Jobs Gains May Not Help Obama's Re-Election Bid

The recent improvement in the job market comes as welcome news for President Obama as he struggles to answer GOP attacks on the campaign trail that he’s mismanaged the economic recovery. There are a lot of reasons, though, that it may be too early for the White House to start cheering about jobs.

There's no shortage of issues vying for voter attention as the 2012 presidential campaign kicks into gear. But with unemployment stuck above 8.5 percent for the 34th month in a row, the job market likely will top the list until the November election.

The White House hammered on the issue again week, as the president rolled out yet another round of job-creation proposals at a meeting with business leaders in the White House. This one is aimed at “insourcing” jobs that have been lost to overseas companies.

"I don’t want America to be a nation that’s primarily known for financial speculation and racking up debt buying stuff from other nations," he said Wednesday in the East Room to a smattering of applause. "I want us to be known for making and selling products all over the world stamped with three proud words: 'Made in America.' And we can make that happen."

The Obama administration has good reason to focus on boosting job growth. History shows that the trend in the unemployment rate can be more important to an incumbent's chances than the unemployment rate itself. Since 1956, every incumbent president has won re-election when unemployment fell over the two years leading up to the election. And none has won a second term when it rose.

After an historic wave of layoffs during the 2007 recession, the job market is showing convincing signs of life again. A week ago, the government reported that the unemployment rate fell to 8.5 percent, the second monthly drop. New weekly claims for unemployment insurance, despite a surprise bump higher this week, have been trending lower to levels economists say are consistent with an improving job market.

But those headlines create the first potential hazard for the White House. Economists note that an improved job outlook typically brings “discouraged” workers back in the official count of the total workforce; to be counted, you have to be actively looking for work.

As those discouraged workers begin looking again, they're added to the statistical pool of jobless workers. But unless they find jobs right away, their re-entry will push the unemployment rate higher.

Like many employment statistics since the 2007 recession, the surge in discouraged workers was extreme. The labor force participation rate - the percent of the population considered part of the workforce - is at the lowest level in nearly 30 years.

From a low of 363,000 when the recession began in December, 2007, the number of workers who are too discouraged to look for work more than tripled to 1.3 million last December. Since that peak, better job prospects have lured some of those people back in the workforce. But as of December 2011, some 945,000 still reported they had given up looking for a job.

Though job growth has picked up, it's still not strong enough to re-hire the large pool of workers left behind by the recession. From a low of 6.7 million in early 2007, the number of people out of work more than doubled to about 15.4 million in October, 2009. While it has since eased to 13.1 million, the current pace of job growth - an average of 162,000 new jobs were created each month in 2011 - is barely enough to keep up with the population growth.

The Obama administration has its work cut out for it to boost the pace of hiring. One big hurdle: Companies from manufacturers to oil producers report that they want to hire but can't find workers with the skills they need. The purported skills mismatch has left behind millions of workers with low-tech skills whose jobs may never come back. Even as the economy recovers, economists say that "structural" unemployment will remain stubbornly resistant to the improving job outlook.

For now, those long-term jobless workers are staying afloat with the help of unemployment insurance, which has become a divisive political issue. After several rounds of extensions, the current program provides up to 99 weeks of benefits for workers who have paid into the system. Congressional Republicans are gunning for major changes in the program after agreeing to a two-month extension in December.

One would cut back the total number of weeks of eligibility, cutting off benefits for millions of households. The other looks to limit eligibility to those who finished high school, unless they're enrolled in a program for an equivalency diploma. That battle, which heats up next month when the two-month extension expires, will open a new front in GOP attacks on the White House jobs policy.

While recent economic data are pointing the right direction, companies aren't creating new jobs as fast as they're booking higher profits. Even as hiring has picked up, the number of jobs openings declined, according the Labor Departments’ monthly Job Openings and Labor Turnover Survey (JOLTS). Employers filled nearly 4.15 million jobs in November, but the number of job openings shrank by 63,000, to 3.2 million. There still aren't enough jobs to go around: there's roughly one job open for every four people out of work, according to the JOLTS data.

