Europe has a persisently high unemployment rate of about 9%, compared to about 5% for the United States. This is a problem that defenders of European-style welfare states must grapple with. The common method is to invoke hidden unemployment. The claim is that the United States’ Bureau of Labor Statistics (BLS) is fudging the numbers by not counting all of the unemployed. In particular, the BLS is leaving off part time, discouraged and other “marginally attached” workers and part time workers.
The problem with the hidden unemployment defense is that the four main organizations that count unemployment - The BLS, the Organization for Economic Cooperation and Development (OECD), Statistical Office of the European Communities (Eurostat), the International Labor Office (ILO) - have harmonized their methods since the 1960’s. They all show that unemployment runs about 4% higher in Europe, give or take a bit. (See the Eurostat data here) See the OECD here
The Bureau of Labor Services looked more deeply into the different methodologies and found that there are still some remaining measurement problems. Correcting for them would lower Canada’s unemployment by 1% and Europe’s by even less, leaving the bulk of the gap unaccounted for except by the relative strength of the economies. Read the full report here.
But the problems with Europe are not just high unemployment. Unemployment in Europe tends to last a lot longer, making it harder to rapidly bounce back after a lost job. Europe also produces more part time jobs and pushes more workers onto extended (government provided) sick leave and early retirement.
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