Topline
Ever a hot button topic ahead of presidential elections, the labor market has performed nominally much better during Joe Biden’s presidency than it did under Donald Trump, in terms of total job creation and the unemployment rate, though that is far from the whole story and Trump holds a major advantage in one key area.
Donald Trump, left, and Joe Biden at a 2020 debate.
Key Facts
At the highest level, Biden holds a massive advantage over Trump.
The U.S. added 15.8 million jobs during Biden’s first 42 months in office, compared to a 2.7 million contraction during Trump’s presidency, according to total nonfarm payrolls, the most-cited measure of total employment which encompasses most American workers.
Similarly the unemployment rate rose 1.7 percentage points from 4.7% to 6.4% under Trump, declining 2.1 percentage points under Biden to the latest reading of 4.3%.
However, the gross data paints a wholly incomplete picture of the labor market’s strength under both presidents, as the COVID-19 pandemic upended the global economy beginning in 2020, causing U.S. unemployment to briefly spike to a record 14.8% in April 2020 after a whopping 22 million-worker contraction from Feb. 2020 to April 2020.
That skewed Trump’s numbers negatively and Biden’s positively as the labor market returned to relative normalcy following the unprecedented shock.
In fact, the first three-quarters of Trump’s tenure were marked by a remarkably strong job market, with nonfarm payrolls growing by about seven million between Jan. 2017 and Feb. 2020 and unemployment declining over the same period from 4.7% to 3.5%, at the time the lowest mark since 1969, later surpassed by Jan. and April 2023’s 3.4%.
Was Wage Growth Better Under Biden Or Trump?
Wage growth has been slightly higher under Biden, with average hourly earnings growing by 17% under Biden thus far compared to 15% during Trump’s presidency. But the Trump-era wage growth went much further for Americans, as it outpaced inflation more strongly, with the consumer price index rising by 8% from Jan. 2017 to Jan. 2021 compared to 19% from Jan. 2021 to July 2024. Americans saved an average of 8.7% of their monthly paychecks under Trump compared to 5.9% under Biden, according to the Bureau of Economic Analysis’ monthly personal savings rate metric.
Contra
It’s “very difficult” to say the changes in the labor market were a product of “one presidential administration versus the other,” Felix Koeing, a professor of economics at Carnegie Mellon University, told Forbes. The labor market was “very strong” prior to COVID-19 under Trump and remains so under Biden, according to Koeing. The macroeconomic factors driving much of the labor market trends that were “not so unique to the U.S.,” like 2020’s massive uptick in unemployment and labor shortages. “Lots of this might just be coincidence” rather than the result of Trump’s and Biden’s policies, noted Koeing.
Key Background
The stronger spending power is perhaps the best feather in Trump’s cap in terms of shepherding the world’s largest economy, reflected in polling which suggests just 19% of Americans believe they are better off financially since Biden took office, compared to 50% who think they are worse off. Just as the Biden economy benefited at a high level from inheriting a weak labor market, it was similarly doomed by grappling with a global inflation crisis partially stemming from a variety of factors outside of Washington’s control like supply chain delays due to COVID-19. Still, the U.S. economy has been remarkably robust under both presidents. Gross domestic product, a metric which measures the total value of all goods and services produced in the U.S., is up 50% from 2015 to 2023. Under both presidents, the unemployment rate has been below where it was for the entirety of Barack Obama’s 2008-2016 presidency marred by the fallout from the financial crisis, save for the 2020-2021 pandemic blip.
What To Watch For
The labor market is at a potential inflection point, with unemployment rising in July to its highest rate since October 2021 and monthly job growth coming in at its second-weakest level since 2020.
Tangent
Both Biden and Trump characterized their labor markets as signs of the “great American comeback.”
Further Reading
Trump Media to the Saudi Arabian influence on golf and what real-life billionaires think of ” Succession.” Send tips to dsaul@forbes.com. Follow Saul for analysis on the biggest daily economic and stock market happenings, ranging from inflation data to tech earnings to deep-dives on hot button assets.
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