Published June 11, 2012
“The private sector is doing fine. Where we're seeing weaknesses in our economy have to do with state and local government,” President Obama claimed on Friday. His solution to fix the public sector was more government spending.
When people started screaming, Obama clarified his remarks and said “It’s absolutely clear economy is not doing fine,” but he just couldn’t bring himself to disown his statement about the private sector generally doing “fine.” His clarification still asserted that there is “good momentum in the private sector.” But private sector employment growth has fallen in each of the last four months, reaching a pitiful 82,000 in May.
President Obama is also wrong about his other claim that state and local governments are doing poorly relative to the private sector. The only group of workers “doing just fine” is federal government employees, where employment has increased by 4 percent since the start of the recession.
In sharp contrast, both private sector and state-and local-government employment have fallen, with the private sector is in the worst shape. Private-sector employment is down by 4 percent and state- and local-government down by half that -- 2 percent. Between 2007 and 2010, annual wages also grew 40 percent faster for state- and local-government workers than for those in the private sector.
So what is Obama’s evidence that “The private sector is doing fine”? There is one measure of employment that shows “4.3 million jobs [were created] over the last 27 months” since February 2010. But Obama ignores how private-sector job creation during this recovery compares to other past ones. The total actual number of private-sector jobs has grown by 2.8% during the “recovery” – the average for recoveries since 1970 is 8%, and 11% after severe recessions.
The growth also looks anemic when it is compared to what was lost. 36 months into the recovery and the private sector hasn’t even made up half the jobs lost during the recession, let alone make up for the fact that there are about 7.6 million more working age people than when the recession started.
What about the 4.2 million that were lost between when Obama became president and February 2010? The “growth” just replaces what was lost during the first part of his administration. Let alone the 8.8 million private sector jobs that were lost between when the recession started.
Strangely the president doesn’t start counting any changes in jobs until February 2010. The president doesn’t seem to believe that he is responsible for anything that happened in the economy private sector job growth for the first year after his stimulus passed. None of the drop in jobs during the first 14 months of his administration is counted. Why this date is the right date to look at is never explained.
This is during the same period of time that Obama promised that if the stimulus were passed the unemployment rate would not rise above 8 percent. Instead it rose above 10 percent.
Obama may keep pushing for more public sector jobs, but it only helps convince voters how left-leaning the president really is. Government spending just doesn’t create wealth out of thin air.
The money that the government spends has to come from someplace, whether the government receives the additional money from taxes or by borrowing it, the increased spending by the government, by necessity, implies others have less to spend. Obama likes to count those who received jobs by government spending but he never subtracts those who lost jobs when money was taken away from the private sector.
The government spending did more than simply move jobs; it temporarily reduces employment. People don’t instantly move from one job to another. It can take months or a year or more for people to get a new job, and these massive increases in government spending have created a lot of chaos. The temporary reduction in employment also reduced GDP.
Not surprisingly, Obama had few options at his Friday press conference. He attacked the “do-nothing” Republican congress, but he failed to mention that the Republican House has passed roughly 27 jobs bills since Republicans took control last year. Nor did he mention that Democrats control the Senate.
Obama either doesn’t understand or doesn’t care that private sector workers, the ones who are hurting the most, will pay for all these new government jobs. Last week, voters in Wisconsin sent a message: Americans simply can’t afford to keep spending money the way that it has been spent. It is one lesson that Obama seems incapable of learning.
John R. Lott, Jr. is a FOXNews.com contributor. He is an economist and co-author of "Debacle: Obama's War on Jobs and Growth and What We Can Do Now to Regain Our Future."