I initially said that I wasn't going to waste my time on this. But as my doctor told me that it was beneficial for my health to sometimes and occasionally relax and waste some good quality time on any stuff, here we go...

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Behind-the-scenes: Obamacare killed job creation

As reported on LiveLeak a few days ago, the Heritage Foundation (THF) produced on July 19 an analysis of private-sector job creation in the USA, since the election of Barack Obama at the end of January 2009 and up to the last projected figures for June 2011. They did this by using the data publicly available from Table B-1 (total private, seasonally adjusted) provided by the Bureau of Labor Statistics, producing a magnificent and very professional-looking chart.



THF started their analysis by stating that private-sector job creation initially recovered from the recession at a normal rate, acknowledging that the economy went from losing 841,000 jobs in January 2009 to gaining 229,000 jobs in April 2010, as reflected by an average positive rate of 67,649 jobs per month (A).

But then THF pretends that the recovery stalled, with the private-sector job creation apparently dropping from that magnificent figure of 67,649 to a miserable only 6,488 jobs per month (B), or —less than one-tenth the previous rate. Miserable.

Miserable, really? Before we address this question, let's see instead what could be the causes for the economy taking this shockingly horrendous new course. THF made some sophisticated statistical analysis using the highly significantly solid and well-proven legendary Bai–Perron breakpoint test to assess both the likelihood and the time point of a structural break in job growth as represented by the discontinuity between the two trends shown in the chart. Nothing less. This showed them that both the level of and the trend in job growth changed somewhat and somehow between April and May 2010 (but a more precise date and hour were not provided by the analysis, maybe because the right option wasn't selected in the appropriate submenu of the computer program).

So, something happened between April and May 2010. In fact, a lot of things happened then, for example, Apple launched the iPad and I washed my car. THF prefers its readers to believe that improvements in the job market ground from a fabulous 67,649 jobs per month to a halt[sic] after Congress passed the Patient Protection and Affordable Care Act (PPACA), although it honestly recognises that correlation cannot prove causation, which is quite surprising. That the PPACA would have such an impact shortly after Congress approval is surprising as this Act consists of provisions meant to become successively effective immediately, 90 days, 6 months or 4 years after the enactment. Thus, provisions causing any effect in April should have only been among those becoming effective immediately. As these were few, it should have been an easy task for THF to do the extra little work to identify exactly which was the main causative element. The FDA being authorized to approve generic drugs? Or could it have been the increase in Medicaid drug rebate for brand names? Or the creation of the Patient-Centered Outcomes Research Institute? Or maybe the reauthorization of The Indian Health Care Improvement Act? Unfortunately, THF leaves the reader to guess which of these could be this very crucial factor...

Now, let's get serious: something indeed happened to cause the trends shown in the chart. Where the THF is committing a deliberate or accidental (you decide) error is to state that the figure of +67,649 jobs per month before April 2010 is due to private-sector job creation alone, and considering it "a normal rate". That is not a normal rate at all, because it is mostly due to jobs stopping being lost much more than to any new jobs being created. In fact, between January 2009 and April 2010, the period of "normal growth" according to THF, the net results are that 373,000 jobs were created (the 229,000 that they mention for April, plus another 144,000 for March), but 5,050,000 jobs were lost. Talk about rates that anyone would love to maintain!

But are they really so clueless? Of course not. As they declare in their homepage, "The Heritage Foundation is a research and educational institution". So they only want to do some good research and educate whoever they can. The worst is that they may even succeed in doing that.

Now, let's consider that their way to interpret that data is not completely rubbish after all. Why are there any breaking points at all in this kind of charts? The obvious answer is the recession and the recovery from it, which is not a usual, frequent and thus normal process. But to be able to better see this, additional data covering the entire recession period and before is required. Despite the laudable beliefs and efforts of THF to educate ignorant people, the World did not begin the day that Barack Obama first sat in the White House as President. Let's take the data that the Bureau of Labor Statistics provides: it comes as simple tables with all the figures for private-sector employment for the last 10 years or so. Bingo! That means that anyone included the best researchers at THF, can easily have access to all the needed data to complete the chart.



What this new and complete chart shows above all is that the "normal rate" of job recovery (not just of job creation) of 67,649 jobs per month obtained while crawling out of the shithole (A) is comparable to the rate of job loss suffered, -61,971 jobs per month, while falling in it (C). In absolute terms recovery happened even some 10% more rapidly than degradation, which are quite good results.

To see how this part of the chart has very little if anything to do with private-sector job creation and how badly this has been interpreted by THF, let's imagine that in February 2009 absolutely no job at all was created, but that no job at all was lost either: that would still have produced a whooping recovery rate of 841,000 jobs per month. Big deal for all the millions of unemployed, thank you so much. How long can THF think that the economy could keep such a phenomenal rate such by not suppressing any jobs? Don't they have any clue that the time required to do this has anything to do with how deep the crisis went?

February-March 2010 is precisely when private-sector creation rate went from negative to positive, the first time that number wasn't in the reds since January 2008. Logically, the true numbers of job creation, unboosted by simple job maintenance, started then to reappear immediately afterwards. That has nothing to do with the PPACA or the iPad, although we can't be sure about my washing the car in April 2010.

So, 6,488 jobs per month or less being such a tiny weenie fraction of the rate of what could be salvaged from the carnage to get out of the recession, is it really such as miserable figure? According to the chart above and if the period administered by George Bush can be considered as normal, there is absolutely nothing wrong with this number: he scored an average of 4,243 private-sector jobs per month for his entire mandate. A perfectly normal figure, but miserable or not, you ultimately decide.

I won't wash my car anymore, promised.