Tag: Job Creation

Democrats Are Better For The Economy

The Daily Escape:

Sunset at Fonts Point, Anza-Borrego Desert SP, CA – March 2024 photo by Paulette Donnellon

“If you want to live like a Republican, vote for a Democrat.” – Harry S. Truman

Republicans always claim that they are the Party of prosperity. They pretend that their policies lift everyday workers and their families, what with tax cuts and all, and the public seems to buy it. In polls, the Republicans usually get better marks on the economy than Democrats, often by hefty margins.

But as John E. Schwarz notes in the Washington Monthly:

“What is truly startling is the astonishing degree to which American workers have fared better under Democratic than Republican presidents….Today, the economic data are unambiguous: Whether it’s real wage gains or job creation, average Americans have fared far better under Democratic than Republican presidents.”

From the economist Jeffery Frankel, Professor of Capital Formation and Growth at Harvard University, and formerly a member of the White House Council of Economic Advisers:

“Since World War II, Democrats have seen job creation average 1.7 % per year when in office, versus 1.0 % under the GOP.  US GDP has averaged a rate of growth of 4.23% during Democratic administrations, versus 2.36% under Republicans, a remarkable difference of 1.87 percentage points. This is postwar data, covering 19 presidential terms—from Truman through Biden. If one goes back further, to the Great Depression, to include Herbert Hoover and Franklin Roosevelt, the difference in growth rates is even larger.”

Frankel says that the results are similar whether one assigns responsibility for the first quarter of a president’s term to him or to his predecessor. He also makes the point that the average Democratic presidential term has been in recession for 1 of its 16 quarters, whereas the average for the Republican terms has been 5 quarters, a startlingly big difference.

Frankel asks whether these stark differences in outcomes are simply the result of random chance?  But he concludes they aren’t:

“The last five recessions all started while a Republican was in the White House (Reagan, G.H.W. Bush, G.W. Bush twice, and Trump)….The odds of getting that outcome by chance, if the true probability of a recession starting during a Democrat’s presidency were equal to that during a Republican’s presidency, would be (1/2)(1/2)(1/2)(1/2)(1/2), i.e., one out of 32 = 3.1%.  Very unlikely.”

I know, nobody said there’d be math in the column. Frankel says that the result is the same as the odds of getting “heads” on five out of five consecutive coin-flips. And it gets worse if we look back further in time:

“A remarkable 9 of the last 10 recessions have started when a Republican was president.  The odds that this outcome would have occurred just by chance are even more remote: one out of 100.  [That is, 10/210 = 0.0098.]”

More math, but you get the idea. If you look at job growth, the results are similar. More from John Schwarz:

“The significant contrast between each party’s record on wage and job growth has held true from the election of Ronald Reagan in 1980 through to the onset of the pandemic, just after 2019 ended, and after that, starting once again under Joe Biden.”

Here’s a chart from The Economist:

The Republican and Democratic Parties were in the White House for roughly equal amounts of time, 24 years each. During the Republican presidencies they created about 17 million jobs, whereas Democrats presided over the creation of about 60 million. That’s such a big gap that Americans can safely reject claims of stronger economic performance under Republicans.

Schwarz closes with this:

“Democrats have an amazing story to tell in 2024. They should tell it loud and clear.”

Absolutely!

Enough of the hard math. It’s time for our Saturday Soother, when we try to disconnect from Trump’s Bible sales and from the plan by Senate Republicans to introduce articles of impeachment of the Secretary of Homeland Security when there’s so much truly pressing business for them to consider.

Here on the Fields of Wrong, we’re attending to some spring yardwork in the precious time between passing rain and snow showers. We will also find the time this weekend to watch college basketball’s March Madness.

To help you focus on anything but politics on this Easter weekend, grab a seat by a south-facing window and listen to Gregorio Allegri’s “Miserere mei, Deus” (Have mercy on me, O God), performed here in 2018 by the Tenebrae Choir conducted by Nigel Short at St. Bartholomew the Great Church, in London.

