Presidents and Jobs (Average Private Payrolls Added Per Month Since Carter)

Given that Republicans are often billed as the pro-business party, shouldn't we find business booming under Republican Presidents? Shouldn't we find payrolls rising significantly from all that business expansion?

For President Reagan, to be fair, we should note that his early years were hurt by the same force that crushed payrolls under President Carter during April through July of 1980: the high rates with which Paul Volcker battled inflation. Double-digit prime interest rates diminished employment under both Presidents Reagan and Carter. While those unusually high interest rates may have been necessary to get control over inflation, those high rates severely slowed expansion and thus hiring. However, that doesn't remove the possibility that President Reagan's descent from Carter's payroll numbers hinted at the start of a Republican trend under Trickle-down policies. After all, the Bush I policies were largely a continuation of the Reagan policies. If we average together the Reagan and Bush I months, together they get 113.3 thousand jobs / month. That's less than either of Carter or Clinton. And it's also less than the rate of increase we've seen since the turn-around on 2/1/2010 under President Obama.

While these figures aren't conclusive proof alone, add them together with a few other factors such as that GDP growth has lagged under the lowest top marginal tax rates. It sure looks like Trickle-down (or Supply-side economic or Reaganomics) failed us in a big way.

Maybe we should stop accepting the notion that talking about lowering taxes and deregulating would actually be business-friendly. Maybe we should instead consider ways to return to the sort of sensible, progressive tax structures we had before Reagan lead us down the road to decline. Instead of calling it red tape, maybe we should consider regulation's value for helping business manage risk, compete on a level playing field, and have more predictable returns. And maybe we should get back to expecting serious infrastructure projects and demanding aggressive investments in our research and development programs to build our avenues for growth.

Notes on methodology: Generally speaking, the January in which the executive transitions from one branch to another will be almost entirely impacted by the outgoing President's policies and not those of the incoming President. As such, the average uses the change in monthly manufacturing payrolls starting with the change from the first full month of the President's term (i.e., from the February that is the first full month to the March thereafter) and going until the first full month after the President's term (i.e., the last change counted is from the January during which the President in question is last in office to the February thereafter). Data from BLS/FRED.

Payrolls During President Obama's Term

What's the direction of the jobs picture?

Total non-farm payrolls (the early/mid 2010 spike in the curve is because of temporary census activity):

Private payrolls:

Government payrolls (trend of state/local budget cuts bringing govt employment down):

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.

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.

Private Payrolls Versus Govt Payrolls

Over the course of the Great Recession, we naturally dipped a bit in our percentage of all payrolls from private employment. At first, over the course of 2008 and very early 2009, private payrolls were dropping significantly faster than government payrolls. That has since reversed.

The dotted red line indicates the level of the first full month of President Obama's tenure.

As 2009 wore on, the bleeding in private payrolls slowed (from -0.73% in April to -0.29% in May and eventually dwindling to -0.04% in November). The change in private payrolls turned positive in March 2010 and the tally's been growing every since. Meanwhile, except for a spike in May 2010 from Census hiring, govt payrolls fluctuated in the same narrow band from late 2008 until plummeting after the Census work. By January 2012, govt payrolls dropped to a five year low at a level not seen since July 2006.

Private payrolls on the larger scale at left; govt payrolls on the smaller scale at right.

Growing population casts the drop in government payrolls with an even larger impact. By 2010, we reached a 20 year low as far as the number of government workers per capita.

Year	Govt workers per million Americans	Annual change
2008	73.94	0.36%
2009	73.47	-0.64%
2010	72.70	-1.05%
2011	70.94	-2.42%

As Daniel Gross put it, describing the increasing private share of all payrolls, "Socialism? Hardly."