Business also aren't using their rising profits to boost workers' paychecks. Though consumer spending is rising, it's coming from more borrowing, not higher wages.

"The consumer has been spending beyond his means once again," said private economist Gary Shilling. "We have seen a decline in the savings rate and a run up in borrowing. I don't think that's sustainable."

Shilling believes that a looming consumer spending crunch could bring on another recession in 2010. If that happens, President Obama will have an even tougher time getting re-elected.

"My Labrador retriever could get elected if we have a recession year," said Shilling.

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  • by Anonymous on Jan 16, 2012 at 03:41 PM
    What jobs gain are they refering to? last week had something like 300,000 new jobless claims!
  • by Hans Location: NC on Jan 15, 2012 at 09:10 PM
    Liberal Obama loving media propaganda lies 25% of Blacks are unemployed and they never got '1' of Hussein's Job Stimulas Plan jobs. - LOL. Now crime is is going up. Read the news people!
  • by Dewey Location: NC on Jan 15, 2012 at 08:59 PM
    Why was Martin Luther King Republican? Few black Americans know that it was Republicans who founded the Historically Black Colleges and Universities. Unknown also is the fact that Republican Sen. Everett Dirksen from Illinois was key to the passage of civil rights legislation in 1957, 1960, 1964 and 1965. Not mentioned in recent media stories about extension of the 1965 Voting Rights Act is the fact that Dirksen wrote the language for the bill. Dirksen also crafted the language for the Civil Rights Act of 1968 which prohibited discrimination in housing. President Lyndon Johnson could not have achieved passage of civil rights legislation without the support of Republicans. Critics of Republican Sen. Barry Goldwater, who ran for President against Johnson in 1964, ignore the fact that Goldwater wanted to force the Democrats in the South to stop passing discriminatory laws and thus end the need to continuously enact federal civil rights legislation. Republicans also started the NAACP and affirmative action with Republican President Richard Nixon in 1969 a plan (crafted by black Republican Art Fletcher. Just a few facts!
    • reply
      by Obama Snake Oil co on Jan 16, 2012 at 05:37 AM in reply to Dewey
      Dewey, true post but might I add; MLK was not allowed to register to vote in the DNC. The GOP allowed blacks to register. I still contend that the DNC has more damage to blacks than the GOP has ever done. Consider welfare....putting people in a way of life never to escape....what does that sound like?
  • by History Student Location: NC on Jan 15, 2012 at 08:51 PM
    From Human Events - Why Martin Luther King Was Republican. It should come as no surprise that Dr. Martin Luther King, Jr. was a Republican. In that era, almost all black Americans were Republicans. Why? From its founding in 1854 as the anti-slavery party until today, the Republican Party has championed freedom and civil rights for blacks. And as one pundit so succinctly stated, the Democrat Party is as it always has been, the party of the four S's: slavery, secession, segregation and now socialism. It was the Democrats who fought to keep blacks in slavery and passed the discriminatory Black Codes and Jim Crow laws. The Democrats started the Ku Klux Klan to lynch and terrorize blacks. The Democrats fought to prevent the passage of every civil rights law beginning with the civil rights laws of the 1860s, and continuing with the civil rights laws of the 1950s and 1960s. During the civil rights era of the 1960s, Dr. King was fighting the Democrats who stood in the school house doors, turned skin-burning fire hoses on blacks and let loose vicious dogs. It was "Republican President Dwight Eisenhower" who pushed to pass the Civil Rights Act of 1957 and sent troops to Arkansas to desegregate schools. John F. Kennedy voted against the 1957 Civil Rights Act while he was a senator, as did Democrat Sen. Al Gore Sr. Republicans also started the NAACP and affirmative action with Republican President Richard Nixon in 1969. MLK JR " In order to break the Democrats' stranglehold on the black vote and free black Americans from the Democrat Party's economic plantation, we must shed the light of truth on the Democrats. We must demonstrate that the Democrat Party policies of socialism and dependency on government handouts offer the pathway to poverty, while Republican Party principles of hard work, personal responsibility, getting a good education and ownership of homes and small businesses offer the pathway to prosperity. "
