The Failed Policy of Promoting Job Growth through Tax Cuts to the Rich and Big Business

Each month the Bureau of Labor Statistics (BLS) prepares the Employment Situation Report for the prior month.  This particular report is a big deal because it's a "market mover" meaning the results of this report have the ability to push the Dow Jones Industrial Average, DJIA, higher if the results are good, or send the stock market spiraling if the numbers are poor.

The employment report consists of a combination of data from two separate sources

• Household Survey is a sampling of approximately 60,000 households and only covers a small percentage of employed persons.
• Establishment Survey is a survey conducted on approximately 400,000 businesses of all sizes and represents about 33% of total nonfarm employment.

Between the two data sources the BLS is able to provide us with various information in their report, including the following figures for December 2007, as released on January 4, 2008. 

• Unemployment Rate - 5% - Household Survey
• Nonfarm payroll employment - +18,000 - Establishment Survey [138,495]
• Number of unemployed persons  - 7.7 - Household Survey
• Total employment - 146.2 million - Household Survey

The figures released each month are the seasonally adjusted totals and the key number is the increase/decrease in nonfarm payroll employment.  In the month of December 2007 the increase in nonfarm payroll employment is +18,000, meaning 18,000 jobs were added to payrolls during the month of December 2007.

During a President's term of office, the number of jobs produced during his/her administration becomes a very important issue because job creation is based on economic policies put in force by the administration.

Upon release of the January 4, 2008 Employment Situation Report, the White House placed a Fact Sheet on their website claiming "Since August 2003, more than 8.3 million jobs have been created". 

Knowing the Bush administration didn't start in August 2003 and knowing 8.3 million jobs since August 2003 averaged out to little more than 160,000 jobs a month I decided to research the subject further.

During the eight years, Bill Clinton was in office, his economic policies produced 23.1 million jobs [average 240,000 per month] as follows:

Data extracted on: January 12, 2008 (11:19:19 AM)

Employment, Hours, and Earnings from the Current Employment Statistics survey (National)Series Id:     CES0000000001Seasonally AdjustedSuper Sector:  Total nonfarmIndustry:      Total nonfarmNAICS Code:    N/AData Type:     ALL EMPLOYEES, THOUSANDS

YearDec

1992109418

2000132484

At the end December 1992 the Bureau of Labor Statistics, BLS is indicating total, seasonally adjusted nonfarm employment, of 109,418,000.  At the end of December 2000, the total has increased to 132,484,000.  The difference is 23,066,000 or 23.1 million new jobs were produced during the Clinton presidency. 

In contrast, George Bush has been in office seven years and his economic policies have produced a total of 6.0 million jobs as follows:

Data extracted on: January 12, 2008 (11:31:47 AM)

Employment, Hours, and Earnings from the Current Employment Statistics survey (National)Series Id:     CES0000000001Seasonally AdjustedSuper Sector:  Total nonfarmIndustry:      Total nonfarmNAICS Code:    N/AData Type:     ALL EMPLOYEES, THOUSANDS

YearDec

2000132484

2007138495(p)

p : preliminary

At the end December 2000 the Bureau of Labor Statistics, BLS is indicating total, seasonally adjusted nonfarm employment, of 132,484,000.  At the end of December 2007, the total has increased to a preliminary figure of 138,495,000.  The difference is 6,011,000 or 6.0 million new jobs have been produced during the seven year period from January 2001 through December 2007, the length of time President Bush has been in office.  

If the White House is stating 8.3 million jobs were created and I'm saying 6.0 million jobs have been created, who is correct? Both figures are correct - they just represent different periods of time.  The White House is simply ignoring the job losses incurred during the first 32 months of the Bush presidency.

There have been 8.3 million jobs created since August 2003, but there were 2.3 million jobs lost during the period from January 2001 through July 2003, bringing the job creation total down to 6.0 million from January 2001 through December 2007.

This is a very important subject and you really shouldn't believe either what the White House is stating, or what I'm indicating regarding these numbers.  To confirm the validity of the numbers, you should extract the data yourself from the Bureau of Labor Statistics.

What these numbers prove is the economic policies put forth by the Bush administration, mainly The Jobs & Growth Tax Relief Reconciliation Act of 2003 have backfired. 

The tax cuts in this plan were intended to "encourage consumer spending that will continue to boost the economic recovery and create jobs" and "promote investment by individuals and businesses that will lead to economic growth and job creation."

Our country cannot move forward with policies that create little more than 71,000 jobs per month.

Most Americans are worried about the economy and think this country needs change.  The major change needed is to go back to the policies that were in effect under the Clinton administration, where all of us prospered, not just the rich and big business.