Mike Smitka, Washington and Lee University
Since it is in the news, let me point to three posts from this blog on growth and jobs. I've read many blog posts on this issues. While others note that labor force growth is slow, they don't provide concrete numbers. I do.
- First there's a February 2015 post on the original 4% growth claim, which Trump borrowed (without acknowledgment) from Jeb Bush. Promises versus Deliverables: Jeb Bush and 4% Growth, which was stimulated by a post by Porter Grieve in my Econ 398 Senior "Capstone" seminar.
- Then in September 2016 this blog picked up Trump's borrowing of the "promise" – 4% Growth?! – Trump channels Bush's 2015 pipe dream. This short post brings my own analytics to bear, with a graph on labor market slack.
- Finally I used that graph to ask the natural followup question: realistically, how many additional jobs could Trump claim to have created during his upcoming 4-year term as President? Thanks (?!) to the retirement of the "boomers" and our slower population growth, that number is about 6 million. Hence: Do the "Jobs" Arithmetic: Trump Calls for 19 million Immigrants.
What Trump can hope for is (i) employing entrants to the labor force due to population growth, which will total about 2 million over the next four years, net of those who retire plus (ii) pulling the employment level of prime-age and 20-somethings back to the pre-2007 level, which was stable over the five years 2002-2006. In particular, as a share of the population about 2% fewer prime-age workers are employed today than in the period before the Great Recession, as per the graph on the right.
Now as the graph indicates, the employment share has been recovering for the past five years. So all Trump has to do is to not mess things up, and for us all not to be the unlucky victim of external circumstances. If in fact we add 6 million jobs, I will let him claim credit, even though policy initiatives under the new presidency aren't likely to make it through Congress and take effect so as to have much impact before his 4 years are out.