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After the Bureau of Labor Statistics released its monthly data for June on Friday, President Obama called the numbers “a step in the right direction.” While the report may pass for progress in the current dismal recovery, a comparison with the recovery that occurred while President Reagan was in office shows that Americans can and should expect much more.
The most important number from Friday’s report is 80,000, which represents the number of jobs added to the US economy. While that number may appear large at first glance, it is in fact miniscule. The increase in employed individuals over the month represents only 0.05 percent of a labor force of more than 155 million workers.
Only the professional sector saw significant job growth in June. Construction added a mere 2,000 jobs and mining added none, while jobs were destroyed in nondurable goods, retail, information, and transportation and warehousing.
In a past time not too distant for many Americans to remember, jobs reports during a period of economic recovery were cause for optimism. Between the 35th and 37th months of the Reagan recovery, monthly employment growth averaged 200,000 new jobs. Adjusting for the smaller size of the labor force in nominal terms during the Reagan presidency (116 million workers in 1985 versus 155 million in 2012) shows that in today’s terms an average of 267,000 new jobs were created during those months.
Over the same period in the current recovery, April to June 2012, the average number of jobs created monthly is a mere 75,000. Despite the existence of a labor force that was significantly smaller than it is today because of differences in population, the mid-1980s recovery saw fifteen months of employment growth above 300,000 jobs against only one month of comparable growth during the Obama recovery.
The 80,000 jobs growth number was far from the only negative statistic to emerge from Friday’s report. Among other figures, labor-force participation remained historically low. Unemployment stayed stuck at 8.2 percent, a remarkably high number. As James Pethokoukis has aptly noted, the unemployment rate would be a truly dismal 10.9 percent if the labor force participation rate were the same in June as it was when President Obama took office. That number would be higher than any unemployment rate recorded under President Reagan, whose administration oversaw falling unemployment and rising labor force participation rates.
Additionally, a broader measure of unemployment called U-6, which includes marginally attached workers and those working part-time for economic reasons, continued to edge up. U-6 was not calculated during the Reagan administration, but at 14.9 percent it remains well above the highest levels recorded before President Obama took office.
President Obama’s recovery has been weak across nearly all relevant areas. In order to match the economic performance of President Reagan, Obama would need several jobs reports that look very different from the one released on Friday.
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