Historical U.S. Job Creation – Under Democratic and Republican Presidents and President Obama

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Fri Sep-02-11 10:23 PM
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Historical U.S. Job Creation – Under Democratic and Republican Presidents and President Obama

It is widely recognized that unemployment is one of most crucial, if not the most crucial problem facing the American people today. From about 4.5% in early 2008, the
unemployment rate in the United States began a sharp climb, which peaked at a little over 10% in October 2009 and has remained unacceptably high ever since, never falling below 8.8% during this time.

Historic differences in the Republican vs. Democratic approach to unemployment

From the time that Franklin Roosevelt (FDR) ran against President Herbert Hoover in the Presidential election of 1932, the Democratic and Republican parties have held very different views on how to approach employment issues. The Republican Party has consistently adopted a laissez-faire economics approach to unemployment, while the Democratic Party has generally held the view that it is the responsibility of government to create jobs.

The contrast was never greater than when Roosevelt ran against Hoover in 1932. Hoover, under whom the Great Depression began, was adamantly opposed to government intervention to end the Depression – and indeed, he steadfastly avoided government intervention, no matter how bad things got. FDR on the other hand strongly believed in government intervention on behalf of the American people.

FDR took office in March 1933. Unemployment rate stood at nearly 22% when FDR took office. It declined steadily during his presidency, so that by 1939 it was about16% - not good, but quite an improvement, as noted in the graph below.

Consider how that translated into job creation. During the 80-year period from 1929-2009, Hoover’s presidency was the only one during which jobs were actually lost – though George W. Bush’s two terms came mighty close to zero job growth, and Obama’s first term may end up in the red as well. Job growth during this 80-year period exceeded 4% during only two of the twenty presidential terms – FDR’s first term (5.3%) and his third term (5.1%). Job creation during his second term (2.6%) was tied for 7th of the 20 terms.

During the whole 80 year period from January 1929 through January 2009, the annual job growth record of every Democratic presidential administration was superior to the record of every Republican presidential administration. The huge difference between Democratic and Republican presidential administrations abruptly disappeared (so far) with the Obama presidency (January 2009 – present). More on that later. Here is the approximate record of average annual job growth, from best to worst, from 1929 to present, with Democratic presidents indicated in blue and Republican presidents in red:

Roosevelt: + 4.3%
Johnson: + 3.9%
Carter: + 3.2%
Truman: + 3.0%
Kennedy: + 2.6%
Clinton: + 2.4%
Nixon: + 2.2%
Ford: + 1.7%
Reagan: + 1.6%
Eisenhower: + 0.7%
Bush I: + 0.6%
Bush II: + 0.4%
Obama (through July 2011): -2.4%
Hoover: -9.0%

Reasons for the superiority of Democratic presidents on job creation

There is no question that the consistent superiority of Democratic presidential administrations compared with Republican presidential administrations is related to the basic differences in philosophy regarding the role of the federal government in job creation.

The Democratic Party’s traditional perspective
FDR has the best job growth record of any presidential administration in U.S. history. Yet, probably no figure in American history is despised as much by conservatives as FDR, who was accused in his day of being a Communist by many a conservative. Cass Sunstein, in his book, “The Second Bill of Rights – FDR’s Unfinished Revolution and Why We Need it More than Ever”, describes the philosophy that motivated Roosevelt to fight for his radical (at the time) programs to benefit the American people:

To Roosevelt, human distress could no longer be taken as an inevitable by-product of life, society, or “nature”; it was an artifact of social policies and choices. Much human misery is preventable. The only question is whether a government is determined to prevent it….
Foremost was the idea that poverty is preventable, that poverty is destructive, wasteful, demoralizing, and that poverty is morally unacceptable in a Christian and democratic society.

Consequently, FDR introduced the concept of economic and social rights, which had not gained much traction in the United States until his Presidency. FDR’s Presidency and fervent advocating of these rights coincided with circumstances (The Great Depression) that made their need glaringly apparent to a large proportion of American citizens.

Among the rights that FDR fervently believed in and aggressively supported was the right of every American to a decent paying job. This was manifested in his programs to create millions of federal jobs, which were major factors in the declining unemployment rate and record-setting job creation during his presidencies, as explained by Stuart Rosenblatt in “The FDR Jobs Program that Saved the Nation”:

In 1935, Congress appropriated $5 billion directly for the Works Progress Administration (WPA)… Did this break the bank? By no means. In fact, the investment increased the productivity of the economy as a whole, and therefore yielded more “payback” to the economy, including through taxes, than it took.

Roosevelt’s method for establishing a Second Bill of Rights was through more than twelve years of advocating for these rights and putting them into practice through executive orders and pushing Congress to enact legislation. Perhaps more important, by the end of FDR’s Presidency large segments of the American population accepted many aspects of his Second Bill of Rights as legitimate rights – for example, the right to a good education.

The Republican Party’s traditional perspective
In marked contrast, Republicans continually spout off the idea that the federal government has little or no role to play in job creation, other than to stand aside and let the private sector work its magic through principles of the so-called “free market”. Unfortunately, President Obama has internalized and supported these Republican concepts – which is without a doubt the reason why Obama has by far the worst job creation record of any Democratic president since official government records on job creation were first developed.

This is what Obama said on the subject in September 2010, in the midst of the worst job crisis in our country since the early years of FDR’s presidency:

See, I’ve never believed that government has all the answers to our problems. I’ve never believed that government’s role is to create jobs or prosperity. I believe it’s the drive and the ingenuity of our entrepreneurs, our small businesses; the skill and dedication of our workers that’s made us the wealthiest nation on Earth. I believe it’s the private sector that must be the main engine for our recovery.

