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Reagan’s Million-Jobs Month Revisited

Posted By Invictus On August 8, 2013 @ 7:15 am In Analysts,Cognitive Foibles,Data Analysis,Financial Press,Really, really bad calls | Comments Disabled

* Sigh.*

@TBPInvictus here

I see once again that the canard about Reagan’s million-jobs-month is making the rounds [1]:

“Reagan’s best job month garnered the very top ranking since WWII with 1,114,000 jobs added in September 1983. A single month with more than a million jobs added. So far Obama can only wish for such a total.”

This is either journalistic incompetence or deliberate deceitfulness. Those of you who keep repeating this falsehood — including some once-reputable media outlets — are committing journalistic malpractice. And shame on you, Senator Rob Portman [2].

So, for the second time in three months (see here [3] for the first go-round) – and then on to a related topic – here we go:

The Reagan recovery simply did not include a month in which anywhere near one million jobs were created. It did include two months in which almost 700,000 AT&T workers went on strike and then returned. Those workers dinged the NFP number one month and subsequently goosed it the next. There’s no magic about this whatsoever; it could not be clearer. If I loan you $10 one month and you pay me back $11 the next, two things: 1) I’m a usurious bastard and 2) i did not “make” $11 the second month. Those who initiated this canard (thinking WSJ editorial page), and the countless bobbleheads who have mindlessly repeated it, have done everyone a great disservice.

I’ve retrieved and posted the two relevant BLS releases to my Scribd page [4].

Here’s the NY Times at the time:

Screen Shot 2013-08-07 at 6.17.09 PM [5]

Here’s an excerpt from the BLS release the month before Reagan’s million-jobs miracle (when the striking workers returned). Note the “nationwide strike of some 700,000 communications workers.”

Screen Shot 2013-08-07 at 6.19.36 PM [6]

All that said, I started thinking about that period of time in a larger context. I thought about what has become of labor’s leverage (or lack thereof) over the intervening years. I reached out to a friend at the St. Louis Fed, who found the data set I needed – Net Change in Number of Workers on Strike, persons, with the following definition:

Net change in the number of persons on strike is the number of persons newly on strike minus the number who returned to work after a settlement. Only strikes involving at least 1,000 workers are covered.

The table below is fairly self-explanatory, and tells a sad story about labor’s diminished – and diminishing – power, as evidenced by the ongoing decline in strikes (aka “work stoppages”). To be crystal clear here: Like everyone else, I have on occasion suffered as a result of striking workers in one industry or another. And it’s no fun. Then again, I’m sure it’s no fun for the strikers, either. I’m sure they’d rather not be on strike. The point is that one of labor’s Hail Mary, last-resort tactics has become virtually extinct, dealing a blow to the labor force.

 

Screen Shot 2013-08-07 at 6.51.56 PM [7]

Given that, is it any wonder that labor’s share of the spoils has just bounced off a record low (props to Slick Willy for at least temporarily turning things around).

 

laborshare [8]

 

See Bruce Bartlett on labor share here [9].


Article printed from The Big Picture: http://www.ritholtz.com/blog

URL to article: http://www.ritholtz.com/blog/2013/08/reagans-million-jobs-month-revisited/

URLs in this post:

[1] making the rounds: http://www.cnsnews.com/mrctv-blog/julia-seymour/economic-recovery-monthly-job-gains-top-100-reagan-12-obama-2

[2] Senator Rob Portman: http://www.portman.senate.gov/public/index.cfm/articles?ID=00119e75-33ea-449a-b1e9-c316713a18a3

[3] here: http://www.ritholtz.com/blog/2013/06/on-meredith-monica/

[4] my Scribd page: http://www.scribd.com/TBPInvictus

[5] Image: http://www.ritholtz.com/blog/wp-content/uploads/2013/08/Screen-Shot-2013-08-07-at-6.17.09-PM.png

[6] Image: http://www.ritholtz.com/blog/wp-content/uploads/2013/08/Screen-Shot-2013-08-07-at-6.19.36-PM.png

[7] Image: http://www.ritholtz.com/blog/wp-content/uploads/2013/08/Screen-Shot-2013-08-07-at-6.51.56-PM.png

[8] Image: http://www.ritholtz.com/blog/wp-content/uploads/2013/08/laborshare.png

[9] here: http://economix.blogs.nytimes.com/2013/06/25/labors-declining-share-is-an-international-problem/

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