Two recent articles combined to stimulate my interest in the history of the US employment rate.The first was the description in the Washington Times of speeches that President Obama gave at rallies last Friday in Virginia and Ohio. Here is the salient quote that stimulated the headline writer’s use of the expression, “blast from the past”:
“Somehow, [Mr. Romney] thinks the same bad ideas will lead to a different result — or they’re hoping you won’t remember what happened the last time you gave them a shot,” Mr. Obama continued. “We are not going back. We remember, and we’re going to move this country forward.”
Reading that made me wonder which target period President Obama was objecting to “going back” to. As I reflected on that question, I came across a second article from the Washington Post, which described a speech that Mitt had delivered in Pennsylvania:
Mitt Romney raised the bar for what comprises an unemployment rate worth celebrating as he used the latest jobs figures to criticize President Barack Obama’s management of the economy while campaigning in Pennsylvania.
“Anything over four percent is not cause for celebration,” the presumptive Republican presidential nominee said inside a warehouse of a specialized cement and corrosion- resistant materials manufacturer in Pittsburgh.
Competing for my attention, the two ideas of “going back” idea and raising “the bar for what comprises an unemployment worth celebrating” bounced around in my head and caused me to wonder whether going backwards might not be such a bad idea. I had to find out how today’s unemployment situation compared with what has happened in the past.
From the Bureau of Labor Statistics Web site I was able collected numbers for the average annual unemployment rate going back to 1948. From that data I plotted the graph below, to which I added a line of regression to show the trends in the rate over various periods of time, separated by a couple of key events, which I mention below.
It is easy to see how the highs and lows both got higher in the first period I identified for the first line of regression and they got lower in the second.The third period only shows an increase until the rate peaked at 10% in October of 2009 and remained close to that level until it began to drop in November of 2010.
Clear is the rising trend in the annual unemployment rate from 1948 until the early 80’s. It seems important to point out that the Democrats controlled Congress during that entire period with the exception of a couple of two-year periods. Ronald Reagan of course was elected in 1980, which happens to correspond to the beginning of a downward trend in unemployment. This continued until 2001 (9/11 happened!) when a short spike took it back up. The rate then dropped until 2006 when the Democrats took over Congress again and when it began its historic climb indicated by the third line of regression.
With those three periods in mind, to which past is President Obama suggesting that Mitt wants to return? The one where the Democrats controlled Congress, the one which began with Reagan and continued even through Bill Clinton and George W. Bush?
Frankly, I would take any of those “pasts” over the current “present.” Incredibly, I find myself longing for the Clinton years! As Mitt often says, President Obama might not have caused the steep rise in unemployment, but nothing he and his friends in the Congress, who took control of both houses beginning in 2006, wielding total control until the Republicans took back the House of Representatives in 2010.
All of this makes me wonder whether a sufficiently drastic change in direction is possible without an across the board change in how business is being conducted in Washington.