Donald Trump’s pundit class parrots and his army of largely working class supporters make a lot of noise about the “record low unemployment” under Trump, but what they don’t seem to want to talk about is labor force participation. Why would they? After all, it’d incredibly inconvenient for them to mention that the labor force participation rate is still well below Jimmy “Misery Index” Carter levels.
They are happy to let Americans forget that labor force participation improved above 63.0% for most of Carter’s four years in office, even if he eventually did manage to botch the recovery, but has conspicuously not improved at all under Trump. Still, the lowest unemployment rate in history is not something easily dismissed… Or is it? What if, the low unemployment rate is simply an artifact of anemic labor force participation rate?
Let’s take a look at what the unemployment rates would be under the labor force participation rates of presidents Jimmy Carter, Ronald Reagan, George H. W. Bush, and Bill Clinton, then perhaps we’ll have more perspective on what the unemployment rate actually looks like. Additionally, we’ll be able to get a better feel for the performance of the current administration against previous administrations.
In many spheres of human endeavor, from science to business to education to economic policy, good decisions depend on good measurement.
– Ben Bernanke, Federal Reserve Chairman 2006-2014
James E. Carter’s Numbers
First up, Jimmy Carter himself. President Carter was handed a recovering economy that had fallen into a punishing recession under his Republican predecessor. There were a lot of reasons for the short recovery, not least of all being missteps by the Federal Reserve, prior to Paul Volcker, and the continuing oil crisis that started well before Carter’s presidency, but Carter does deserve the shame of accusing Americans of malaise.
- 1980 Average Unemployment Rate: 7.175%
- 1980 Average Labor Force Participation Rate: 63.78%
- Trump’s Unemployment Rate under these conditions: 5.36%
Ronald W. Reagan’s Numbers
Next comes Ronald Reagan. Reagan inherited the stalling economy of Jimmy Carter and immediately followed through on his bold promises to dismantle the government apparatus and taxes that were holding back the American economy. He worked with the Democratically controlled Congress to pass not one, but two major tax reforms. After riding out the major correction of 1981-1982, the American economy boomed.
- 1988 Average Unemployment Rate: 5.49%
- 1988 Average Labor Force Participation Rate: 65.91%
- Trump’s Unemployment Rate under these conditions: 8.42%
George H. W. Bush’s Numbers
The elder George Bush’s economy inherited the booming economy of Reagan, but rising tensions between OPEC nations in the Middle East caused oil prices to climb. In 1990, thanks to the Iraq invasion of neighboring Kuwait, oil prices spiked, rocking an already jittery economy into a short but widespread recession. Then Bush reneged on a promise not to raise taxes, and caused another mild correction that ended his reelection chances.
- 1992 Average Unemployment Rate: 7.49%
- 1992 Average Labor Force Participation Rate: 66.44%
- Trump’s Unemployment Rate under these conditions: 9.15%
William J. Clinton’s Numbers
By the time Bill Clinton was sworn in, the fighting in Iraq and Kuwait had been over for a couple of years, and the economy was already back on a growth cycle where it peaked in his second term. He road an expansion in the tech industry through most of his presidency, working with the Republican controlled Congress to keep regulations and tax rates low. A tech correction late in his presidency slowed the economy as he left office.
- 2000 Average Unemployment Rate: 3.97%
- 2000 Average Labor Force Participation Rate: 67.07%
- Trump’s Unemployment Rate under these conditions: 10.01%
Donald Trump’s unemployment numbers are, in every case, worse when put into the context of the last four presidents of the last century. In terms of Trump’s unemployment rate adjusted for each labor force participation rate, Trump’s numbers manage to outperform only Jimmy Carter’s, but Jimmy Carter’s economy was in the middle of a recession, while Trump was unarguably handed a growth economy.
Trump’s unemployment rates perform so badly when we compare his economy to some of his predecessors, because the unemployment rate is entirely dependent on the labor force participation rate as a base. That there are fewer people in the labor force today as a share of the total population than there were under the other presidents is the only reason Trump’s unemployment rate are as low as they are.
The fact that so many Americans are not participating in the labor force today, a problem that exploded under Obama, so he bears responsibility, is the single largest problem facing America today, and Trump and his supporters never talk about it. Almost two full years into his presidency, Trump has managed to do nothing to reverse this crisis. He promised to put Americans back to work. He simply has not delivered.
Liberty is For The Win!