Jobs and Wages Lack in the Obama and Oregon Recovery

Right From the Start

Recessions are a natural phenomena of a free market.  In the simplest terms recessions result from an over supply and they recover when the excess supply is eventually consumed.  Left alone, a recession will cure itself over an abbreviated time line.  Governments can make a recession worse, or the recovery slower, by virtue of interference in the marketplace.  In the latest recession, the policies of President George W. Bush and the Democrat controlled Congress made the recession worse and the policies of President Barack Obama and the Democrat controlled Congress made the recovery slower.  (For most working men and women, despite the “technical” end of the recession, recovery is clearly invisible and their opportunities for employment are demonstrably limited.)

But what is in plentiful supply is hypocrisy.

This weekend’s Wall Street Journal carried an article by Jeffery Sparshott noting that we had reached a milestone – America, under Mr. Obama, had finally regained the record 116.09 million private sector jobs set by Mr. Bush in January of 2008 immediately before the economic crash.  You would think we should be celebrating.

Unfortunately, during that same period of time America’s population was growing and additional people were eligible for employment.  So much so that an additional 7.2 million jobs would have to be created in order to reach equivalent peak employment levels from the Bush years.  That factor is also borne out by the labor participation rate that remains stubbornly near a three-decade low at 63.2 percent.

At the bottom of the Bush-Obama recession, according to the Bureau of Labor Statistics, total private sector employment fell to 107.19 Million – a loss of nearly 8.9 Million jobs.  When you adjust that to include populations growth, we are still down 7.2 Million jobs.  In essence that means that Obama recovery has barely kept pace with population growth – an anemic gain of 1.7 Million jobs from the depths of the recession (a 1.5 percent cumulative gain over Mr. Obama five and one-half years as president – less than 0.3 percent per year.)

But there is worse news on the horizon for the economy.  In March the average hourly income fell by $0.01 per hour.  I checked with the Bureau of Labor Statistics and while there has been a minor increase in the average hourly income rate, that increase has not kept pace with inflation.  In terms of real dollars (the Bureau of Labor Statistics utilizes 1988 dollars as its constant), American’s average hourly income has fallen from $10.38 per hour in January of 2009 when Mr. Obama took office to $10.30 per hour as of March of 2014.  (For those of you forced to endure a teachers union directed education in Portland’s public schools, the use of “real” or “constant” dollar takes into account the effect of inflation – a dollar today does not purchase the same amount as a dollar in 1988.)  The average American is worse off after five and one-half years of Mr. Obama’s leadership.  That may not seem much to you but it has real ramifications for the economy.

The reason is defined by John Waggoner in an April 5, 2014 USA Today article:

“The reason: People won’t spend more unless they earn more money, and if they don’t spend more, the economy will stagnate. Consumer spending accounts for two-thirds of the economy’s output.”

The source of the flaccid recovery should be self-evident (a lack of jobs and diminishing earnings) but it always helps to have the Bureau of Labor Statistics data to confirm the obvious.

In Oregon the results are even more dramatic.  Oregon reached its peak private sector employment in December of 2007 at 1,444,200.  At its nadir in January of 2010, employment had dropped to 1,294,000 – a loss of 150,200 jobs.  Oregon has yet to recover the total private sector jobs lost and currently stands at 1,409,000 – still 35,100 jobs shy.  At the current annualized rate of growth it will take Oregon almost another year to recover those remaining jobs and that does not account for the growth in population and workforce eligibility in the ensuing five years.  Oregon is likely to be a decade away from reaching comparable peak employment.  Compound that job loss and the anemic recovery in Oregon with the fact that Oregon’s average hourly wage rate trails the rest of the United States by $2.55 per hour and you have a politically inspired mess.

You can cut the pie a hundred different ways but the answer is always the same – where Mr. Obama has intervened, things have deteriorated.  And whether Oregon has suffered more or less because of a concurrent series of state Democrat administrations (Govs. Ted Kulongsoki and John Kitzhaber) is open to debate and supposition – whatever the cause, Oregon remains mired deep in the Obama recession.

So what would you have Mr. Obama do?

Given Mr. Obama’s track record, I would say nothing.  Please stop.  Play golf, pay attention to your family, see a movie, just about anything but tinker with another element of the country’s economy, security or international relations.

But here is where the hypocrisy lies.  Mr. Obama has embarked on a new crusade regarding income inequality as if he is blameless for the state of the economy, the massive real unemployment (particularly amongst minorities), the diminishing average income and the fact that his friends and fellow Ivy Leaguers continue to reap huge profits on Wall Street not by producing anything but rather by speculating with other people’s money.

And so we have another Obama solution – raise the minimum wage.  He is supported in this mission by America’s labor unions – not because they are deeply concerned about the poor but because they have provisions in their labor agreements that require negotiated wages to rise proportionally with increases in the minimum wage.  All of this despite the fact that virtually every credible economist (including the Congressional Budget Office) has stated without reservation that such a massive increase in the minimum wage ($7.10 per hour to $10.00 per hour) will result in significant reductions in employment – particularly in entry level employment.

And if you are looking for anecdotal evidence you need look no further than the mess in Oregon.  Oregon’s minimum wage already exceeds America’s minimum wage by nearly $2.00 per hour.  How is that working out for Oregon?  Well, as noted above, Oregon has not yet recovered the jobs lost during the economic downturn and is probably a decade away from reaching comparable peak employment.  As noted above, Oregon’s average hourly income trails the national average by over $2.55 per hour and yet its minimum wage exceeds the national average by approximately the same amount.

Oregon government has been a leader in government mandated wage increases and that has resulted in a lagging average hourly income.  Oregon government has been a leader in subsidized production of green energy and that has resulted in just more subsidies required.  Oregon government has actively discouraged the use of fossil fuels (mandated percentage use of green energy in utility rates, opposition to the transshipment of liquid natural case, opposition to the transshipment of coal, and pressure to close existing coal fired generators) and that has resulted in the loss of prospective jobs.  Oregon government was one of the first to embrace Obamacare and the results are a $50 Million computerized enrollments system that, to this day, has failed to enroll a single person and which is about to be abandoned by the current administration.  Oregon government epitomizes the goals of liberal government.

It should also, for conservatives, epitomize the results of a liberal government.