Slow Job Growth Hampers Bush
During the president's term, US economy has added jobs at meager 0.3 percent annual rate
WHO will be "the jobs" president?
The question is not academic to the 9.76 million people the Department of Labor reported unemployed in July, a seasonally adjusted unemployment rate of 7.7 percent.
Although President Bush said he was cheered that the rate had come down from 7.8 percent in June, the jobs picture must be politically distressing to the White House. "It's a big albatross around his neck," says Bob Dederick, chief economist at Chicago's Northern Trust Company.
Since Mr. Bush took office, there has been a net increase of only 1.18 million jobs in the nation. Over the past 3-1/2 years jobs have grown by 1.1 percent, or 0.3 percent per year.
"It's the lowest rate since World War II, there's no doubt about that," says Joel Naroff, chief economist for First Fidelity Bancorporation in Philadelphia.
It could get even worse. The latest numbers are swollen by 60,000 to 100,000 temporary jobs funded by Congress under the Dire Emergencies Act after the Los Angeles riots. Unless Congress extends the funding, those jobs will disappear by the end of the summer. Those remaining jobless will show up in the September unemployment report issued in October. This will be the last unemployment report before the presidential election.
Economists are not expecting any economic cushion for Bush. "If you look at what's out there, unless there is some enormous surge in spending, I don't see any good job growth over the next five months. We could average less than 70,000 new jobs each month, which is less than average," Mr. Naroff says.
Mr. Dederick notes the economy is still in the "creep forward" stage. "We've picked up some speed but not enough to be visible to the naked eye," says Dederick, who was a Commerce Department official in the Reagan administration.
If the White House is concerned, it is not showing it. The last job-creation proposal coming from the president was on April 14, when he proposed the Job Training 2000 Act. This act would have created a network of local skill centers to provide "one-stop shopping" for vocational and job training services, started a unified voucher system for participants, and added certification for job-training services.
The proposed legislation, which would get $50 million of funding from other on-going programs, has not been voted on by Congress. In the 1993 budget Congress is planning to actually cut the funding for job training by $6.7 million, or 1.5 percent.
On May 3, 1991 the president introduced an Enterprise Zone and Jobs Creation Act to provide capital-gains tax breaks and other incentives for businesses to establish operations at as many as 50 urban, rural, and Indian enterprise zones.
The Clinton campaign plans to attack Bush's job record. "It's the worst of any of the last 10 presidents," says Robert Shapiro, a Clinton economic adviser and a vice president of the Progressive Policy Institute in Washington.
The Arkansas governor is fortunate that jobs have grown 12.21 percent over the past 3-1/2 years in his state. However, Arkansas has had to face neither the large defense cutbacks that are now hurting California nor the real estate overbuilding that battered the Northeast.
Mr. Shapiro says the basic thrust of any Clinton job-creation program will be to make the economy grow. "We will increase investment and raise the rate of return on all economic activity," Shapiro says. How? He says Clinton will focus on worker education and tax incentives to get companies to invest in job training and research and development. In France, Germany, and Australia, companies are required to spend at least 1.5 percent of their revenues on job training. In Australia, however, the job training
program has been criticized for allowing professionals vacations at plush resorts.
Shapiro says Clinton plans to make the research and development tax credit permanent and increase federal support for generic research. He adds that the Democrats hope to create a million jobs a year. Shapiro says the revenues for new programs will come from increasing taxes on the wealthy and by taxing foreign companies' US subsidiaries.