Closing the books — why real math matters

Now that ​Governor Branstad has left office, the latest (and preliminary) job numbers are in, and they effectively close the books on the goal. We did not come close. Through six years and four months, Iowa jobs stood little over halfway to the five-year goal.

Or: How Governor Branstad claimed to reach his jobs goal but did not come close

As it all turned out, the job-growth goal set by former Governor Terry Branstad was at best ambitious, and never realistic.

With four previous terms behind him, and 12 years out of office, Branstad came back in 2010 with a goal of 200,000 new jobs in five years.



Nothing wrong with setting lofty goals. The biggest problem with this one was the way the longtime Governor decided to measure progress toward it. If the goal was never realistic, the counting method was never math.

Iowa’s economy produced 106,900 new jobs — the net job increase — through the Governor’s second round in office.

As late as April, the last jobs report released in Governor Branstad’s tenure, the official report from Iowa Workforce Development bore an extra line, ordered by someone, for “Gross Over-the-month Employment Gains,” from January 2011. And that line would, magically, put the state over the 200,000 mark — a year late, but more on that later.

There was no explanation with the report on how this special line was computed, but analysis showed the administration cherry-picked job gains to come up with the “gross” figure. Job categories that showed a loss in a given month were simply ignored.

It was as if a business reported its sales but not its expenses, or a football team counted its own touchdowns but not those it gave up. The number, then, was literally meaningless as an indicator of anything happening in the economy.
 

Last week, IWD released its first report on monthly job numbers since Governor Kim Reynolds took office, and the “gross” gains line was gone from the official spreadsheet.

So, for the sake at least of history, a little context:
— Through the five years of the Governor’s goal, Iowa produced 92,100 new jobs.

— Through the end of the Governor’s tenure, Iowa produced 106,900 new jobs.

In fact, we didn’t reach 200,000 under even the Governor’s counting gimmick until January of this year, a year late. Meeting the goal would have required 60 months averaging over 3,300 net new jobs a month. Instead, we have seen far less:



The slow pace of recovery should not have been a surprise to anyone. Iowa and the nation had just come out of a shorter and less severe recession in 2001. The pace of that recovery — up until the Great Recession hit — was quite similar to what we have seen over the past six years before even the latest pace slowed down.

The actual job numbers and what they may illustrate remain more important than Governor Branstad’s spin on them. It would be a mistake to devote undue further attention to the fake numbers.
Likewise, it would be a mistake to attribute any general job trends — positive or negative, even legitimately derived with actual math — principally to state efforts. Much larger forces are at work. Plus, overselling the state role feeds poor policy choices, namely to sell expensive and unaccountable tax breaks, supposedly to create jobs, at the expense of the public services that make a strong business environment possible and make our state one where people want to raise families.
Iowa needs more jobs and better jobs. To understand whether we’re getting them
requires responsible treatment of data, and honest debate with it.
owen-2013-57Posted by Mike Owen, executive director of the Iowa Policy Project

Finding closure on the job count

Not only are the actual job increases about half of what the Governor had hoped — but even his own “gross” counting method leaves him short, at 184,000.

For years, we had to watch Governor Branstad’s bogus job count tracked on the official nonfarm jobs spreadsheets provided by Iowa Workforce Development.

Basic RGBYou might remember: The Governor set a goal for 200,000 new jobs in five years. We didn’t come close — 104,500 net new jobs from January 2011 through January 2016. Everyone wants new jobs, but it was clear for a long time the goal was unrealistic.

And it was a distraction for those of us who work with such data carefully, as we do each month in our Iowa JobWatch report.
Nevertheless, the Governor’s people concocted a way to count jobs that no elementary arithmetic teacher would sanction — leave out the job losses. So IWD added a line to the official sheet, for “Gross Over-the-month Employment Gains.” And that way, the Governor claimed, he made it with a couple of months to spare.

In fact, at IWD’s budget hearing in November, the Governor asked IWD Director Beth Townsend to back up her slideshow to bolster the claim with the media present.

A few months later, it looks like we should back up that slideshow once again. The jobs data have now gone through their regular annual review, and the numbers show something different.

Not only are the actual job increases about half of what the Governor had hoped — but even his own “gross” counting method leaves him short, at 184,000.

Yes, we all want more jobs in Iowa, better jobs, more sustained job growth. But we also want the facts treated properly. Is it too much to ask for the Governor or IWD to acknowledge publicly that the “mission accomplished” claims were wrong?

