Jobs and the Future of Work

This is how Obama's performance on jobs compares to his predecessors

U.S. President Barack Obama and first lady Michelle Obama cuddle together as they participate in the National Christmas Tree lighting in Washington, U.S. December 1, 2016.  REUTERS/Jonathan Ernst     TPX IMAGES OF THE DAY - RTSUAH9

The unemployment rate has fallen under Obama. Image: REUTERS/Jonathan Ernst

Ana Swanson
Christopher Ingraham
Writer, Wonk Blog
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The economy today is far from perfect, but as Barack Obama leaves office, he is leaving it far better than he found it.

In fact, Obama ends his administration with the second-largest drop in the unemployment rate during a presidency since the New Deal helped pull the nation out of the Great Depression. The rate under Obama is bested only by the one under Bill Clinton, which fell from 7.3 percent in January 1993 to 3.9 percent in December 2000.

As Obama took office amid the depths of the recession, the unemployment rate was 7.8 percent. Last month, it was 4.7 percent.

Although it was a large drop, average unemployment during Obama's presidency was relatively high, at 7.4 percent.

Unemployment and the White House
Image: Wonkblog

As the chart shows, unemployment in the United States has fallen under every Democratic president but Jimmy Carter. It rose under every Republican president but Ronald Reagan.

Yet those trends may not mean as much as they suggest. Although the popular narrative runs otherwise, economists typically argue that presidents have little control over the economy, at least compared with the strength of the business cycle, the pace of technological innovation and the events in the global economy. And the sample size here – just 11 presidents – is way too small to draw sweeping conclusions.

The drop in the unemployment rate during Obama’s term also hides another harmful trend – that an increasing number of people are giving up participating in the U.S. job market altogether.

Although the unemployment rate has fallen under Obama, it’s partly because some workers have stopped looking for work. The U.S. government only counts people as “unemployed” if they do not have a job and they have actively looked for work in the past month. "Discouraged workers" -- who could work but are no longer searching -- are not counted as unemployed.

These workers are measured by the labor force participation rate. And if you look at those figures for prime-age workers, who are 25 to 54, you can see that the labor force participation rate has declined under Obama, though it has begun to recover in the last few years. That suggests that many Americans who could be working are sitting on the sidelines instead.

No one knows exactly why, though there are many possible explanations, says Jed Kolko, chief economist at jobs site Indeed. Many economists blame shifts in technology and automation that have eliminated good-paying jobs for less-skilled workers. Some have proposed other causes, including higher levels of incarceration, which leave more people with criminal records that make them ineligible or undesirable for employers. Others blame growing rates of addiction, and even entertaining video games that sap people’s inclination to work.

In any event, these factors, too, are probably out of a president’s control.

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Jobs and the Future of WorkEconomic Growth
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