The Welch Consulting Employment Index is 93.3 for August 2012, up 0.8% from August 2011 (seasonally adjusted). An index value of 93.3 means that full-time equivalent employment (from the BLS household survey) is 6.7% below its level in the base year of 1997, after adjusting for both population growth and changes in the age distribution of the labor force. The index has fallen over the past five months, it was 94.9 in March. The index remains weak because part-time employment is higher than it has been historically and employment growth has barely exceeded population growth over the past two years.
The following chart compares employment changes in the first 44 months of the first terms of Presidents George W. Bush and Barack Obama. George W. Bush took office when the employment index was 101.8, one of the highest values in the past 15 years, while the index had fallen to 96.9 by the time Barack Obama was inaugurated. Nonetheless there has been a similar decline in employment during the first three and a half years of their administrations. Between George W. Bush’s inauguration in January 2001 and August 2004 the employment index fell by 3.4%. The corresponding change for President Obama’s first term is a 3.7% decline in the employment index between January 2009 and August 2012.
The similarities in the pattern of employment decline during these administrations becomes even more clear if the chart axes are adjusted to account for the differences in the state of the labor market between 2001 and 2009.
The first terms of the Bush and the Obama administrations have been characterized by steady declines in full-time-equivalent employment relative to the growth in the adult population. The primary difference in the jobs record is that President Bush inherited an unusually strong labor market with a very low unemployment rate and a high rate of full-time equivalent employment. President Obama inherited a labor market that was already declining fairly rapidly. After 44 months of their presidencies, however, the net percentage change in employment is remarkably similar across administrations.
Technical Note: Full-time equivalent employment equals full-time employment plus one half of part-time employment from the BLS household survey. The Welch index adjusts for the changing age distribution of the population by fixing the age distribution of adults to the 1997 base year. The Welch Index adjusts for population growth by fixing total population to its 1997 level. Seasonal effects are removed in a regression framework using monthly indicator variables.