Obama will leave office with unemployment at 4.7 percent
On the month of President Obama’s first inauguration in January 2009, the US economy bled nearly 800,000 jobs and the unemployment rate was speeding toward its peak of 10 percent.
He leaves office with the jobless rate down to 4.7 percent in December, wages showing their strongest pickup in seven years, and the recovery finally reaching to the bottom rungs of the US labor market.
The US Labor Department on Friday said employers had added 156,000 new workers to their payrolls in December, bringing the total tally of jobs created under the Obama administration to 11.3 million. It’s a robust record for a modern president, particularly considering the depths of the recession he inherited, though he was outperformed by Ronald Reagan (15.9 million jobs) and Bill Clinton (22.9 million).
Average hourly wages also increased in December to $26, a 2.9 percent climb over the same time the previous year, the Labor Department reported.
“We were [in] the abyss,” said Mark Zandi, a chief economist with Moody’s Analytics. “We are now at full employment or pretty close. Not everyone has benefited, but every indication is that they soon will. It’s been an amazing eight years.”
Yet it was also a long slog that unmasked inequities across the US and left much work still to be done to strengthen the economy for the long term, economists said.
Obama is turning over a mixed economic legacy to his successor Donald Trump, economists added.
The unemployment rate for black workers remains at 7.8 percent. While the jobless rate for those with a college degree is 2.5 percent, it’s almost twice that for workers who only finished high school, said Alicia Sasser Modestino, an economics and public policy professor at Northeastern University.
While the number of people working part-time who want full-time jobs has declined, along with those who have dropped out of the workforce entirely, it’s still in the millions, she said.
And that might not change much as companies rely more on contract work and new technologies such as ride-hailing apps Uber and Lyft demand more flexible workers.
“For those part-time workers, it’s now called the gig economy,” Modestino said. “Uber and Lyft and TaskRabbit, would they have really taken off if we hadn’t had the Great Recession and people were desperate and willing to give people a ride in their car? Now, it’s here to stay.”
Obama will get credit for stabilizing an economy that was in free fall, by helping push through the $832 billion stimulus package in 2009 that ensured that many infrastructure projects around the country stayed on track and workers stayed employed. He didn’t meddle with the Federal Reserve as it tried to jumpstart the economy with monetary stimulus and a near-zero short-term interest rate, said Brian Bethune, an economics professor at Tufts University.
But due in part to the gridlock in Congress, few policies came out of Washington during the Obama administration that addressed longer term economic issues, such as incentives for companies to invest in research and development of new products that could have boosted worker productivity, Bethune said.
Instead, many companies tried to increase shareholder return in recent years by merging with competitors and cutting costs, he said.
“It was a benign neglect,” Bethune said.
Now with the economy on much stronger footing, policymakers might be able to turn their attention to these thornier issues, including better training for workers that could lead to higher quality jobs, ensuring that the economic gains are shared by all, said Fred Goff, chief executive of Jobcase.com, a Cambridge-based networking site for lower-wage workers.
“It’s fabulous to have gone from 10 percent unemployment to 4.7 percent. That’s an unequivocal win,” Goff said. “The inequity balance of wealth, there’s been a lot of good intentions, but it’s not been addressed.”
Economists said Trump has an opportunity after he is inaugurated on Jan. 20 to help spur growth further, with his proposals to invest in infrastructure and reduce business taxes. But it’s unclear whether Trump’s plans to curb immigration, just as the US labor market tightens and more baby boomers retire, could slow economic growth.