  • by Just Facts on Jan 14, 2012 at 04:45 PM
    The GOP/TP are gone. They are traitors to this country for what they've done to this country in an effort to make the President of the United States fail. The citizens of this country will not forget the obstruction, the holding hostage, the misuse of the filibuster, the downgrade. The GOP/TP political games have been holding this economy down since this President took office. You can justify their actions any way you want. We are done believing anything the GOP/TP says. We are simply biding our time until we can vote the GOP/TP out. Obama 2012... (Kick the Republicans to the curb) That includes winning a super majority in the Congress and Senate so we don't have to hear any more of your total, greedy, hand's in our pocket B.S.
    • reply
      by Obama Snake Oil co on Jan 15, 2012 at 02:44 PM in reply to Just Facts
      Just Hype, try some facts sometime, blaming it on bush, Obimbo teach you that or did you come up with that on your own? You guys are washed up in 2012 and you know it, the country knows it and even foreign countries know it. It had nothing to do with anything outside of the whitehouse and everything to do with the p poor leader you guys voted for. Jimmy Carter is proud. You vote the worst president in the history of this nation and under your desperate measures rule, you come an pot that bile. Well, smile, he is you fault, not mine, I didn't vote for him, support him or defend him. I read his book and knew what he was. You went along with the sheepish like you most likely always do. Well, 2012 will be a very sorry year for you since you will see 2010 all over again then some. So walk away, hang you head low and never tell anyone you voted for the president...they will loathe you...
    • reply
      by Mark on Jan 15, 2012 at 09:20 PM in reply to Just Facts
      To - Just Facts on Jan 14, 2012 at 07:45 PM - No facts ranting nonsence. Why?
    • reply
      by Cindy on Jan 15, 2012 at 09:28 PM in reply to Just Facts
      OK - Just Facts on Jan 14, 2012 at 07:45 PM - Give all your $$$$$ Money to the poor people. Be a true Democrat? LOL
  • by Anonymous on Jan 14, 2012 at 04:41 PM
    I lost my job in September because my company "downsized" to do more with less. They weren't losing money, just wanted more of it. Things were not rosy, and after 30 years of paying unemployment tax I had to file for it! I don't see how any of the Republican candidates have any new ideas to fix the economy, and I have not heard of one specific new regulation under Obama that "kills jobs". And the unemployment numbers have always been a sham.....
    • reply
      by Dar on Jan 15, 2012 at 05:45 PM in reply to
      If you are living in NC, you don't pay unemployment tax....youe employer does. Do try to disagree with me on this as I am an accountant & I know my job. I do agree there are cut-throat companies that will do anything for a buck.
  • by Nuff said on Jan 14, 2012 at 04:31 PM
    The last month of the prior Bush administration there were 643,000 jobs LOST. So we should return to that?!? At the very least - VERY LEAST - the POTUS has stopped the hemorraging and brought us back to some growth. And done so without the help of a do-nothing, don't-have-a-plan-at-all GOP congress. I'll take Obama in 2012. Easy.
  • by Anonymous on Jan 14, 2012 at 04:19 PM
    The jobs data will not have to, the Republicans are helping with Mitt the ball glove, That makes Obama the only choice!!!!! Ron Paul is the only hope for Repubs.
  • by Waldo on Jan 14, 2012 at 03:59 PM
    At this point.. The GOP is so busy mud-slinging.. Obama is still ahead, jobs can't push him any higher, all the democrats need to do for Obama is replay Newts ads against Romney.. their greed and bickering is Obama's win
  • by Whew on Jan 14, 2012 at 03:49 PM
    Michelle is def the ugliest first lady we have ever had...whoa careful shell knock you out with those man arms!
    • reply
      by Waldo on Jan 14, 2012 at 04:14 PM in reply to Whew
      Have you seen Barbara Bush??
      • reply
        by Anonymous on Jan 15, 2012 at 01:16 PM in reply to Waldo
        Have you seen pictures of Abe Lincoln's old lady?
        • reply
          by Anonymous on Jan 15, 2012 at 04:16 PM in reply to
          Bush is uglier.
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