Bain, Barack and Jobs

By PAUL KRUGMAN
America’s recovery from recession has been so slow that it mostly doesn’t seem like a recovery at all, especially on the jobs front. So, in a better world, President Obama would face a challenger offering a serious critique of his job-creation policies, and proposing a serious alternative.
Instead, he’ll almost surely face Mitt Romney.
Mr. Romney claims that Mr. Obama has been a job destroyer, while he was a job-creating businessman. For example, he told Fox News: “This is a president who lost more jobs during his tenure than any president since Hoover. This is two million jobs that he lost as president.” He went on to declare, of his time at the private equity firm Bain Capital, “I’m very happy in my former life; we helped create over 100,000 new jobs.”
But his claims about the Obama record border on dishonesty, and his claims about his own record are well across that border.
Start with the Obama record. It’s true that 1.9 million fewer Americans have jobs now than when Mr. Obama took office. But the president inherited an economy in free fall, and can’t be held responsible for job losses during his first few months, before any of his own policies had time to take effect. So how much of that Obama job loss took place in, say, the first half of 2009?
The answer is: more than all of it. The economy lost 3.1 million jobs between January 2009 and June 2009 and has since gained 1.2 million jobs. That’s not enough, but it’s nothing like Mr. Romney’s portrait of job destruction.
Incidentally, the previous administration’s claims of job growth always started not from Inauguration Day but from August 2003, when Bush-era employment hit its low point. By that standard, Mr. Obama could say that he has created 2.5 million jobs since February 2010.
So Mr. Romney’s claims about the Obama job record aren’t literally false, but they are deeply misleading. Still, the real fun comes when we look at what Mr. Romney says about himself. Where does that claim of creating 100,000 jobs come from?
Well, Glenn Kessler of The Washington Post got an answer from the Romney campaign. It’s the sum of job gains at three companies that Mr. Romney “helped to start or grow”: Staples, The Sports Authority and Domino’s.
Mr. Kessler immediately pointed out two problems with this tally. It’s “based on current employment figures, not the period when Romney worked at Bain,” and it “does not include job losses from other companies with which Bain Capital was involved.” Either problem, by itself, makes nonsense of the whole claim.
On the point about using current employment, consider Staples, which has more than twice as many stores now as it did back in 1999, when Mr. Romney left Bain. Can he claim credit for everything good that has happened to the company in the past 12 years? In particular, can he claim credit for the company’s successful shift from focusing on price to focusing on customer service (“That was easy”), which took place long after he had left the business world?
Then there’s the bit about looking only at Bain-connected companies that added jobs, ignoring those that reduced their work forces or went out of business. Hey, if pluses count but minuses don’t, everyone who spends a day playing the slot machines comes out way ahead!
In any case, it makes no sense to look at changes in one company’s work force and say that this measures job creation for America as a whole.
Suppose, for example, that your chain of office-supply stores gains market share at the expense of rivals. You employ more people; your rivals employ fewer. What’s the overall effect on U.S. employment? One thing’s for sure: it’s a lot less than the number of workers your company added.
Better yet, suppose that you expand in part not by beating your competitors, but by buying them. Now their employees are your employees. Have you created jobs?
The point is that Mr. Romney’s claims about being a job creator would be nonsense even if he were being honest about the numbers, which he isn’t.
At this point, some readers may ask whether it isn’t equally wrong to say that Mr. Romney destroyed jobs. Yes, it is. The real complaint about Mr. Romney and his colleagues isn’t that they destroyed jobs, but that they destroyed good jobs.
When the dust settled after the companies that Bain restructured were downsized — or, as happened all too often, went bankrupt — total U.S. employment was probably about the same as it would have been in any case. But the jobs that were lost paid more and had better benefits than the jobs that replaced them. Mr. Romney and those like him didn’t destroy jobs, but they did enrich themselves while helping to destroy the American middle class.
And that reality is, of course, what all the blather and misdirection about job-creating businessmen and job-destroying Democrats is meant to obscure.
NYT