by Mitch Kokai
Senior Political Analyst, John Locke Foundation
Gene Epstein of Barron’s offers a relatively upbeat picture of employment in the United States, especially in comparison with Europe.
While the gain in nonfarm payroll employment ran a reasonable 160,000 in April, it was the lowest in seven months. But this preliminary sample may have been at the low end of the range, with upward revisions yet to come.
One sign of strength even in the payroll data: the 0.3% gain in average hourly earnings and upward revisions to February and March, which pushed the 12-month increase to a healthy 2.5%, indicating a tight labor market. The unemployment rate held steady at 5%. But the labor-force participation rate ticked down to 62.8%, not far above its 39-year low in September of 62.4%.
FOR A LABOR MARKET that really is troubled, try the euro area 19. By way of explanation, the EA19—also called the euro zone—covers the 19 European nations that have adopted the euro as their official currency. The better-known EU28 covers these 19 plus nine others, including the United Kingdom, Poland, Sweden, and Denmark, which are part of the European Union but haven’t adopted the euro.
On June 23, there will be a referendum in the U.K. on whether to continue membership in the EU. It isn’t exactly good press for the benefits of joining the euro zone that, as a group, the nine non-euro-using nations have a noticeably lower unemployment rate. In March, the unemployment rate for the EU28 ran 8.8%; but once you exclude these nine, the March rate of joblessness for the EA19 jumps to 10.2%.
These unemployment rates would be considered scandalously high if they prevailed in the U.S. Even worse is the pattern since 2000 for the EA19, as the chart shows. Since 2000, the lowest unemployment rate for these 19 was 7.4% in 2007. In 2000, the gap between the 19 and the U.S. was even wider than today, 9.4% versus 4%, respectively. …
… One final scary figure. In March, the rate of joblessness for workers under 25 in the EA19 was 21.2%, versus 10.4% for the U.S. In France, the figure was 24%; in Italy, 36.7%; and in Spain, an unimaginable 45.5%.