforce, the lack of good jobs has left many formerly employed working age Americans on the sidelines. In retrospect, we know that aspects of the Clinton and Reagan economy were built on bubbles that burst, and one can argue that Obama’s economy is on sounder grounds.
• The challenges facing the white working class are real. The claims by the Economic Cycle Research Institute that people of color have gained more jobs were overblown by some in the media. Overall, black workers are still nearly twice as likely to be out of work (7.8 to 4.3 percent), despite a 1.0 percent drop in 2016. Black and Latina women only earn 63 and 55 cents for every dollar white men earn. But, take for example the experiences of adult workers (over 25) with a high school degree but no college. Despite claims by some analysts that college educated workers have been the exclusive beneficiaries of the recovery, both Hispanic and black high school educated workers have enjoyed employment gains since the recovery began in 2010. Figure 1 normalizes the number of employed high school graduates to the start of the jobs recovery. It is stunning to see that there are now fewer white high school graduates holding jobs than at the start of the recovery. In fact, only 54.5 percent of white high school graduates hold a job compared to 55.6 percent of similarly educated blacks and 65 percent of similarly educated Hispanics.

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For sure, the cohort of whites with only a high school degree is an older group more likely to be nearing retirement age and disability. But, the hard truth is that the recovery has not lifted the fates of this group of white working class Americans—a sizable group of 26 million Americans over 25 with no more than a high school degree (more than 1 in 6 of all workers).

It’s no surprise that the number one concern of Trump voters is jobs, despite the overall solid numbers delivered by President Obama. Researchers have identified that many white blue-collar workers laid off from good paying jobs like those in manufacturing or construction are loathe to take jobs that pay less like in retail, restaurants, or in health care. It remains to be seen whether Trump’s economy can create the kind of jobs that would boost the employment fortunes of all groups within the working class. Such an economy would likely have to be one that grows at the robust rates seen by Presidents Clinton and Reagan, whose records Donald Trump would certainly love to emulate.

Tags: unemployment, barack obama, bls employment report, workforce, domestic workers, future of work, jobs, unemployment rate, jobs report