Should We Believe Mitt Romney’s Claim That He Created 100,000 Jobs?
While Mitt Romney may be misunderestimating, as a certain former president would say, the damage that his get-filthy-rich tenure at Bain Capital is causing, opposition researchers are having a devil of a time disproving his claim that he created 100,000 or 120,000 jobs (he has cited both numbers) as CEO of the private-equity company, while supporters are having an equally hard time proving that he is right.
In any event, the majority of the jobs Romney takes credit for creating come from a single source: Staples Inc., and a closer look shows that he is kind of right and kind of wrong.
Romney is kind of right in saying that he helped create 89,000 jobs at Staples, which is the number of employees that the office supply giant currently has. But Bain’s investment in Staples was a mere 10 percent of the start-up cash it raised and when Romney left Bain the fledgling retailer only had a single store with fewer than 200 employees.
The larger picture is muddled.
Steve Kaplan, writing for The American, the online magazine of the right-leaning American Enterprise Institute, attempts to unmuddle the numbers by looking at jobs created and lost in Bain companies at the time Romney left the firm in 1999 and then looking at jobs created and lost in those same companies today.
Kaplan notes that among Bain’s investments under Romney, the large job creators were Staples and Sports Authority. At the end of 1998, Staples had more than 42,000 employees and Sports Authority had almost 14,000 for a total of 64,000, while today Staples has 89,000 and Sports Authority, which is now a private company, had 14,300 employees in 2006, the last time it revealed job numbers.
Citing four companies that the Wall Street Journal looked into — American Pad & Paper (Ampad), Dade Behring, DDI, and Stage Stores—that Bain made very profitable investments in and took money out of that later went bankrupt, Kaplan arrives at these numbers:
Stage has about 3,900 more employes today than in 1996 when Bain invested in it, Dade Behring in its present incarnation has about 1,000 fewer jobs and DDI about 1,500 fewer jobs, while the numbers for Ampad are impossible to ascertain.
“What the article does not tell you is what happened before and after those bankruptcies,” Kaplan writes. “When you add it all up today, even in these investments, it looks likely that Bain Capital created jobs overall.”
He concludes that “While we will probably never be able to measure the true numbers, it seems pretty clear that ‘looting’ is an inaccurate description of what happened with these companies.”
Tim Murphy, writing for the left-leaning Mother Jones, isn’t buying.
This, he says, is because Romney himself has failed to produce credible numbers. He and his surrogates have cited Staples and Sports Authority as success stories but have said zilch about the Bain investments that have lost jobs.
Meanwhile, the Obama re-election team, using the 100,000 jobs-created number as a benchmark, taunts Romney by saying “his claim is ever changing” in this chart:
The bottom line, Murphy says, is that the 100,000 figure was not actually calculated; it was “just a composite of a couple of data points, and there’s no evidence that it’s actually a ‘net’ figure, according to Romney’s own campaign.
Meanwhile, Jonathan Last of the right-leaning Weekly Standard enters the fray with the cogent observation that people don’t credit the jobs created by McDonald’s, Home Depot, and Apple to the money men. The credit goes to the idea men — Ray Kroc, Bernard Marcus, Arthur Blank, Steve Jobs, and Steve Wozniak.
“This doesn’t make Romney a bad guy,” writes Last. “It makes him a wise investor — and investors are incredibly important. But the skills of an investor aren’t those we think of first when contemplating the presidency. If they were, Warren Buffett would be squaring off against George Soros every four years.”
“More importantly, Romney’s real skills differ in important ways from the ones he’s been advertising. Voters may sense this. And it’s one more reason why Romney hasn’t been able to close the deal with skeptical Republicans.”
When challenged on the accuracy of his job creation figures during a Republican debate by George Stephanopolous of ABC News, Romney told the audience they should just trust him.
“I’m a good enough numbers guy to make sure I got both sides of that,” he said.
Okay, Mitt, we trust you.
24 Responses to “Should We Believe Mitt Romney’s Claim That He Created 100,000 Jobs?”
Rom might have created jobs only to sell out in the end. He didn,t care for the workers only for the Corporation. His daddy was gov of Mich and nobody liked him after awhile..looks like a repeat if this religious fanatic gets in because with all the money he made he contributed 4 million (supposedly) to charity and bigger chunk to his morman church of 6 million. Tells alot about his priorities doesn,t it…
Companies like Bain don’t create jobs. The person who started Staples, thats who creates jobs. Bain is just a source of funding, and by the time companies like Bain get involved the business has already gone through the hardest part of getting going.
For Romney to claim credit for creating jobs at Staples is like the food wholesaler who supplies your favorite restaurant claiming credit for the meal you just ate.
