posted March 5, 2012
Fact-Checking Obama’s State of the Union Speech

Last Monday, January 24, 2012 President Obama delivered his latest ‘State of the Union’ (SOTU) speech to Congress. It heavily emphasized economic themes, among which were jobs, manufacturing, trade, the auto industry, teachers, taxes, medicare, financial regulation, and growing income inequality in the U.S. Claims were made and general proposals offered for creating more jobs and how to get a sluggish US economic recovery finally going after three years of tepid, stop-go results. But many of the President’s claims in his SOU speech were contrary to the facts, especially with regard to jobs. And the proposals he reaffirmed for generating a sustained economic recovery were more of the same ‘old wine in new bottles’ that haven’t had much impact to date. Here’s some facts concerning jobs to consider before feeling too optimistic over what was largely a campaign election year SOTU speech—a speech more reminiscent of Obama’s 2008 ‘talk the talk’ period than his 2009-11 ‘talk but no walk’ record.

Part 1: JOBS

Obama boasted that the US manufacturing sector had turned around and created millions of jobs on his watch. He subsequently raised the need to further boost manufacturing and the exports of US manufactured goods as one of his two primary recommendations for doing something about the 23 million jobless still without work in the U.S. (The other primary recommendation was more business tax cuts, further comment about which will follow in Part 2).

What are the facts concerning manufacturing sector jobs in the U.S. today?

According to the US Labor Department (table B-1 Employment Reports), there were 17.264 million jobs in manufacturing in December 2000. By the start of the recession in December 2007 there were 13.879 million. When Obama took office in 2009 there were 13.406 million. As of December 2011 there were 11.812 million.

Over the past year, from December 2010 through December 2011 there were 1.932 million total private sector jobs created. But only .218 million of those were manufacturing jobs. And virtually all of those manufacturing jobs were created in the first half of 2011, as global trade and exports accelerated. That same global trade began contracting in the second half of 2011. In response to that contraction, in the last three months of 2011, October-December, US manufacturing employment actually fell by 24,000 jobs. So tell me how this picture, and a further promotion of manufacturing sector is going to significantly reduce the 23-24 million currently still jobless in the US? Even at the early 2011 rate, it will take 100 years to create 20 million additional manufacturing jobs.

The above numbers represent total manufacturing jobs. How about jobs for non-supervisor/non-managers in manufacturing? Since the so-called official ‘end’ of the recession in June 2009, through December 2011—over a period of two and a half years—a mere 174,000 production manufacturing jobs were created. That’s a meager 5,800 a month.

The president in his speech was exceptionally laudatory of the US auto companies, praising all three for having fully recovered and now creating jobs. But let’s look at the record here as well. 315,000 auto jobs were lost from the start of the recession in December 2007 through the end of 2010. Over the past year the industry has hired back at the rate of only 4,000 a month, or 48,000, of those 315,000 jobs lost. And let’s not forget, the overwhelming number of those hired the past year have been temp status auto industry jobs paid at around $14 an hour, about half of the normal auto worker wage rate. Yes, the auto companies are hiring, but at half pay. Not surprisingly, their profits have recovered, but have done so by shifting money from auto workers to auto companies’ profits bottom line.

Ok, friends of the administration may argue, maybe the facts regarding manufacturing jobs were a bit overblown, and exaggerated by the president. What about the 1.9 million total private jobs created this past year. Isn’t that significant? Well, 600,000 of those jobs were created in the retail sector in the last two months of 2011, the holiday season. Most jobs in that sector are part time and temp jobs, many of which will soon disappear in early 2012. Another 82,000 jobs were messengers and couriers, hired by UPS, Fedex, etc. for the surge in mailing in the holiday season. They too will quickly disappear in early 2012. In addition, Banking and Finance sector companies have announced more than 150,000 layoffs scheduled for 2012, and that’s just a start. And the two biggest job creation sectors of the economy in the first half of 2011—Business and Professional Services and Leisure and Hospitality—both reduced jobs in the final two months of 2011 by 264,000 jobs.

Finally, let’s not forget the non-private, government sector of the economy. While the private side may have created 1.9 million jobs, 257,000 state, local government, and postal workers lost their jobs just in 2011 alone—106,000 of whom were teachers.

While on the topic of teachers, Obama praised the profession for its key role in the economy and development of society. He properly noted teachers should be honored and respected for their contribution to both. He then proclaimed the best teachers should be rewarded with more pay. Education managers should be given more flexibility, he advocated, to give more pay to the best teachers and get rid of the worst. This is his Education Secretary, Arne Duncan’s, old formula. In practice it means the introduction of merit pay, which would undermine teacher union contracts, and more manager freedom to fire teachers and/or layoff out of seniority based on administrator preferences and favoritism—the old ‘civil service’ approach. Together with the push toward charter schools, Obama’s policy for education amounts to a destruction of teacher union contracts. Charter schools plus merit pay plus end of seniority and more freedom to fire means the end of teacher unionism as we know it.

In the second half of 2010 Obama reshuffled his staff, re-populating his team with corporate advisers. Bill Daley became chief of staff. General Electric Corp. CEO, Jeff Immelt, headed his ‘jobs council’. Scores of corporate underlings were hired behind them. What we subsequently got in terms of jobs policy was a manufacturing sector-export trade centric set of proposals. Jobs were supposed to come from stimulating manufacturing, exports, pushing free trade, as well as cutting business regulations, promoting patent protection for the tech sector, and similar pro-business approaches. Daley-Immelt essentially took over the Obama jobs program.

More business and investor tax cuts followed, including $802 billion in further tax reductions in December 2010. Regulations were reduced, as Obama bragged in his SOTU that he cut more regulations than did George W. Bush in his first term. Contrary to his 2008 campaign promises to restructure job-killing free trade agreements, the Obama-Daley-Immelt team opened a new offensive to pass pending free trade agreements with Korea, Panama, Columbia and elsewhere. The former three were adopted in 2011. These were promoted as manufacturing job-creation measures. However, according to various studies since 1994 by the respected Economic Policy Institute, more than 10 million jobs have been LOST due to free trade. Nevertheless, in his SOTU speech Obama once again is promoting the corporate line and false claim that free trade creates jobs.

Manufacturing output has risen significantly since mid-2009, as has manufacturing corporations’ revenues and profits, especially the big multinational players like Immelt’s GE and the auto and high tech companies. But manufacturing jobs are still 1.6 million short of where they were in early 2009 and wages of new manufacturing jobs are far lower than existing wages. A few workers get low paying jobs, while manufacturing companies reap the big benefits of Obama’s manufacturing-export centric jobs policies. The ‘let’s boosts manufacturing-export companies’ approach to job creation has been a sham job creation program, taken straight out of the economic playbook of the Daleys and Immelts that have been driving the Obama team jobs program since late 2010. And by the comments of President Obama in his recent SOU address, corporations will continue to drive the Obama jobs program—while they simultaneously sit on their current $2.5 trillion cash hoard and refuse to invest in America. Sure, GE and GM may create some jobs in the US—but only if American workers are willing to work for Chinese wages!

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