Heritage Foundation’s Misleading Chart
In my ongoing (and largely empty) search to find empirical evidence for the role “policy uncertainty” in slowing hiring, a reader challenged me by sending me this link to a Heritage Foundation report. It was fairly shocking at first how clearly it seemed to show that the passage of Obamacare coincided with the economic recovery “stalling.”
James Sherk writes,
Within two months of Obamacare’s passing, the recovery stalled. Figure 1 shows net private-sector job creation from January 2009 onward. The red line shows the trend in job creation before and after April 2010. Private-sector job creation improved by an average of 67,600 jobs per month before April 2010. That month, private-sector employers added 229,000 net jobs.
As Sherk admits, this is only a correlation not causation but, he writes, “the fact does lend strong weight to the voices of businesses who say that the law is preventing hiring.” It seemed to be at least suggestive evidence of the “policy uncertainty” theory. Yet, my skepticism led me to think about this graph a bit further.
Notice that before around January of 2010 the line graph dips below 0. Although the “trend in job creation” is upward, what that graph actually shows is the economy is losing private sector jobs just at a slower rate from earlier months. Former Bush advisor, Keith Hennessy, had previously criticized Austan Goolsbee for a similar tactic with arrows. (I discuss that video here) The Heritage Foundation even approvingly links that video so they understand what they’re doing.
If you instead look at this bar graph of private sector job creation you can see more clearly what’s going on.
I’ve added in an arrow for April – the month that supposedly shows the beginning of the lower trend for job creation due to Obamacare. But now we see that after Obamacare passed we were gaining jobs while before it we were losing jobs. I’m certainly not claiming causation. I’m merely pointing out the obvious fraud that James Sherk and The Heritage Foundation are trying to get away with here.
[update July 22]: A few other bloggers have noticed them same thing I did about Heritage’s deceitful report. Their pieces are worth reading too. Funny enough, I actually checked all these blogs when I was first sent the Heritage link. Glad they joined the party to expose the propaganda.
[update September 13]: I’m happy to see that this post has been cited frequently in numerous online forums. Unfortunately, I’ve noticed that some confusion continues around the change in “trend” in private sector employment before and after the passage of Obamacare. The trend cited by Heritage is purposefully misleading; we were not gaining an average 67,600 before April and then 6,400 afterwards. Repeat: Net change in jobs is not the same thing as job growth. I looked up the private sector job numbers for the dates in the graphs (Jan ’09 – Jun’11) and calculated the average monthly change in private sector employment before and after Obamacare, which is what everyone seems to think the Heritage graph shows.
Before Obamacare the monthly change in private sector employment was an average of about -326,000 jobs a month. That’s NEGATIVE 326 thousand.
After Obamacare the monthly change was an average of +114,000 jobs a month. That’s POSITIVE 114 thousand.
How’s that for a changing trend?