Okay, I think we can all agree that the participation rate is a sign that the economy is weak and the credit crisis was devastating. There’s no denying that. But what’s really held back the labor reports over the last 5 years is the rate at which the government has destroyed government jobs, not the participation rate. To emphasize this point, let’s just review what Barack the Great Slayer of Government Jobs, has achieved since he took office.
Barack Obama is on pace to preside over the only Presidency in the post-war era to average negative government employment growth. Since 2009 when he took office the total size of the government workforce has declined by 706K jobs. That’s about 3.1% of the government workforce. That’s not a huge number, but let’s put that into perspective. During Ronald Reagan’s first 5 years in office the government created 623K jobs which expanded the size of the government workforce by 3.8%. Ronald Reagan was a huge creator of government jobs. In fact, over the course of his entire presidency the size of the government workforce expanded by 9%.
Now, what if Barack Obama were more like Ronald Reagan? What if the government workforce had expanded by 3.8% up to this point during the recovery rather than contracting by -3.1%? There would be about 1.5 million more people employed today than there actually are. The total size of the workforce would be roughly 138 million people in this case. And instead of talking about the declining participation rate we’d be talking about how we’re at all-time highs in employment.
If only Barack could have been more like Ronnie.
Mr. Roche is the Founder and Chief Investment Officer of Discipline Funds.Discipline Funds is a low fee financial advisory firm with a focus on helping people be more disciplined with their finances.
He is also the author of Pragmatic Capitalism: What Every Investor Needs to Understand About Money and Finance, Understanding the Modern Monetary System and Understanding Modern Portfolio Construction.