Monday, August 27, 2012

Updated Job Picture Under President Obama

How's the job picture look under President Obama's term in office so far? Not only did payrolls stop the inherited plummeting but also private sector jobs have strongly, steadily grown since turning around in February 2010. Meanwhile, aside from the Census spike, steady govt cuts -- mainly at the state and local levels -- have taken government payrolls in the opposite direction.

Graph of the monthly levels of US private job totals versus US government job totals from February 2009 through July 2012

We have here a good, solid private recovery that's impeded by heavy govt cuts diminishing it from how good it'd be otherwise. Below, we can see roughly the hypothetical difference that govt cutbacks (aside from the brief census surge) have made to the overall employment picture by looking at total employment assuming private sector hiring had still followed exactly the path it did and govt payrolls had held steady at February 2009 levels.

The adjusted line likely understates how much it would have helped to avoid the govt cutbacks. After all, those laid off govt workers couldn't buy as many goods and services, so there would arguably have been more demand fueling more private sector jobs and making the private component grow faster if we hadn't had cutbacks. But for the chart above, the only adjustment reflected in the green line versus the blue line is a freezing of govt payrolls at precisely the February 2009 level. A more complete picture of the difference cutbacks made would reflect an estimate of anticipated higher private payrolls resulting from avoiding the govt layoffs.

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