Timothy T. Taylor Home Page
Journal of Economic Perspectives
Articles and Writing
Economics Textbook
Classroom Teaching
The Teaching Company
High School Pedagogy

Articles and Writing

August 29, 1993
"Ordinary Job Growth - Clinton is Not a Miracle Worker"
San Jose Mercury News
By Timothy Taylor
<< Back to 1993 menu

IN THE creation of new jobs, George Bush's term of office was an outright disaster. From February 1990 to November 1992 -- that is, for the 33 months leading up to last year's presidential election -- the number of civilian U.S. jobs increased by zero percent. That's zip. Zilch. Nil. Naught. Nada. Goose egg. Bagel. Not at all.

Meanwhile, over that time period, enough new workers entered the labor force that the unemployment rate rose from 5.3 percent to 7.3 percent.

Little wonder that job creation was one of Bill Clinton's strongest campaign issues. As his proposed budget staggered through Congress this summer, he even made a specific promise: that enactment of his program would create 8 million jobs over the next four years.

Currently, about 9 million Americans are unemployed. Thus, at first glance, it might seem that Clinton has promised that almost all of the unemployed will find jobs by 1996, and that the unemployment rate will be less than 1 percent. If that were to happen, Clinton could probably take out a long-term lease on the White House.

But Clinton's promise of 8 million new jobs is actually a far more modest claim. In fact, he's merely pledging that the number of jobs will continue to grow at an ordinary rate. This point deserves some illustration.

Clinton's budget offers forecasts of the unemployment rate for the next few years. As the 8 million new jobs combine with growth in the number of workers, the budget predicts that the unemployment rate will fall from 7.3 percent in 1992 to 5.9 percent in 1996. Even by 1998, as far into the future as the budget projects, the Clinton budget predicts an unemployment rate of 5.7 percent.

By comparison, the national unemployment rate was 5.5 percent in 1988, 5.3 percent in 1989, and 5.5 percent in 1990. By Clinton's own predictions, six full years of Clintonomics will not create enough jobs to reduce unemployment to the level that Ronald Reagan left behind.

In historical terms, Clinton's projection also looks modest. Eight million new jobs works out to an increase of 6.7 percent over four years; not up to the rapid job growth of Reagan's second term, Carter's four years in office, or the late 1960s, but still respectable.

In fact, Clinton's pledge of 8 million new jobs essentially amounts to saying that the economy will continue much as it has through the first part of this year. In July, the Department of the Treasury put out a media release boasting that in "the first five months of the Clinton presidency there have been 740,000 private sector jobs created -- nearly 150,000 per month." So multiply it out. Over 48 months, job growth of 150,000 per month will total 7.2 million new jobs.

It's a bit silly for Clinton to be claiming credit for the current state of the economy. Just as an ocean liner doesn't change direction when a new captain walks out on the deck, no president can claim responsibility for altering the course of the $6 trillion U.S. economy immediately upon assuming office.

The truth is that Bill Clinton inherited from George Bush an economy with some modest forward momentum: it has now been growing for more than two years, and as Clinton has boasted this summer, the recent statistics on job growth look fairly good. The policy environment for the 1993 economy, and some proportion of later years as well, isa legacy of Bush.

When it comes to job creation over an extended period, broad demographic and economic forces probably matter as much as political decisions. For example, one reason that relatively few jobs were created in the 1950s is that birth rates were low in the Great Depression of the 1930s, so the workforce was not expanding by much. Conversely, one reason that so many new jobs were created from the late 1960s through the 1970s is the surge in workers as many women and the postwar baby boom surged into the labor market.

From this perspective, Clinton's promise of 8 million new jobs may be too optimistic. The Bureau of Labor Statistics recently estimated that job growth will average 1.2 percent per year from 1990 to 2005, less than 5 percent growth during a four-year presidential term. The bureau points out that the working-age population will not be growing as rapidly, so there simply won't be as many workers. It makes a good political story to treat Clinton as some sort of economic deity, who can reach into the nothingness and say: "Let there be jobs." But Clinton's key economic challenges are more earthbound and pragmatic.

Many of his proposals will create a stronger business environment over time but also involve short-run job dislocations. Examples include reduced defense spending, overhauling the health care system, embracing free trade with Mexico, and cutting the budget deficit.

As Clinton and Congress grapple with these issues, they would do well to remember that presidents and legislatures don't create jobs. They can transfer jobs from one place to another, by taxing money that would have supported jobs in one area and spending it somewhere else. Or they can try to create a healthier business climate, by making it more attractive and profitable for businesses to hire new workers.

The table shows the growth in civilian jobs during each four-year presidential term of office since World War II, both in total number and as a percentage increase.

  Total Increase
Truman 1949-'53 3.7 million 6.3%
Eisenhower 1953-'57 2.4 million 3.8%
Eisenhower 1957-'61 1.3 million 2.1%
Kennedy/Johnson 1961-'65 4.5 million 6.9%
Johnson 1965-'69 7.2 million 10.3%
Nixon 1969-'73 5.9 million 7.6%
Nixon/Ford 1973-'77 6.4 million 7.7%
Carter 1977-'81 9.8 million 10.8%
Reagan 1981-'85 6.4 million 6.4%
Reagan 1985-'89 10.2 million 9.6%
Bush 1989-'93 1.7 million 1.4%
Clinton 1993-'97 (promised) 8.0 million 6.7%

Source: Bureau of Labor Statistics. All measurements from February to February of the years provided.

<< Back to 1993 menu