Allegri composed this in the 1630s, during the papacy of Pope Urban VIII. The piece was written for use in the Tenebrae service on Holy Wednesday and Good Friday of Holy Week. Pope Urban loved the piece so much, that he forbid it to be performed elsewhere outside of the Sistine Chapel.

We all could use a little mercy now, and this is beautiful:

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Trump Promised Jobs. That’s Why He Won

Take a good look at this map. It shows which counties switched parties in the 2016 US Presidential election compared to 2012. Red counties switched from Democrat to Republican, blue counties switched from Republican to Democrat and the vast majority in grey did not switch parties:

counties-that-changed-partys

Source: Brilliant Maps

Of course, it doesn’t show vote margin or size of the total vote in each county. The main thing this map shows is the large number of counties in the North East and Midwest that flipped to Trump, after having been Democratic counties in the prior election. The effect was large enough to deliver the normally Democratic leaning states of Iowa, Michigan, Pennsylvania, and Wisconsin into the Republican camp.

Tim Duy has an article about how economists and most politicians get so wrapped up that they miss the human element in economic dislocations. Duy makes the point that they ignore two of the negative impacts of job losses. First, they say how lost jobs free up human capital for use elsewhere in the economy. Of course, as jobs are added to the economy, skill levels and training determine whether laid-off workers are part of that equation.

“High-skilled” workers is what we need, but they are not always the kind of workers that were laid off.

Second, Duy reminds us that most workers have little ability to move to where better jobs might be found. Politicians tell us that the economy is shifting to urban and suburban areas; to higher skilled jobs; that workers must go and get retrained. That misses the point.

Most new jobs for those who were laid off will only be found if workers are able to relocate, to move from rural or devastated urban locations to geographic areas where jobs are expanding. Duy notes it is particularly difficult for rural areas:

The speed of regional labor market adjustment to shocks is agonizingly slow in any area that lacks a critical mass of population…Relative to life spans, in many cases the shocks might as well be permanent.

We don’t have answers for most of these communities. Rural and urban economic re-development is hard. The people living in these regions have experienced job losses (or no jobs growth) for decades; positive jobs growth has occurred elsewhere.

And the laid-off workforce isn’t mobile. In effect, we have limited access to housing in our major cities by pushing housing costs beyond the reach of most middle class workers. This, from Kevin Erdmann:

If you lost your manufacturing job in Buffalo, and you’re thinking of moving to New York City because there are more jobs there, you might decide not to move because it is too expensive. It is the affordability that is keeping you out. But, even here, the affordability problem is just the messenger. It is the rationing mechanism for a housing stock that is relatively fixed for political reasons.

If you decide to move to the NYC area, you see that the housing supply is largely fixed. New buildings are hard to get through zoning. Construction costs in big cities are very high. Income taxes are rising rapidly.

Erdmann makes the point that housing in big cities doesn’t move up with increased demand:

So, it doesn’t matter if Brooklyn apartments rent for $500, or $1,000, or $2,000, or $4,000. There isn’t one for you. Fixing this by fixing affordability isn’t going to change the supply curve. It’s simply substituting non-monetary rationing mechanisms for the monetary one.

Trump’s message that US firms need to consider domestic jobs as much as their bottom line, also resonated with middle and upper-middle class households. OTOH, it’s not like Trump took on the Coal Industry on behalf of workers. He blamed federal environmental policy, but that isn’t what caused the loss of coal industry jobs.

Trump doesn’t really have any answers, but he pretends to care while pretending to have answers. Pretending to care and pretending to have answers gave him the switched counties on the electoral map above. People want work. They want secure jobs.

Trump might be running a “jobs” scam, but if it fails, what is the Democrats’ alternative?

We have four years until the next election, two if you are looking at Congress. What policies will work? Will we just trade Trump’s scam for another one peddled by the establishment?

Business as usual hasn’t delivered. The idea that economic growth creates jobs is a pipe dream for many: For the past 40 years, economic growth did not improve wages.

Trump’s promise swung the election. If he fails, what will be the Democrats’ response?

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