The Trump Job Fantasies
I notice claims made on various Internet sites that Donald Trump expects to create 25 million jobs. Assuming he means during his period in office over the next four years it is worthwhile explaining why that will not happen: why it is fantasy.
If the adult civilian population over the age of 16 continues to grow at the same annual rate as it has since 1990 America will add a little under 2.5 million people a year to the adult population. If every single one of them enters the labor force and finds a job that will be only 10 million jobs over four years. If people enter the labor force to look for work at the same labor force participation rate as the last eight years and they find jobs, then the increase of new jobs will be 6.6 million: far short of 25 million.
To have 25 million new jobs we need first to have 18.4 million more people enter the labor force in addition to normal population growth. That requires an increase in the labor force participation rate from its current 62.7 to 72.5 percent. My data files go back to 1950 and the labor force participation rate has never been that high. For most of that time it remained below 66 percent and the participation rate continues to decline as it has been for more than a decade.
Even if an unprecedented 25 million people enter the labor force it does not mean they will find jobs. Establishment employment has to grow as well and it will have to grow at rates not recorded since the Bureau of Labor Statistics started producing establishment data in 1939. The highest four year, or 48 month interval, of new jobs for every single month for data from 1939 to the present shows only five times with as many as 13 million new jobs. All five were in President Carters term of office in 1979.
Obama took office during a severe Bush recession but created 11.5 million jobs during his eight years. During the eight years of the Reagan Administration establishment employment increased by 16.1 million jobs; in the first Bush Administration establishment jobs increased by 2.7 million; in the Clinton Administration over eight years the increase was 22.9 million new jobs; in the second Bush administration George left office after eight years with just 1.3 million new jobs. The second Bush years had immense tax cuts that created a bubble of expansion, but accelerated income inequality and ended by hurting production and job growth.
Trump will not create 25 million jobs in four years. Republican threats to health care and education if carried out all but guarantee a failure to create more jobs, much less the fantasy millions Trump talks about.
Wednesday, February 8, 2017
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