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President Barack Obama took office in the throes of the worst recession since the Great Depression, as the future of the country’s economy was in doubt, and as workers were being laid off like crazy.
Eight years later, it’s clear that the Obama presidency has been pretty solid for the US labor market.
Despite a mixed Friday jobs report — the US economy only added 154,000 jobs against expectations of 175,000 — the labor market has come on strong over the past few years after the decimation of the financial crisis.
Technically, this isn’t the final report of the Obama era. The survey week, which comes in the week of the 12th every month, for the January report will take place before President-elect Donald Trump is inaugurated.
But it’s the last time Obama will be in office for the release of a report, leading the White House to put its final spin on what it said were eight years of “labor market progress” under Obama.
“Thanks in part to the forceful response to the crisis and policies throughout the eight years of the Obama Administration to promote robust, shared growth, the US economy is stronger, more resilient, and better positioned for the twenty-first century than ever before,” the White House said in an email following the jobs report.
“Even with this remarkable progress, it remains important to build on these efforts to support further job creation and real wage growth in the years ahead.”
Let’s take a look, with the help of a few charts, at just how strong the jobs recovery has been under Obama and where it fell short.
Since Obama took office in January 2009, the US economy has added 11,250,000 people to total nonfarm payrolls.
This includes a decrease of 354,000 government workers, so private payroll growth has been slightly higher. A number the Obama administration loves to tout is that the economy has added jobs every month for the past 75 months, the longest on record and much higher than the previous record of 48 between 1986 and 1990.
Obama is roughly in the middle of the pack for recent presidents in raw jobs created.
Obama ranks third among the past five presidents in total job creation over the length of his presidency — in front of both George H.W. and George W. Bush, but behind Bill Clinton and Ronald Reagan.
While Clinton did not have to deal with any significant economic downturn during his presidency, Reagan did see a recession in the early part of his first term. But compared to Obama’s recession, the downturn in the 1980s was caused by the sudden and massive increase in interest rates by the Paul Volcker-led Federal Reserve, not a meltdown of the global financial system. Studies have shown “crisis-induced” recessions have a longer-lasting effect on employment.
The unemployment rate has decreased from 7.8% when Obama took over the Oval office to just 4.7% today.
It hit its lowest point since June 2007 last month, at 4.6%. Unemployment peaked at 10% in October 2009. Additionally, the U-6, or underemployment rate — which includes people in part-time jobs for economic reasons— fell to 9.2% in December, the lowest since April 2008. The gap between the U-6 and the U-3 rates is also the lowest since the onset of the recession.
The composition of jobs under Obama has changed.
Different industries have fared better than others under Obama. As shown in the chart above, the healthcare industry has done exceptionally well.
This is a possible result of the combination of the aging population in America and a variety of policy changes, such as the Affordable Care Act giving more people access to healthcare.
On the other hand, manufacturing and some heavy industries have not seen as robust a recovery during Obama’s tenure. In fact, manufacturing employment is still below the point when the president took office. This is partly due to structural factors, as employment in manufacturing has been dropping since June 1979. There was a solid gain of 17,000 manufacturing jobs in December, however.
Wage growth for American workers has bounced back, but has not fully recovered yet.
Growth for average hourly earnings reached a post-crisis high of 2.9% year-over-year in December, much higher than the trough of just 1.3% in October of 2012. The measure of wage increases is still lower than the 3.7% from January 2009, however.
Given the trend over the past year, it appears earnings are heading in the right direction. Given the low unemployment rate, anecdotal evidence from a variety of companies, and alternative measures such as the Atlanta Fed wage tracker showing stronger growth, wage growth may not be back at pre-crisis levels. But wages are certainly headed in the right direction.
One place where the jobs recovery has been underwhelming…
Often the biggest caveat for the jobs recovery under Obama is the labor force participation rate. The measure looks at how many people over the age of 16 are employed or actively seeking work.
This number has fallen since the recession, coming in at 62.7% for December — down from 65.7% in January 2009 and a peak of 67.3%.
Some of this stems from Baby Boomer retirement. But there has also been a reduction in participation by prime-age workers — people between ages 24 and 35 — as well. The reasons behind this drop remain puzzling, but it remains a troubling trend to economists.
There are still a few other weak spots in the employment data. The average length of unemployment is still above its level from before the recession, and the percentage of unemployed people that are long-term unemployed — out of a job for more than 4 months — also remains higher than before the crisis.
Overall, Obama took over a jobs market in crisis and ended up growing the labor market better than most of the modern US presidents.
For all presidents back to Harry Truman (the first to have reliable data for his full term), Obama ranks fourth in raw job additions, behind Reagan, Clinton, and Lyndon Johnson.
Considering that the US lost more than 700,000 jobs in the first three months of Obama’s presidency —including an 823,000 loss in March 2009, the largest drop of the recession, the comeback for the US labor market has been impressive by most counts.