Job creation: what's it going to take

[ProSense]

Clinton has one of the best jobs records in recent times, and his average was about 2.84 million per year (a total of 22.7 million in two terms)

FDR's created about 18.3 million (7 million in his first term for an average of about 1.75 million). Of course, the population was about 40 percent of what it is today.

In November 1933, FDR created 4 million jobs via the CWA:

The Civil Works Administration was established by the New Deal during the Great Depression to create jobs for millions of unemployed. The jobs were merely temporary, for the duration of the hard winter. Harry L. Hopkins was put in charge of the organization. US President Franklin D. Roosevelt unveiled the CWA on November 8, 1933.

The CWA was a project created under the Federal Emergency Relief Administration (FERA). In order to increase the benefits, another program was needed and the CWA was set up along with the Civilian Conservation Corps, a.k.a. the CCC.

The CWA created construction jobs, mainly improving or constructing buildings and bridges. It ended on March 31, 1934, under the advice of Lewis Douglas, after costing $200 million a month. So much was spent on this administration because it hired 4 million people and was mostly concerned with paying high wages.

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An article in Slate stated: Four million jobs in two years? FDR did it in two months.

... Roosevelt diverted not quite one-third of Ickes' PWA budget to Hopkins' CWA with the goal of putting to work 4 million people. As a percentage of the population, that would be the equivalent of putting 10 million people to work today. In his first weekly radio address, Obama pledged that the stimulus package would "save or create 3 to 4 million jobs over the next few years." (His budget director estimates that 75 percent of the money will be spent within 18 months.) Hopkins got there within two months.

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The only serious obstacle the CWA encountered is the same one that President Obama would face today: politics. Republicans and conservative Democrats in Congress screamed bloody murder about Roosevelt's dalliance with state socialism—Republicans like Landon who were willing to admit a government program might actually work were as rare then as they are today—and the segregationist Georgia Gov. Eugene Talmadge was apoplectic to learn that black laborers were being paid as much as white ones. Once winter had passed, Roosevelt, worried that the controversy would cost him Democratic seats in the coming midterm congressional elections, ordered Hopkins to shut the CWA down. Hopkins promptly and uncomplainingly did so. A year later, though, Roosevelt recognized his error and put Hopkins in charge of the Works Progress Administration (later the Work Projects Administration). Over its life, the WPA would create, on the model of the CWA, more than 8 million jobs, which today would be equivalent to creating more than 20 million.

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Interesting because 20 million is near the 23 million Clinton created in his two terms. Of course, FDR created more than 18 million jobs in his three terms. To extrapolate based on the population stat above, FDR created the equivalent of 45 million jobs, or 15 million per term and 3.75 million per year.

So 2.5 million per is adequate. More than 3.5 million jobs per year is excellent.

The stimulus has created or saved 3 million jobs. As in the 1930s, President has to reverse a huge jobs deficit. In 2010, the economy created 1.1 million jobs, which is less than half the jobs required for adequate job creation.

If President Obama can bring the economy to create in the range of 2.5 million jobs in 2010, it will make a dent. More is better.

In December 2009, Krugman created a benchmark:

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Anyway, I thought it might be useful to create a sort of benchmark for the level of job growth that would really count as good news. I start from the fact that we’ve lost about 8 million jobs since the recession began — that’s the official number plus the preliminary estimate of the coming benchmark revision. I then take EPI’s estimate that we need to add 127,000 jobs a month. EPI points out that when you put these numbers together, they say that to return to pre-crisis unemployment within two years we’d have to add 580,000 jobs a month. That’s not going to happen.

But let’s set a more modest goal: return to more or less full employment in 5 years –which means seven lean years of depressed employment. To keep up with population growth over those 7 years, the United States would have had to add 84 times 127,000 or 10.668 million jobs. (If that sounds high, bear in mind that we added more than 20 million jobs over the 8 Clinton years). Add in the need to make up lost ground, and we’re at around 18 million jobs over the next five years — or 300,000 a month.

So that’s a useful benchmark. Even if we add 300,000 jobs a month, we’re looking at a prolonged period of suffering — a huge cost from the Great Recession. So that’s kind of a minimal definition of success. Anything less than that, and it’s bad news. It sort of puts that wonderful report that we only lost 11,000 jobs in perspective, doesn’t it?

Again, Clinton created about 2.84 million jobs per year. By today's standard, FDR created about 3.75 million.

President Obama needs to create at least 300,000 jobs per month to dig out of the hole in five years. So the most agressive job creation since FDR is needed to dig out of this hole.

NYT chart from 2003:








Edited to date the chart.