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Willisms

« Trivia Tidbit Of The Day: Part 350 -- The Media Are Not On Our Side. | WILLisms.com | Comment Policy... »

Trivia Tidbit Of The Day: Part 351 -- The Bush Jobs Boom.

A Big Upward Revision-

Quick quiz: How many net new jobs has the American economy created since the 2003 Bush tax cuts?

Answer: 6.6 million.

Indeed, the BLS recently revised (preliminarily) job growth over the past year WAY UPWARD, by 810,000 jobs. Some historical perspective on just how big this revision is (.pdf):

hugeupwardjobsrevision.gif

Given that the average revision of the past decade is plus or minus 0.2%, this is huge news.

tinyelvis.gif

The government is befuddled by the necessity of such a huuuge upward revision (.pdf):

BLS currently is researching possible sources for this larger-than-normal expected benchmark revision. On initial review, the difference between the CES sample-based estimates and the UI employment counts does not appear to be concentrated in any one industry or geographic region.

So what's the deal?

Easy.

There are two ways of measuring jobs and employment (and unemployment), the household survey and the payroll survey. The payroll survey measures an economy that existed long ago, while the household survey takes into account more of the dynamicism of our information-age economy.

Today, there are just more entrepreneurs, more small businesses, more independent contractors, and more self-employed folks than there were in the past. Unfortunately, we're still using the measures of the past to determine how many jobs the economy is creating.

But, you might be thinking, how do we know that the revision itself isn't the number that is wildly off target? Well, the revision is based on state unemployment insurance tax records. Drastically fewer people are collecting unemployment insurance, relative to last year.

Meanwhile, the household survey continues to indicate robust job growth (271,000 new jobs in September; 250,000 new jobs in August).

It's not rocket science. The 2003 tax cuts stimulated the small business engine of job creation. All of those millions of new jobs have driven down the unemployment rate to an historically low 4.6% (.pdf):

unemployment4point6.gif

Policies matter. Democrats want to drastically change public policy in the United States. Their #1 domestic priority: raising taxes.

Let's not let that happen next month.

And less importantly, let's fix the payroll survey, or start paying more attention to the household survey.


-------------------------------------

Previous Trivia Tidbit: The Media = Not Even Neutral In The War On Terror.

Posted by Will Franklin · 10 October 2006 10:32 AM

Comments

just curious: why are you only looking at the period from 2003 on? I thought that the tax cuts began in 2001.

If you include the 2.4 million jobs lost during Bush's presidency, the actual total jobs created under Bush is approximately 4.2 million, not 6.6 as you are stating in this post. Why do you not include those statistics as well?

There is also the fact that the compensation of the newly created jobs is somewhat less than the jobs they replaced, and the benefits packages accompanying those new jobs are significantly worse than those offered pre-Bush.

You have also left out of the discussion the fact that people are no longer being considered unemployed, once they have completed their UI eligibility - so they drop off the statistics. Which means that the unemployment rate is significantly under reported. Why is this not considered within the analysis in this post as a contributing factor to the historically low unemployment rate?

Finally, if we use January 2001 as a starting point, and we also use the benchmark of 150K jobs needed each month in order to employ the new workers entering the work force, Bush would have needed to create 10.2 million jobs just to employ those entering the workforce in the 68 months since he became persident (as of the end of September 2006). He has fallen woefully short of that mark by any standard of measurment you choose to use. Hardly a robust job creation record IMHO.

Posted by: (: Tom :) at October 10, 2006 04:25 PM

Okay, some valid questions (and without personal attacks, awesome!), all of which have been answered here in the past.

The 2003 tax cuts were the meaty tax cuts, the ones that required a Republican Senate (achieved in 2002). The 2003 tax cuts were supply side tax cuts. They were broad-based, longer-term, and yet immediate tax cuts. They weren't just "here is a refund check" wham-bam tax cuts.

So May of 2003 is clearly the point of "our" policies actually beginning. Our policies have worked profoundly well.

In terms of the "dispirited job seeker" phenomenon, I've covered this in previous posts as well, but this theory does not match the facts. The labor participation rate would have needed to plummet for this to be true. Initial jobless claims are also a good indicator. There just aren't armies of people out there who tried and gave up on finding a job.

In terms of benefits and compensation, it all depends on how you measure it, but most intellectually honest studies examine health care and other benefits carefully and determine that pay/compensation is definitely up. ALSO, and most importantly, pay and benefits have shot up in the past year, above historical averages (yay!). So this one lagging indicator has become indisputably positive. Bottom line: if you take post-inflation, post-tax cut take home pay and compensation, people are definitely doing better than they were several (or 3) years ago.

Finally, why do I not use the date Bush took office as the benchmark? Well, obviously, because Bush inherited a recession. He inherited a burst bubble economy (for the record, I don't blame President Clinton for the burst, or the bubble itself). The stock market was already tanking months before election day 2000. All of those wonderful bubble jobs were also going away already when Bush took office. Anecdotally, I remember having an opportunity to work 20 goof-off intern hours a week at a tech company in Austin in 1999 for almost 1000 bucks a week. Several months later, that sort of a job-- and the pay surrounding it-- had already become a tired joke.

Why is this point so hard for left-wingers to understand? The economy was terribly out of balance, and trending downward, when Bush took office in 2001. Is this even still up for debate?

Moreover, with Tom Daschle at the helm of the Senate, the 2001 tax cuts were not really what Republicans wanted. They were beyond watered down. That's why 2003 matters so much.

Posted by: Will Franklin at October 10, 2006 04:50 PM

Quick question. When Pelosi speaks of raising minimum wage how will that effect the jobless claims? I'm not an economist but if I have to pay more for my employee's i'm less likely to hire more. So is this the kind of policies your talking about?

Posted by: christian at October 10, 2006 05:31 PM

That is a good question, Christian. Small business owners are always the first to feel the effects of the big government policies!

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Posted by: thomson at October 13, 2006 08:51 PM

Posted by: thomson at October 13, 2006 08:51 PM