One of the ways liberals try to sugarcoat the abysmal performance of the US economy under Obama is to cite the “unemployment rate,” which indeed came down for Obama’s last 6 years in office (after skyrocketing for the first 2 years). However, the oft-quoted “unemployment rate” is a highly misleading metric as it is the ratio of the number of unemployed in the country to the total number of people working or actively looking for work. Thus, the unemployment rate can drop in two ways: (1) people find jobs (the numerator goes down) or (2) people give up looking (the numerator and denominator go down by the same amount).
Let me give you a simple example. Suppose there were 100 people in the potential work force and 10 of them were unemployed, actively looking for jobs. The unemployment rate is 10% (10/100). If 2 of the 10 find jobs, it goes down to 8% (8/10). But, if 2 of them find the employment market so terrible that they simply give up looking, then the unemployment rate drops to 8.2% (8/98). Obama made the unemployment rate drop using this second methodology. He made the labor market so unattractive that people simply got despondent and gave up looking. How do we know this? Well, thanks for asking – let’s go to the data.
My source is the United States Dept. of Labor Bureau of Labor Statistics. The picture below has two graphs. The top graph shows the more commonly used “unemployment rate” in America from the time Obama took office until today. Obama inherited high unemployment as we came out of the great recession. That’s usually a great opportunity to turn things around quickly. Indeed, Obama’s “recovery,” if you can call it that, was one of the worst ever coming out of a major recession and he ballooned unemployment from 7.3% on the day he was elected to 10% in his first 2 years in office. This likely explains the blood bath dems suffered in the midterm elections. But, that’s not even the point.
Let’s keep going. If you look at the top chart, you see that the “unemployment rate” dropped during Obama’s final 6 years in office from about 10% to 5%. While it took 6 long years, this is the statistic often quoted by the left to show that Obama “put people back to work.” But, that’s a lie, as the lower graph shows. As discussed above, the unemployment rate ignores people who found the job market so miserable that they gave up looking.
That’s where the bottom chart is more relevant as it shows the labor participation rate (LPR), which is a far more accurate measure of what percent of the working age population is working, regardless of whether they’re looking or not (it’s effectively the inverse of unemployment rate, only without the confusion caused by people giving up). The higher the labor participation rate, the better off people are. It’s defined as the percent of working age population that is working, independent of whether they’re actively looking or not.
As you can see, despite a generational opportunity to grow the economy and labor participation, Obama’s policies caused the LPR to drop just about every year in office and overall from 66% to 62.5%. In order to find a US labor participation rate as low as 62.5%, you have to go all the way back to 1977, the heyday of Jimmy Carter. So, let’s recap the simple math. The way Obama got the “unemployment rate” to drop was by having such a moribund economy for so long that large numbers of working age people simply gave up looking for a job and, thus, were no longer counted in the unemployment statistics. The LPR chart tells the whole story. He failed to put people to work and, worse, he chased them out of the workforce into a sort of permanent hopelessness.
Now look at Trump’s numbers. He didn’t have the benefit of a down economy. He had to grow from growth, which historically has been much tougher (recall Rahm Emmanuel’s quote “never let a good crisis go to waste”). And, Trump grew the economy, lowered the unemployment rate, AND increased the labor participation rate. Dwell on the math again for Trump. His denominator in the more commonly quoted “unemployment rate” went UP (Obama made it go down), thus meaning he had to put even more people to work in order to get that fraction to decrease. Thus, Trump got more people engaged in the workforce AND put them to work, whereas Obama made it so hopeless they simply stopped looking.
I want to say that again, lest it be missed in the potentially confusing math: Obama’s economic policies failed people miserably. Trump’s policies worked very well.
Note that my analysis stops at the beginning of the pandemic. All employment numbers are way down, largely as a result of over-reactive shutdowns advocated for by liberals. It would not be meaningful to include those data in a comparative analysis of economic policy.
Inasmuch as having a job is probably the single most important thing to any adult, this analysis shows how much better Trump’s economic policies were for all Americans. If you want to go deeper, just google “black labor participation rate” or “black teen labor participation rate.” You’ll find an even more interesting story!