The “job creators” are the small business owners themselves who need capital to get going. Maybe you can say the banks that give small business loans as well, but frankly they are there to make money on the small business owners. The larger investors like Bain come in later after the business model is proven, and represent the next stage in the business. They would just as soon invest in a company that uses live babies as crash test dummies in China as they would a local small owned business, as long as they see a profit can be made.
Yeh, the government can do a better job, and the filthy profits from the backs of the poor workers can go back into the government’s coffers.
Wait, so should we credit the stimulus with creating jobs, then? After all, it just provided the funding. And what about those calculations?
It’s true that no single person can ever claim exclusive credit for a job created. It is a combination of several factors and several players that “create” a job. I don’t think Mitt ever has or would dispute that. But, if that means that no one can ever point to their record of job creation, then let’s apply the standard evenly: no one can ever claim credit. No one or no program has ever created a job, by this standard. They just appear out of thin air. Apparently.
As for his numbers, what I get from your post is this: people who actually look at the numbers objectively generally end up agreeing with Romney that Bain helped create jobs in the ballpark of what he has claimed. And a “ballpark” really is the best we can do anyway. And he never said “just trust me.” The numbers are out there for all to see, and your post contains some of them. He was responding to a question in which it was asked if he had considered both sides, and he said he had.
Now, I don’t know if I’ll be voting for Romney. It’s true that being a good investor doesn’t make one a good president. Neither does being a good community organizer, or a good senator, or a good governor. All of these things add to someone’s experience, but in the end no one is completely qualified. Personally, all else being equal, I’d rather have a business man and governor than a community organizer and Senator. To each his own.
A, come on, the stimulus and Obama’s economic policies created 3 million jobs. How do I know, he said so.
All nonsensical, reflexive, anti-govt screeds aside, Romney’s problem closing the deal isn’t only going to be confined to “conservatives”. The conventional wisdom seems to be that he is too moderate for many of them, but will do better in a general election for that very reason. I think he’ll meet the same kind of skepticism, but magnified a great deal. Craven profiteering isn’t the same thing as job creation – that is unless one still believes in the fantasy of trickle down.
The stimulus is nothing like what Bain did. You guys know the difference right?
“You guys know the difference right?”
No, if they both created jobs, or I hire someone to clean my house.
The stimulus was there to create demand and take care of some needed projects. Not buy companies or gain assets. It was meant to inject money back into the economy. Bain was buying companies, not creating demand. Whether or not jobs were created, lost, or shipped overseas was immaterial. They are completely different processes, done for completely different reasons. A closer analogy to Bain would be the bailout of the auto industry, or the banks we took stock in. But those aren’t quite the same either.
And to answer the comment that the govt does it better, as of the last few years I would in fact say the govt does do it better as evidenced by the fact both the auto and banking industries would be smoking ruins now if not for outside help. The “Free Market” ran itself into the ground with total abandon and was going to take this country with it.
Of, course Bush was on board for the bank bailouts/handouts, Obama inherited that.
Ford did fine without any bailout, so the jury is out on whether GM should have gone bankrupt.
Jobs are created many ways, OK?
I’m not disputing that Bush was on board for the bank bailouts, but the point was that sometimes the govt does things that help the private sector when no one else can. One of my big pet peeves is when people make blanket statements that the govt doesn’t do anything right when it really does a lot. In fact its provided so much we really take for granted.
My issue with Bain is that any job growth generated is purely incidental. When a company like that buys a company its an investment they need to see a return on. Maybe they grow the company 10x, make a lot of jobs before selling it. Maybe they ship all the jobs to China, show increased profit for a quarter to two, then sell it to a foreign holding company at a profit. Either way they don’t care.
Henry Ford was a job creator, Steve Jobs was a job creator, the guy who opens a sandwich shop down the road is a job creator. Companies like Bain manage to make money based on the fact someone else is already making money. They are a second tier profit generator, and do not necessarily need to expand their employee ranks to make a profit. I don’t begrudge them that profit or the line of work. I just think its kinda odd that he would connect himself to the numbers of Staples, when his company merely bought a 10% interest in their funding, and claim he made a hundred thousand jobs.
P.S. – Ford is smarter than GM. I saw GM advertising Hummers during the ’06 NBA finals, 6 commercials in that game I watched, when gas was climbing past $3/gallon. GM was about as dumb as you can get.
S, So the government saved a dumb company. They also let Lehman go down the tubes, some say that was a mistake.
Yes, the government does some good thing, just not all the time.
And, sometimes Gates, Jobs and Warren also do a better job. Mitts type of company comes with the overall capitalist system, and some businessman say he did a good job whether you like the methods he used or not.
