Barack's Increasing Stock

The stock market, during Barack Obama's administration, has achieved the third best increase of any presidency. 

So much for the often-repeated Republican talking-point of Barack Obama being bad for business.

Public Sector Employment

Doug Henwood comments on the decline in public sector employment:

"Paul Krugman notes that public sector employment has declined under Obama—a sharp contrast with his two predecessors, under whom it grew (with Republican Bush ahead of Democrat Clinton). How does recent experience stack up on a longer view?

Very unusually. Graphed [above] is the behavior of employment—total, private, and public—around business cycle troughs and recoveries. The darker lines are the averages of all the cycles since the end of World War II; the lighter lines, the most recent period, around the June 2009 trough.

As of March, the most recent data we have, we were 33 months into the recovery/expansion. In a “normal,” or at least average, expansion, total employment would be up 6.6% (which is why the index number on the graph is 106.6). But now it’s only up 1.8%. But there’s an enormous divergence in public and private sector employment. In an average recovery, private employment would be up 6.7% and the public sector up 6.4%. This time, though, the private sector is up just 2.7% (4 points short of the average)—but the public sector is down 2.5% (almost 9 points below average).

Putting some numbers on that, total employment is 6.3 million below where it would be in an average recovery. (As the graph shows, the decline in employment was far deeper than average, and the recovery slower to kick in.) Of that shortfall, 4.3 million comes from the private sector, and 2.0 million from the public. So the public sector is responsible for about a third of the deficiency. But that’s twice its share of total employment.

No doubt yahoos will cheer the fall in public employment as a reduction in waste—though there’s no visible payoff in private sector job growth. (Of course, the yahoos don’t care about the continued deterioration in public services.) Public sector austerity is a major drag on the job market. If public employment had merely matched the anemic growth in the private sector, the unemployment rate would be more like 7.4% than 8.2%. And if it had matched its post-World War II average, the unemployment rate would be under 7%.

Propagandists love to go on about how the socialist in the White House is scaring the private sector, leading to a hiring strike. But public sector austerity—mainly at the state and local level—is a major drag on the job market. That doesn’t get anywhere the attention that it should."

Removing Democratic Support

Good insight from Joel Rogers (via Doug Henwood):

"Rogers also sees Walker’s attack on the public employee unions as part of a nationally coordinated Republican strategy to remove the unions as major financial and organizational supports for Democratic candidates. Some of the wavering Republican legislators in Madison got calls from Karl Rove and people speaking on his behalf. Such is politics in the USA (and this is me speaking, not Rogers) that the unions have a choice only between supporting a party that does little for them when in office and one that would destroy them."

New Firms Are No Job Engine

John Torinus, of the Journal Sentinel, assures us that new firms are the key to our recovery. Encouraging new firms using the typical incentives (job credits, small business loans, investment credits, grants, using pension fund money for speculative investment, etc.), he believes, will create jobs.

He also uses the education-as-magic-bullet talking-point to paint the image of a miraculous market machine, infused with newly educated college graduates, encouraged by credits and grants, creating new firms, thereby growing employment.

Yet, Torinus even points out that one-third of young companies fail to make it through a second year; what he calls a "messy churn." But lets ignore that fact, it would expose the false premise concocted in the article.

As Doug Henwood notes, "Small firms pay less than large ones, are less likely to offer health, pension, or child care benefits, and are often more dangerous to workers. With few exceptions, they're not all that innovative technologically...37% of the labor force changes its employment status every year...new jobs do not sprout in the greatest numbers at either fresh start-ups or small firms...Smaller employers do generate plenty of jobs, but they also destroy them in great quantities. If you add together creation and destruction, no clear picture emerges."

The recovery hinges on the destruction of neoliberal policies and a reclamation of the public good.