Undoubtedly President Obama inherited an economic mess. Also undoubtedly, he’s made it worse. Barring substantial revisions to recent job loss estimates, we have now crossed the line where as many jobs have been lost during this recession under President Obama as under President Bush. From the start of the recession, in December 2007, until President Obama took the oath of office at the end of January 2009, there have been 3.36 million nonfarm payroll jobs lost. From February 2009 until now there have been about 3.36 million nonfarm payroll jobs lost (estimates from ADP employment report).
Even during the best of times, the economy experiences substantial job loss. However, we consider those times good because the labor market is also creating lots of jobs, so that job losses are offset by job gains. The early parts of a recession are generally characterized by large increases in job losses, with minor declines in job creation. Eventually the job losses moderate and job creation picks up, bringing us out of the recession. We are arguably past the worst of the job losses. What has escaped us is job creation.
And it is on the job creation front that Obama takes ownership of the economy. While there are certainly problems in the credit markets, the major reason behind the lack of job creation is the massive uncertainty being generated by Washington. For any employer today, it is almost impossible to estimate what the future health care costs of new hires will be. It’s impossible to gauge what your environment costs are going to be. Same with the costs of the 90 new workplace rules that the Department of Labor promised would be forthcoming over the next year.
Sadly this administration learned the wrong lesson from the defeat of the Clinton health care plan. The history lesson they should have learned is that Clinton inherited a recession as well (as did Bush for that matter), but that job creation was weak until the Clinton health care plan stalled.
Until employers and investors feel it is safe once again to put their businesses and investments at risk, and Washington ends its war on the productive elements of our society, we will not have significant private sector job growth.