The U.S. economy has been staggering for months and is still millions of jobs away from recovering from the nearly 9 million jobs lost since the start of the recession. Indeed, the official unemployment rate has hovered around 9 percent or 10 percent for more than two years.
President Obama has promised to focus on jobs, so we decided to look at his actual record: What exactly has the Obama administration done to create jobs so far? Here’s a look at Obama’s jobs initiatives, the hits, the misses, and the ones we’re still waiting for an answer on.
Overall, job creation has been relatively meager during the Obama administration, particularly compared to the massive job losses brought on by the recession. According to the St. Louis Federal Reserve, even if job creation were happening at pre-recession levels, it would take us 11 years to get back to an unemployment rate of 5 percent.
Keep in mind: There is no sure-fire way to count how many jobs a given program added to the economy. Some economists use economic models to gauge how the economy would have progressed in the absence of that program. Others look at raw data. As the Washington Post’s WonkBook has detailed, there are drawbacks to both approaches. But they can still give you an overall picture.
Auto industry bailout, December 2008 to January 2009
In total, the government spent $79.3 billion assisting General Motors and Chrysler. Though the initial round of aid was approved by the Bush administration as part of the Troubled Asset Relief Program, Obama expanded on it. It has certainly helped save the companies and perhaps many jobs in the process.
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There is little independent data on how many jobs were saved as a result of the auto industry bailout. But a study from the Center for Automotive Research, which receives some industry funding, says the bailouts of General Motors and Chrysler saved more than 1 million jobs in the car industry, supply chain, and communities where auto workers spend their paychecks [PDF], a figure Obama echoes in his speeches on the bailout. According to the Bureau of Labor Statistics, the industry added 45,000 jobs in the nine months after GM exited bankruptcy. [PDF; see fourth page]
American Recovery and Reinvestment Act, February 2009
The stimulus, with its mixture of tax cuts, grants, loans and infrastructure spending, is likely Obama’s most successful job-creation initiative.
Initially projected to cost $787 billion, the package has actually cost $825 billion, according to the Congressional Budget Office’s latest calculations. The CBO’s latest report estimates that the stimulus raised the number of employed Americans by 1 million to 2.9 million over the last quarter. At its peak in the second quarter of 2010, it increased employment by 1.4 million to 3.3 million.
A report by economists Mark Zandi and Alan Blinder [PDF] found that the stimulus, along with the bank bailout, helped significantly soften the recession. Zandi, who is chief economist at Moody’s Analytics, emphasized that it created the basic conditions for job growth. “If you don’t stabilize the financial system, nothing else matters,” he said.
As we mentioned in our earlier guide to Obama’s economic record, most of the major studies on the stimulus say it had a positive effect on the economy. But not everyone thinks it was such a success. Douglas Holtz-Eakin, former head of the CBO and current head of the conservative American Action Forum think tank, said the stimulus’s achievements were small considering the big price tag. “If you throw nearly a trillion dollars at the economy, it has to have an impact, and it did. … The stimulus basically stopped the fall, but it didn’t have any big multiplier effect.”
The repeated extensions of unemployment benefits haven’t received the attention, or level of vitriol, that the stimulus has, but they do appear to have saved millions of jobs by allowing people who are out of work to keep buying goods and supporting other businesses. A study conducted for the Department of Labor by an outside firm found that unemployment insurance has been an important economic stabilizer, reducing the fall in GDP by 18.3 percent and preserving about 1.6 million jobs each quarter during the recession. The CBO estimated that the latest extension of unemployment benefits would add $34 billion to the deficit over the next decade.
HIRE Act, March 2010
The $17 billion Hiring Incentives to Restore Employment Act provided a payroll tax break for businesses that hired unemployed workers, but the impact has been, at best, unclear.
The Treasury estimates that for the first eight months of the yearlong program, 10.6 million unemployed workers [PDF] were hired by businesses eligible for the HIRE Act tax cut. But it’s unclear how many of those workers would have been hired anyway, without the incentives. Zandi and Holtz-Eakin both said that given the modest overall size of the program, the HIRE Act’s impact would be small even under the best of circumstances.
Education Jobs Act and Medicaid Assistance Act, August 2010
This bill gave $10 billion to the states to preserve education jobs during the 2010-11 school year. It’s still too early to tell how many jobs were created; not all of the money has been spent yet, because districts also have the option to use it for 2011-12. The program estimates that it has created or saved 114,407 teaching jobs so far.
Small Business Jobs Act, September 2010
The Small Business Jobs Act extended Small Business Administration loan programs and created a $30 billion fund that provided capital to small banks in order to increase lending to small businesses. The results are far from clear.
According to the Treasury Department, $4 billion has gone to 332 banks across the country, though again there’s little research on how this has translated into jobs. Jared Bernstein, a senior fellow at the Center on Budget and Policy Priorities and former Obama administration economic adviser, cautioned that it’s more difficult to gauge how many jobs a program created if it’s not a direct job-creation measure—you’d have to see whether businesses that got access to credit through this program expanded and hired more than business that didn’t.
Holtz-Eakin and Zandi were both skeptical about the program’s results. “The banks that would take the capital probably were the weakest banks, and the banks that were in good shape wouldn’t take the capital,” Zandi said. “There was a great disincentive for participating in that program.” A Wall Street Journal investigation found that more than half of the Small Business Lending Fund money given to small banks this year was used to repay TARP loans, rather than going to small business.
–Braden Goyette, ProPublica