According to President Obama, happy days are here again for all of us.
During his State of the Union address, the president called 2014 a “breakthrough year” for the economy, and even compared the recent economic performance to the soaring late 1990s economy. The media is on board, with recent reports hailing a strong economic rebound and a return to prosperity. A CNN columnist triumphantly asked “Is it finally morning in Obama’s America?”
For too many Americans, I’m afraid the answer is no.
In talking with families and workers and job creators across Ohio, it is clear to me that the president’s “breakthrough year” celebration is premature. People don’t feel it, and unfortunately that fits with the economic measures.
Slow Growth: Last quarter’s solid growth cannot mask the slowest economic recovery since the 1940s. In the nearly six years since the recession ended, the economy has grown just 13 percent—barely half the 24 percent average following the other ten post-WWII recessions. Even the equally-deep 1982 recession was followed by 28 percent growth by this point in time.
Had it been a typical recovery, today’s economy would be $1.7 trillion larger—which comes to a significant $14,000 more per household annually.
Fewer Jobs: This has been the second-slowest jobs recovery since World War II. Even an average economic recovery would have produced 10 million more jobs by now.
The president asserts that adding 250,000 jobs per month compares well to the booming late-1990s. Of course, back then the economy was already at full employment, so it was nearly impossible for the number of jobs to grow faster than the working-age population. But an economy recovering from recession should enjoy substantially faster job growth as millions of unemployed workers return to work. In that context, an underwhelming 250,000 jobs per month can absorb the rising population but not bring back the unemployed.
How should a jobs recovery look? In 2010, the Obama recovery created 1.06 million jobs. Yet at the same point in a recovery from an equally-deep recession, the Reagan economy created 1.11 million jobs in a single month. And President Reagan did it despite a working-age population one-quarter smaller.
With less than half of U.S adults working full time, we can do much better.
Labor Force Leavers: The unemployment rate can drop if the unemployed find jobs, or if they become so discouraged that they give up looking. The collapsing labor force participation rate—now at its lowest point since 1978, which is before most women had entered the workforce—suggests much of the latter. In fact, under President Obama, two people have left the workforce for every net job created.
And it’s not just retiring baby boomers leaving the workforce. Work rates have declined for young adults, and a staggering 10 million men between ages 25 and 54 are jobless. This is a crisis—those who leave workforce for an extended period of time face extraordinary challenges re-entering it later.
Collapsing Incomes and Net Worths: Incomes typically fall during recessions, and rise during recoveries. What is confounding is that, under President Obama, incomes have continued falling even during the so-called “recovery.” In fact, half of the 8 percent drop in median income since the recession began has occurred after the recession was declared over in June 2009. This has dropped median income below 1989 levels.
The median family’s net worth has fallen 40 percent to below 1989 levels—evaporating 25 years of wealth. The average homeowner has suffered a 28 percent drop in equity since 2007. Non-homeowners aren’t doing much better—their median net worth stands at just $5,400. Does this look like a breakthrough?
Other parts of the economy are struggling as well: health care costs continue to rise, and ObamaCare forced countless families out of health plans they liked. The number of food stamp recipients has leaped by 11 million or 33 percent since the recession ended. And while the budget deficit has fallen from its 2009 peak, it is still nearly $500 billion—substantially larger than before the recession—and is projected to soar once again in the next several years due to unsustainable entitlement and interest costs.
Not all the news is bad; an American energy boom led by an innovative private sector is creating jobs and reducing gas prices. Interest rates remain low, and the housing market is slowly recovering.
But nearly six years after the recession was declared over, families continue to endure stagnant wages, job losses, reductions in work hours, and rising health care costs. It’s been the worst economic recovery in memory. When President Obama talks about “turning the page” on the recession, it is these families that will be left behind.
So rather than declare victory, it’s time for Washington to roll up its sleeves and work together to create an economic environment conducive to prosperity. We should reform the tax code in a way that benefits workers not corporations, encourage job-creating exports, bring choice and competition to health care, expand energy development, balance the budget, and improve job training. What we should not do is dismiss the real challenges people face by prematurely declaring an economic “breakthrough.”
Rob Portman is a U.S. Senator from Ohio