When we see the news release, we’ll be sure to pass it along.
Owen-2013-57Posted by Mike Owen, Executive Director of the Iowa Policy Project
mikeowen@iowapolicyproject.org

About those jobs …

That we don’t have a chance of reaching Governor Branstad’s ambitious jobs goal is not surprising, because our long-term pace of growth is far too slow.

To read the headlines, you might not know we actually lost jobs the last two months. In fact, we’ve lost jobs in three of the last six months.

Basic RGB

Our monthly Iowa JobWatch report offers context you don’t get from official news releases.

Overall, we continue to have stubbornly and staggeringly slow job growth in Iowa. We are only about halfway to the ambitious job goal set by Governor Branstad when he sought Terrace Hill in 2010 — 200,000 jobs in five years. Through 56 of those 60 months, Iowa’s economy has added only 97,400 jobs.

That we don’t have a chance of reaching his goal is not surprising, as the long-term trend of 2,000 or fewer jobs added per month, which has held through his term, is far too slow a pace for the job growth that the Governor promised.

This has been going on for many years, and we have not fully recovered from a recession that ended six years ago. We have a 37,800-job deficit from the number of jobs we need — accounting for population growth — to be where we were at the start of the recession in 2007. (See graph below)

Basic RGB

For the state to be trumpeting a sixth-lowest unemployment rate really misses the job picture in Iowa — which is neither one of sweetness and light nor of gloom and doom, but one that demands a little more critical thinking about the challenges that face us.

How do we encourage more, and better, jobs in Iowa with sensible public policies that do not squander our state revenues on subsidies for companies to do what they would do anyway?

Owen-2013-57Posted by Mike Owen, Executive Director, Iowa Policy Project

Watching Iowa jobs: Don’t miss the deficit

Given that the population of Iowa has grown, it makes sense that more jobs need to be added to keep up. Our job deficit is almost 48,000.

Iowa’s up-again, down-again job picture is looking up again, at least for now. The May numbers from the state show an increase of 6,200 jobs. Coming on the heels of a 3,700 increase in April, this marks the first two-month gain since the end of last year, and the increase is the largest since last October.

One-month results, however, do not tell the whole story of what’s happening in the state economy and the job market. Over the past year, Iowa has averaged a gain of about 2,100 jobs per month, which is a modest pace. At this rate it would take about three years for Iowa to completely recover from recession losses.

In fact, even though Iowa has more jobs than it did when the recession started, the state shows a jobs deficit:

Basic RGBSource: Economic Policy Institute

Given that the population of Iowa has grown since the start of the recession, it makes sense that more jobs need to be added to the economy each year in order to keep up with the growing number of people. According to the Economic Policy Institute, 23,800 jobs have been added so far but 71,600 were needed by now to keep up with this growth. This means that there aren’t enough jobs for everyone who wants or needs one — a deficit of 47,800, as shown in the graph above.

For more about the latest Iowa job numbers, see our new Iowa JobWatch report. IPP has given its view of the monthly numbers since 2003 — there are always plenty of new angles for a “Job Watcher.”

IPP-gibney5464   Posted by Heather Gibney, Research Associate

The problem with political goals on jobs

Why not get rid of the political goal and focus on a realistic economic goal: the job growth we would need to bring down unemployment and keep pace with the growth of the labor market. As of the latest count, we are 55,100 short.

Mike Owen
Mike Owen

This week we were treated (?) to the latest bizarre count provided by Governor Branstad’s administration on how many jobs he has created.

The Governor is claiming 160,600 jobs already created since he took office, and it’s nowhere close to reality, if for no reason other than the fact that he’s only wanted to count job gains and ignore the losses.* But even then, the number is inflated.

So, class, let’s all take out our abacus and our slide rule and try to come up with the same number. On second thought, let’s not. Let’s get past the politics on job numbers and just count ’em ourselves. A pencil will do.

As you’ll recall, the Governor promoted a goal of creating 200,000 jobs in five years. He took office in January 2011.

We start with 1,475,900 — the number of nonfarm jobs in Iowa in January 2011, according to Iowa Workforce Development. (Find IWD’s spreadsheet here.) The latest data, which are preliminary and might be adjusted, put that number at 1,530,300 as of June 2013. That’s a net increase of 54,400 jobs.

To reach 200,000 jobs by January 2016, the Governor’s goal, Iowa would have to add 4,700 jobs per month for the next 31 months.

130719-NF-goalsIPP’s latest JobWatch report shows we have not kept that kind of pace in Iowa over the last decade. In 2013 the average net gain has been 2,400 a month, which is higher than usual.

Why not get rid of the political goal and focus on a realistic economic goal: the job growth we would need to bring down unemployment and keep pace with the growth of the labor market. As of June, we are still 55,100 jobs short of this basic threshold. But that’s a more manageable number than the 145,600 left to meet the Governor’s goal, and probably a more meaningful one.

