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Who Creates More Jobs ?

By David King Published: September 2, 2012

Who creates more jobs, Democrats or Republicans ?

The Democrats just answered, "Democrats !".

The Republicans just answered, "Republicans !"

The answer to this question is sure to spark political controversy, with each political tribe supporting their own side. The answer is also fairly subjective, because in reality, neither Democrats nor Republicans create jobs per se, except for government jobs. The private sector creates jobs, not the politicians. What the politicians can do is create a framework that promotes job creation, or a framework that inhibits job creation. The rest is left up to us for the most part.

But is there a way we can measure whether Democrat or Republican policies contribute more to job creation ?

We could look back over time and compare job creation under Democratic presidents to job creation under Republican presidents, but that is problematic. Economic conditions change. For example, you could make the flat statement that Democrat Barack Obama has created more private sector jobs during his first term than Republican Bush Jr. did (surprise, Republicans. It's true), but by the same token, Bush's average unemployment rate was 5.2%, while Obama's thus far is 9%. And after the recession ended in 2009, the economy was supposed to gain back many of the jobs it lost, as it has done in the aftermath of every recession. What I'm saying is, Obama's upside potential was a lot higher than Bush's, because Bush was closer to full employment. But the Obama/Bush statistics are all ultimately subjective, because they don't factor in things like recessions, economic bubbles, worldwide economic conditions, legislative effects, deficit spending, etc.

We could go back a little further and point out that Democrat Clinton was the modern job creation king with 20 million jobs created, but Republicans could simply ar\gue that all  happened because Republicans controlled Congress under Clinton. Republicans could also point to Republican Reagan's excellent job creation record (16 million jobs created), which Reagan accomplished despite inheriting a severe recession from Democrat Carter. The Reagan/Obama comparison is much more apples to apples than the Bush/Obama comparsison, because both Reagan and Obama inherited skyrocketing unemployment rates amid severe recessions. In that comparison, Reagan comes out the winner by far.

My point is, debating in this fashion could continue until the end of time without resolution.

But is there a way we can measure the job creation performances of Democrats versus Republicans ?

One way might be to look the performance of Democrats versus Republicans at a specific moment in time, but to do that we have to look at the state level, not the federal level. We only have one President and one Congress, but we have 50 governors and 50 state legislatures. We could measure the states against each other to see whether Democrat or Republican states perform better under the same economic conditions during the same period of time.

The period of time I will choose is now, because now is what concerns us, not what happened 30, 40, or 50 years ago when economic conditions were different, and the world itself was different.

Let's look at some evidence.

Fox News points out that in 2010, the Tea Party-influenced midterm elections brought in 17 Republican governors, and from January 2011-May 2012, the unemployment rate dropped in all 17 of those states.

What does that tell us ?

It doesn't tell us anything, because the unemployment rate dropped all over the country following the 2010 midterm elections. What might tell us something is if Republican-led states dropped by more than Democrat-led states.

According to Fox News, that is the case:

the average drop in the unemployment rate in these [Republlican-led] states was 1.35%, compared to the national decline of .9%, which means, according to the analysis, that the job market in these Republican states is improving 50% faster than the national rate.

On the other hand, the unemployment rate in states that elected Democrats in 2010 dropped, on average, as much as the national rate decline and, in some states such as New York, the unemployment rate has risen since January of 2011.

That makes the Republicans look pretty good, but it's still incomplete. The Fox News article covers 17 Republican states, but Republican governors currently run 29 states (Democrat governors run 20, and an Independent governor runs 1). The Fox News article doesn't say anything about the other 12 states run by Republicans. See how tricky Fox News can be ? Can I get a big "you betcha !!!" from my Democrat readers on that one ? I thought so.
 
So let's put Fox News aside and look at ALL the states. And let's use a more Democrat-friendly source this time, CNN. According to a CNN factcheck piece:
 
According to the Bureau of Labor Statistics' preliminary, seasonally adjusted data for July 2012, 7.84% of the civilian labor in the 29 states with Republican governors were unemployed (6,680,400 out of 85,155,600).

The same data set shows that 8.77% of the 20 states with Democratic governors were unemployed (6,032,500 out of 68,792,500). The national unemployment rate was 8.3%.

Here we find that states with Republican governors have an unemployment rate lower than the national average, while states with Democrat governors have an unemployment rate above the national average. Things are looking good for the Republicans. CNN tries to spin this as much in favor of the Democrats as possible, saying things like "there is nothing in the data to show a causal relation" (except for THE REPUBLICAN GOVERNORS !!!)  but that's just CNN being CNN, just like Fox News was being Fox News. The data is the data.
 
Republican-led states have unemployment rates nearly a full percentage point lower than Democrat-led states, and unemployment rates have dropped more in Republican-led states than they have in Democrat-led states.
 
In case you are wondering, state legislatures also flipped from Democrat control to Republican control in the 2010 midterms, and following the midterms is when the national unemployment rate began to drop.
 
Now let's shift to a comparison of blue states versus red states during the Obama administration. According to Investor's Business Daily,  blue states that voted for Obama have lower income growth, lower job growth, lower home values, and higher unemployment rates than red states that voted for McCain. The blue states outperformed red states in GDP growth.
The data looks very favorable for Republicans on job creation. Is it absolute, iron-clad, definitive proof that Republican policies lead to lower unemployment and more job creation than Democrat policies ? No, but it IS evidence, and what else do we have to go by ???
 
I'm not going to go into detail about the the real unemployment rate versus the official unemployment rate in this post. I'll only say that if you go by labor participation rates, in order to reach pre-recession levels of labor participation, we need an additional 11 million jobs. Going by the official unemployment rate, we need around 5 million additional jobs to return to pre-recession levels. Being in need of so many jobs to turn around our economy, maybe we should think about electing the party that seems to be the best at creating them.
 
 
 
 
 
 
 
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