The Obama campaign is based on a foundational myth that the Democrats have the policies to move America and its economy forward. They are the party of fresh, innovative ideas while the GOP wants to “turn back the clock.” This is used often in the context of social issues, which is simply daft. But, it’s also used in an economic context which is ludicrous. Obama may call his policies ideas for the future, but, for the American workforce, they’ve only succeeded in turning the clock back 30 years. Today’s jobs report showed that the American workforce has shrunk to its lowest level since September 1981.
That month, the labor force participation rate stood at 63.5%, exactly where it is today. This measures the percentage of working age adults (16-64) who are employed or are unemployed but actively looking for work. This was just a few months after Reagan took office and just as he was winning approval for his economic reform policies. Over his two terms in office, as economic growth exploded, the participation rate grew to around 66%.
This is important, obviously, because increasing the number of workers in the economy helps, in part, to create a self-sustaining growth curve. More workers increases products and services, income and consumer spending. It also provided significant opportunities for women to enter the workforce, giving them greater economic independence. Over the twenty years after Reagan, the participation rate was around 67%.
In the aftermath of the recession, the participation rate had dipped back to around when Reagan left office. When Obama was sworn into office, the rate was 65.5%, about where it was after Reagan’s eight years in office. In less than four years, Obama’s policies have driven the participation rate to where it was right after Reagan took office. In other words, in 3 1/2 years, Obama wiped out all the workforce gains achieved in the eight years of the Reagan administration.
This is forward?
Remember, the recession ended in June 2009, just a few months after Obama took office. Unfortunately, we have lost ground ever since. There are still more unemployed people–those actively looking for work–then when his term began. Considering that the working age population has grown by around 10 million since then, this is dismal. The only reason unemployment isn’t higher is that people have given up and left the workforce.
In fact, if we had the same participation rate as when Obama took office, unemployment would be 11.2%, a level America hasn’t seen since the depths of the depression. Obama borrowed trillions–around 10% of our total GDP–to try to boost growth. It hasn’t worked. It will never work.
So, Obama has gotten us, in terms of the American workforce, to about where we were when Reagan first took office. Or, rather, when Carter left office. Might actually be time to “turn back the clock” and spark anyone Reagan-style rebound.