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Obama trounces Welch's job record

October 9, 2012: 5:00 AM ET

Jack Welch's hiring history isn't much to tweet about.

Obama critic Jack Welch

FORTUNE -- Jack Welch, the former CEO of General Electric, has attacked the notion that President Obama and his policies are creating jobs. On Friday, Welch in a message sent through Twitter accused the administration, referring to it as "these Chicago guys," of changing the number in the monthly jobs report, which showed that the unemployment rate had fallen to the lowest level since Obama took office. In the past, Welch has said that Mitt Romney's business experience makes him more qualified to be able to create jobs from the Oval office than Obama.

"Romney oughta' wipe [the election] out," Welch told CNN's Piers Morgan in May. "When you look at [Romney's] qualifications, compare it to someone who was handing out leaflets as a community organizer."

Welch, like Romney, has had a storied business career. Nonetheless, when it comes to job creation, Obama's record appears to far better than the GE executive, who spent two decades on top of the one of the world's largest companies.

MORE: Among financial professionals, Romney trounces Obama

GE lost nearly 100,000 jobs while Welch was at the helm of the company -- a tenure that spanned two of the most robust periods of economic growth in American business history. Welch, who along with his wife Suzy has written articles for FORTUNE, took over as CEO of GE in 1981. At the time, the industrial giant had 411,000 employees. When Welch left the company 20 years later, it had just 313,000 employees.

(Update: Welch quits as a columnist for Fortune)

"The effect of Welch's massive restructuring was to put thousands of GE employees out of work," wrote Robert Slater in Jack Welch and the GE Way.

President Obama, on the other hand, since taking office during a financial crisis appears to have been either a modest job creator, or a slight job loser depending on the data you are looking at. In January 2009, according to the Bureau of Labor Statistics's survey of individuals, there were just over 142 million people employed in the country. On Friday, the BLS reported that number had risen to nearly 143 million in September, for a gain of about 800,000 jobs, or less than 1%, since Obama became president.

But even if go with the BLS's other survey, the one that polls employers, which some economists say is more narrow because it misses, for example, people who are self-employed, the economy has only lost 61,000 jobs under Obama, which still beats Welch's record at GE.

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Welch says revenue increased fivefold and income tenfold while he headed GE. The company's market cap soared by 30 times. A $100 invested in GE when Welch became CEO of the company in April 1981 would have been worth $5,112 when he left.

What's more, Welch says a good portion of the headcount reduction when he was at GE was not the result of layoffs, but sales. For instance, when GE sold its aerospace division in 1992 to Martin Marietta it transferred 37,000 jobs in the deal. At the time, though, Norman Augustine, then CEO of Martin Marietta, told the New York Times that the deal would almost certainly result in layoffs.

But even if you discount the jobs Welch claims were not eliminated but transferred to other employers, GE still appears to have cut about 30,000 positions during Welch's tenure.

"We changed the mix," says Welch. "We sold a lot of labor intensive manufacturing businesses in favor of technology businesses."

Interestingly, it appears that Welch's jobs record roughly follows Obama's. In the first four years Welch was CEO of GE, the company lost 112,000 positions. GE's headcount finally bottomed in 1994 at 216,000 employees, or nearly 200,000 less than when Welch took over as CEO.

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Welch added jobs over the next seven years before giving up the title of CEO in 2001, but, unlike Obama, not nearly enough to make up for those that were lost in his earlier years. What's more, only 12,000 of the 97,000 jobs Welch added at GE during that time were in the U.S. The rest were overseas.

Of course, comparing Welch's job record as CEO of one public company and Obama's in the Oval Office is really not fair. As President of the United States, Obama does not get to count the jobs that the recovery of the U.S. economy surely created overseas in the past two years toward his total. Nor does Obama get to exclude the jobs that were shipped overseas.

But what's clear from looking at the tenure of Welch and business leaders like him is that the notion that being successful in business translates into knowing how to, or have even have much experience, creating jobs is misleading at best.

"I've never passed myself off as an employment agency," says Welch.

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About This Author
Stephen Gandel
Stephen Gandel

Stephen Gandel has covered Wall Street and investing for over 15 years. He joins Fortune from sister publication TIME, where he was a senior business writer and lead blogger for The Curious Capitalist. He has also held positions at Money and Crain's New York Business. Stephen is a four-time winner of the Henry R. Luce Award. His work has also been recognized by the National Association of Real Estate Editors, the New York State Society of CPA and the Association of Area Business Publications. He is a graduate of Washington University, and lives in Brooklyn with his wife and two children.

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