Governors and state legislators have only so much impact on the overall health of a state economy to influence its job performance; there are much greater forces at work.

In the end, the issue for Iowa families is not as much a Governor’s goal as it is whether the economy is producing the number — and quality — of jobs necessary to maintain and improve all Iowans’ standard of living.

But we didn’t raise the issue about the job count. Others have. So as long as Iowans are going to be looking at it, we’ll help them to monitor it accurately.

* The Governor’s count of jobs already produced, 160,600, is far above even the number you’d accurately compute if you avoided counting job losses. Iowa Workforce Development has added a line on its nonfarm jobs spreadsheet leaving out the job losses and counting only gross jobs added, month by month, since January 2011. For what it’s worth, that number is 112,700 — about 48,000 behind what the Governor’s office was claiming Wednesday, and more than twice the actual net increase of 54,400.

Posted by Mike Owen, Executive Director

Different goals for progress on Iowa jobs

Depending on which goal you choose, we’re anywhere from 4,100 to 155,100 from meeting it.

David Osterberg
David Osterberg

The graph below offers one way — actually, four ways — to look at the latest nonfarm job numbers in the context of history and job goals for Iowa.

As of February, we’re 4,100 behind where we were at the start of the recession in December 2007, and 7,200 behind Iowa’s peak nonfarm job level in May 2008.

However, Economic Policy Institute analysis suggests that those historical numbers don’t give an apples-to-apples picture for how well the economy is producing jobs to meet the demand for jobs — that you need to factor in growth in the population. When that is done, Iowa still has 60,900 to go to reach where we were before the recession.

Yet another number to consider is Governor Branstad’s goal of creating 200,000 jobs in five years. Since his term started in January 2011, Iowa has produced a net total of 44,900 jobs, which works out to a pace of 1,800 net new jobs per month. At that pace, the state is well off what is necessary to reach the Governor’s goal — 4,400 per month for the remaining 35 months of the five-year period.

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As we point out in our monthly Iowa JobWatch report, the overall job numbers do not tell the full story about the job climate in our state. One thing those monthly numbers do not disclose is any detail about job quality — whether jobs gained or lost are full-time or part-time jobs, or are permanent or temporary positions, or pay well, or offer health and/or retirement benefits.

For more, see our latest Iowa JobWatch report and also The State of Working Iowa 2012.

Posted by David Osterberg, Executive Director

Score one for economic reality: Public jobs matter

Public-sector spending feeds private industry, and creates new jobs in the private sector. To pretend otherwise is foolish.

Mike Owen
Mike Owen

Today’s New York Times editorial, “The Myth of Job Creation,” takes both President Obama and challenger Mitt Romney to task for their comments in the second debate about the importance of public-sector (government) jobs.

As the Times noted:

Public-sector job loss means trouble for everyone. Government jobs are crucial to education, public health and safety, environmental protection, defense, homeland security and myriad other functions that the private sector cannot fulfill. They are also critical for private-sector job growth in … fundamental ways.

At the Iowa Policy Project, we have made this case repeatedly in Iowa over the last few years, both in response to cutbacks in Iowa budgets and to misinformed political assaults on federal stimulus spending, which did a good job bridging revenue gaps in Iowa to prevent worse cutbacks in public-sector spending. See our latest “Iowa JobWatch.”

In Iowa, 1 in 6 jobs is a government job, at the local, state or national level. How is it possible that roughly a quarter-million jobs in our state do not have an important impact on our economy? The answer of course is that they do. The lion’s share of those jobs are in local government, so they are scattered across the state. They are filled by our neighbors, buying goods and services from local businesses and keeping kids in our schools. As the Times notes, regarding comments by both presidential candidates suggesting that “government does not create jobs”:

Except that it does, millions of them — including teachers, police officers, firefighters, soldiers, sailors, astronauts, epidemiologists, antiterrorism agents, park rangers, diplomats, governors (Mr. Romney’s old job) and congressmen (like Paul Ryan).

As with shortsighted approaches in budgeting that attempt to resolve all deficit issues with spending cuts, instead of taking a balanced approach to both the spending and revenue sides of the budget ledger, our leaders make a mistake when they think all new jobs have to be in the private sector or they don’t matter. Public-sector spending feeds private industry, and creates new jobs in the private sector. To pretend otherwise is foolish.

It’s always good when a dose of fiscal and economic reality hits the public debate. But it is unfortunate that it doesn’t happen more often.

Posted by Mike Owen, Assistant Director