I believe government should be lean; government should be efficient. I believe government should leave people free to make the choices they think are best for themselves and their families, so long as those choices don’t hurt others.

Well, good luck with that approach, President Obama. I suggest you get rid of your conservative economic advisors and look at the historical record of those presidential administrations that spouted your Republican philosophy.

This is what Bob Herbert had to say on the subject last year:

Mr. Obama’s problem – and the nation’s – is that in the midst of the terrible economic turmoil that the country was in when he took office, he did not make full employment, meaning job creation in both the short and the long term, the nation’s absolute highest priority….

Such an effort, properly conceived, would have put millions to work overhauling the nation’s infrastructure, rebuilding our ports and transportation facilities to 21st-century standards, establishing a Manhattan Project-like quest for a brave new world of clean energy, and so on… There was every reason to use those enormous amounts of public dollars… for investment in projects and research that the country desperately needs and that would provide enormous benefits for many decades. Think of the returns the nation reaped from its investments in the interstate highway system, the Land Grant colleges, rural electrification, the Erie and Panama canals, the transcontinental railroad, the technology that led to the Internet, the Apollo program, the G.I. bill.

More on the Obama record on jobs

In defense of President Obama, it could be said that presidential efforts are not the only factor that impacts on job growth. Furthermore, Obama did make some effort, through his stimulus package, to boost job growth. There is much evidence that that program did create a lot of jobs, and it is probably something that no current Republican leader would have supported. There are undoubtedly reasons beyond Obama’s control that account for the fact that his job record is so far the worst of any U.S. president since Herbert Hoover.

But at the time he put through his stimulus package, with Democrats in full control of both houses of Congress, our nation’s best economists warned him that it was much too small. Yet, in the interest of “compromise” with obstructionist Republicans, Obama settled for that much too small stimulus. And not surprisingly, his poor record on the economy led to a Republican takeover of the House of Representatives in 2010.

Many Obama defenders have pointed out that he inherited one of the worst economies in U.S. history. That is true – but the economy that Obama inherited was not as bad as the one that FDR inherited in 1933. Obama is not responsible for the unemployment rate that he inherited. But he is largely responsible for the U.S. job growth record since he inherited that high unemployment record. Bob Herbert comments on what FDR had to say about the situation that he inherited:

During the Depression, Franklin Roosevelt explained to the public the difference between wasteful spending and sound government investments. “You cannot borrow your way out of debt,” he said, “but you can invest your way into a sounder future.”

Another Obama administration policy that has not helped with our job crisis is putting so-called “free trade” above job creation in our country. An article titled “U.S. to Train 3,000 Offshore IT Workers” explained:

Despite President Obama's pledge to retain more hi-tech jobs in the U.S., a federal agency run by a hand-picked Obama appointee has launched a $22 million program to train workers, including 3,000 specialists in IT and related functions, in South Asia. Following their training, the tech workers will be placed with outsourcing vendors in the region that provide offshore IT and business services to American companies looking to take advantage of the Asian subcontinent's low labor costs...

David Sirota commented on this program:

In recent months, President Obama reversed his campaign promises on trade issues – first by dropping his pledge to renegotiate NAFTA and then by pushing to pass NAFTA-style trade agreements with South Korea, Panama and Colombia…

Now look, I'm all for a robust foreign aid budget – we don't do nearly enough to help the developing world. However, using foreign aid money to specifically help private corporations "take advantage of low labor costs" in the developing world – that's not "aid," that's rank taxpayer subsidization of for-profit exploitation. Right now, Even if we do not reform our atrocious trade policies that incentivize the ongoing wage-cutting race to the bottom, the least we should be doing is investing every single available dollar we have in job training and job creation here at home. Doing the opposite – actually using public dollars to intensify that wage-cutting race to the bottom – is grotesque.

What more is there to say?

One could speculate (and many have) on why Barack Obama ran for president in 2008 as a Democrat, and yet as president has governed largely as a Republican – but that is not the subject of this post. Suffice it to say here that his economic strategy has worked well neither for him nor for the American people. We continue in the midst of our worst economic crisis since the Great depression, the middle class continues to shrink, the income gap expands to record highs, and the poverty rate continues to rise.

I’m sure that all U.S. presidents want to have a good record on jobs. Even Republican President Richard Nixon supported a jobs program, the Comprehensive Employment and Training Act, to facilitate job creation, in response to a struggling economy. Maybe that’s why he has the best job creation record of any Republican president from Hoover to Bush II.

But President Obama echoes too many Republican talking points, both in his rhetoric and in his policies, in his efforts to “compromise” with the Republican psychopaths in Congress. That’s a terrible shame, because it should be obvious by now that those Congressional Republicans are not the least bit interested in helping Obama create jobs for the American people. Their attitude seems to be that if they can obstruct all efforts by Obama to create jobs, then they can blame our continuing economic crisis on him. Rather than helping them with that effort by “compromising” with them and spouting Republican rhetoric, President Obama should be fighting them all the way in behalf of traditional Democratic Party principles that have a long-standing excellent track record.

It’s not too late. He’s still president, and if he radically changes his approach soon, he may yet be able to begin to bring us out of this very long recession, and may even get a chance to do more in a second term. But if he fails to make efforts in that direction, we really need a good solid primary challenge against him in 2012.