Administration’s tax cuts falling short in job creation
The Bush Administration called the tax cut package, which was passed in
May 2003 and took effect in July 2003, its "Jobs and Growth Plan."
The president’s economics staff, the Council of Economic Advisers
(see background documents), projected
that the plan would result in the creation of 5.5 million jobs by the
end of 2004—306,000 new jobs each month, starting in July 2003.
Although jobs increased by 57,000 last month, November 2003, the "Jobs
and Growth Plan" still fell 249,000 jobs short of the administration’s
projection. The administration projected that a total of 1,530,000 jobs
would be created in the first five months after the tax cuts took effect.
In fact, only 271,000 jobs were created over those five months for a cumulative
shortfall of 1,259,000 jobs.
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First time that jobs contracted two years after the end of a recession
Since the recession ended 24 months ago in November 2001, 726,000 jobs
have disappeared, a 0.6% contraction. This is the first time since monthly
job statistics began in 1939 that there has not been positive growth in
jobs for two years after a recession ended. Two years into the "jobless
recovery" of the early 1990s, jobs had grown by 1.3%. In every other
recovery, jobs had grown by at least 5.0% by this stage. If jobs had grown
by 5.0% in the last two years, there would have been 7.3 million more
jobs in November.
performance of manufacturing jobs in a "recovery"
The manufacturing sector, which employs 11% of the workforce, has borne
the brunt of the job losses in recent years. In the last two years, manufacturing
employment has declined by 1.3 million, or 8.1%. That record is far worse
than the first two years following any previous recession. Even the 2.0%
decline in manufacturing employment following the recession that ended
in March 1991 does not equal the number of manufacturing jobs lost during
this "recovery." In the first eight recoveries since 1939 that
lasted at least two years, manufacturing enjoyed strong job growth of
between 5.0% and 16.2%. If manufacturing jobs had grown at the slowest
recovery rate prior to 1990, 2.1 million additional manufacturing jobs
would have been created.
plagued by higher unemployment
Given the grim national job picture, it’s not surprising that most
states are facing troubled job markets. In every state the unemployment
rate is still higher than it was when the recession started. In 32 states
across the country, at least a full percentage point more of the labor
force cannot find work than at the official start of the recession in
March 2001. Eight states have seen at least a two percentage point increase
in the unemployment rate.
losses observed for the nation as a whole are pervasive across the states.
Nearly two and a half years after March 2001, 36 states still have fewer
jobs than they did at the onset of the recession, compared to only 19
states with fewer jobs after the recession of the 1990s (see state
data and organizations).
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© 2003 by The Economic Policy Institute. All rights reserved.