Job creation claims for retail establishments are always bogus because a new retail store does not generally increase consumption, it only transfers it from somewhere else. A big-box like Staples inevitably causes a net loss in jobs because it puts a lot of mom and pops out of business.
The whole point of any real investment is to increase our standard of living through increased performance or efficiency. Both inevitably lead to fewer jobs.
Not all investments are real however, many are just scams that create no wealth – they just bleed it away from others.
dr_B, good points………….
Well yes GM was dumb, but they also had the potential to come back by being smart again. It is also the backbone of American manufacturing.
Lehman Brothers was not a commercial bank, but an investment bank. There is a big difference in the failure of one over the other. In addition to poor business decisions like GM, they were also guilty of financial shenanigans to cover up their screw ups. An investment bank is much easier to let go than say, a commercial bank that’s holding $800Bn in FDIC backed accounts. Investment banks are known risks, and while it was pretty bad that they went belly up, the ripple effect for the economy is not as bad as say BofA or GM collapsing. Not nearly as bad.
Dr B that is not true. Or rather it is only true if the economy is remaining stagnant. Like say when banks are no longer issuing loans for new small businesses. Or the middle class which does the majority of purchasing no longer has any disposable income.
But to imply that no growth is occurring as new businesses open up is wrong. Its a competitive market sure, but it generates growth.
“Newt Gingrich: Maybe Repealing Glass-Steagall Wasn’t Such a Good Idea After All
Read more: http://www.minyanville.com/dailyfeed/2011/11/09/newt-gingrich-regrets-glass-steagall/#ixzz1lBBQ3192
In 1999, both Reps and Dems were responsible for this mistaken repeal.
Lehman was into everything as were all the other “banks”.
To that I would have to say “Duh!” to Newt. You think that rule they put in place so the banks couldn’t crash the economy like they did in 1929 is still a good one? Nah, I’m sure they’ve learned their lesson. Lets get rid of it! Morons.
Paul Ryan and Newt agree with you and me.
slamfu,
Of course there are differences in what the stimulus did and what Bain did. Completely different things. But, the original post brought up questions regarding whether Bain created the jobs that Mitt says it did. My point is just that you can apply those same questions to the stimulus.
I see entrepreneurs and investors as relatively equal in importance in economic growth. One can’t exist without the other, so to say one is more important than the other doesn’t make sense, it my view. Investment does take some skill, as you have to know a good idea and a good team when you see it. Further, my understanding is that Bain did take on some management role with the companies they took over, demonstrating skill in turning companies around, in many cases.
But I will agree with you on this: The goal of Bain was not to create jobs, as Mitt has said. Obviously, it was to make money. In a capitalist society, normally the two are supposed to go together and it appears, in this case, that they did. So, there’s nothing wrong with that. I wish Mitt had been more honest about that point.
Dr. B,
You do raise some good points and point out why calculating these numbers is a bit of a fools errand since we can’t possibly know the counterfactual. But, I would dispute this:
“The whole point of any real investment is to increase our standard of living through increased performance or efficiency. Both inevitably lead to fewer jobs.”
That can’t be true or else there would be fewer jobs today than there was in 1900 when our standard of living and productivity was less. Yes, in order to increase our standard of living, productivity must increase. In a closed system, that would result in fewer jobs. But, we don’t live in a closed system. Through history, our current unemployment rate notwithstanding, we’ve seen the excess labor capacity put to productive use in areas that were not possible before, thus further increasing our standard of living and perpetuating the cycle.
Aadelinesdad,
I didn’t want to write a long, boring essay. Of course nothing’s simple or black and white. And, of course, real investment involves at least temporary consumption and therefore temporary jobs. But a higher standard of living means that we’re working less on the whole and enjoying it more – no more 48 hour weeks.
In the end, nothing creates jobs but consumption – of one kind or another. For there to be consumption people have to have money and the desire and confidence to spend it. Private capital is not going to up-front this money to those without it, which leaves the government – one way or another. And where’s the government to get this money? In my view, for reasons of, not only fairness, but also of social and economic stability, from those who have it an are sitting on it.
Pareto demonstrated mathmatically, in the nineteenth century, what is obvious to begin with: absent firm outside control, economies are rapidly unstable, with a few quickly amassing most of the wealth.
It’s both sad and frustrating that the 1% don’t realize just how dependent their standard of living is on the existance of a strong, stable middle class.
A and dr._B, excellent points, again.
“It’s both sad and frustrating that the 1% don’t realize just how dependent their standard of living is on the existance of a strong, stable middle class.”
Truly. Now how do we convince the modern day GOP voter to think along those lines?