I never understood American unemployment numbers. Many countries operate fine with far higher unemployment numbers. Canada was at 7 or 8% for many years, France is often around 10%.
Also, I remember reading an article that talked about the vast number of people who are excluded from the American data. People in prisons for example - 2 million people. There are also people who do not file unemployment claims or are ineligible to do so because of much higher restrictions in the US compared to more liberal societies. Therefore, US unemployment figures are always about 2% too low, but it is one of these 'psychological' stimulus the government gives. If our unemployment rate is near 0, then economy must be doing great!
Another major difference is that unemployment benefits are much better in places like France and Holland and it encourages people to stay unemployed. Though we're not immune from this problem either. I recently met a lady who was, "on fun-employment," as she called it. "I get a card from New York City every two weeks that gives me cash from most ATM's. My rent also gets paid. I'm moving in with my future husband at his apt in the Hamptons but we're keeping my place in the city in case we want to come party for a w/e." When I asked how long things would go like that she said, "Another 15 weeks to be sure, but if I fill out some paper work I could stretch it to 40 weeks, and I hear that Obama wants to add another 9 weeks, so all it all it's about a year."
Anyone ever use fun-employment to bootstrap as startup? :)
Please be a dear and forward that woman's contact information to the New York Republican Party. She has excellent career prospects as a talking point. (Hey, it worked for Joe the Plumber.)
I haven't been so disgusted since my $40,000 a year university had a newspaper publish instructions on how to apply for welfare benefits, "as most students are legally entitled to them and, hey, free beer money". (Some of us worked our way through college. Surveying the few I can remember, I think all moved rightward over their four years. Wonder why.)
What is wrong with getting support from the government while you are in school?
I didn't think full-time students were eligible for anything. I worked through school but still came out with over $60k of student debt. I would have done anything to reduce that, even take government handouts.
I'm glad you had the courage of your convictions not to apply for the benefits, though.
I sympathize with the aversion to debt but have to note that, empirically, you were not willing to do "anything" to reduce that because you could have gotten a sheepskin from a perfectly acceptable state university for about a fifth of the price.
Now there are many reasons to prefer what you did to what you could have done, but I think paying for your choices is your responsibility, not the responsibility of the rest of us. For example, had you gone on public assistance merely because it was possible due to a bug in the law, you would be transferring money to yourself from folks without college degrees who work much, much harder than you or I ever will. There is no justice in that. The hypothetical availability of that as an option also corrupts your incentives to choose cheaper options like that state school I was just talking about. When you replay those distorted incentives across the whole market, this just increases education prices for everyone.
(This is why I think that subsidies for higher education, such as grants and subsidized loans that I favor in principle, need to be carefully kept in check for them to have any meaning. Otherwise you end up with a bidding war between the colleges and subsidizer for who can pull a higher number out of thin air, with the number eventually footed by the taxpayer. Which is exactly where we have been for the last two decades, with tuition galloping in front of inflation every year.)
I note in passing that you, or any student similarly situated, should be more than willing to take on $60k of student debt in return for any undergraduate education that results in a profession because the delta in earnings outcomes exceeds the loan payments (including interest) by a stupidly high margin.
Only one small correction: if the unemployment rate really approaches 0, then you have trouble, because growing businesses won't be able to hire, and there'll be missed growth opportunities.
The same is true in a consulting firm, for example. You want "chargeability" to be as high as possible, but if everyone is always out on projects, and there's no one on the bench, then you can't staff new projects that come up - which may hurt your existing client relationships, or prevent you from building up new clients, etc. So ideally you still want to have some people on the bench, free to take up new projects.
Even if everybody is employed, people would still be looking out for better jobs than what they currently have. So I don't think there would be missed growth opportunites.
This idea, in itself, seems erroneous. For a system where everyone is employed and no missed opportunities vs. the counterpart (per swombat), you assume that the liquidity of human capital is the same, by virtue of people constantly looking. It seems incredulous that it will.
I'm actually less interested in whether your statement is correct or not, but more in the reasons why you believe this (and why there are people who agree with this idea).
The scarcer employees get, the more will employers be willing to pay to get them.
So yes, I think the liquidity of employees will remain roughly the same.
I forgot to mention something in my last post. It isn't so much the assumption of liquidity, but the assumption that given the particular kind of liquidity, the efficiency (in terms of opportunity cost) can be the same.
When I said liquidity of human capital, I did not want to mean person P moves from company X to company Y. I wanted to mean person P's production power (in terms of output, factoring in creativity, and the myriad of other factors), within the system (which also factors in P's capacity to induce disruptive changes) gets transferred seamlessly from X to Y. Again, this does not seem at all possible. Neither does this factor in effects of people spontaneously regrouping (i.e. forming startups). Having people in stable structures inherently slows down regrouping quickly, and you cannot assume that capital (money, enticement, whatever) can induce it to become efficient, simply because transfer of resources takes time and distance.
Of course, with the ideal assumptions of perfect information and instantaneous transfer of all resources, this would seem to work, but these are the same assumptions that ground many economic models permanently in theoretical territory.
Now, is there still a good reason to think the systems can be the same?
"Having people in stable structures inherently slows down regrouping quickly, and you cannot assume that capital (money, enticement, whatever) can induce it to become efficient, simply because transfer of resources takes time and distance."
So you argue that having some people unemployed will in the long run prove more profitable for the economy?
Then inevitable a market will evolve around this and someone will come around and pay people to remain unemployed (possibly requiring a fee when they finally take a job).
"Of course, with the ideal assumptions of perfect information and instantaneous transfer of all resources, this would seem to work, but these are the same assumptions that ground many economic models permanently in theoretical territory."
If you're strictly talking about the real world, then I agree that unemployment will never reach zero and that it may be true that having unemployment may lead to more economic growth. But it may also lead to less growth. We can't be sure. Therefore we have to assume some kind of ideal model.
I'm actually not making any argument about profitability in the long run. Simply about whether swombat's comment about missed opportunities, or your comment that there won't be missed opportunities, holds.
I am now able to see how your situation would work, so I will abandon my deep skepticism. But I have also come think it's far more complex than any of these comments. They now both seem plausible, and I don't think either of you can be certain without substantial justification. :D
I think your comment advances a common misconception, that unemployment percentage figures are derived from unemployment insurance benefit filings.
They're not. The unemployment percentage figure comes from a household survey by the federal government that simply asks people if they lack work and are looking. Whether one is eligible for, has applied for, or is receiving unemployment benefits is irrelevant.
"But one prominent critic, John Williams, an economist and publisher of the research site Shadowstats.com, said that when you take into account the large number of people who have been so discouraged by job market woes that they have not been actively looking for work for more than a year, the unemployment rate is actually as high as 17.5%
Williams explains that prior to 1994, all people who were "discouraged workers" were counted in the unemployment survey. But that's no longer the case. So he believes his number is more of an apples-to-apples comparison to some of the numbers cited about the peak level of unemployment during the Great Depression, which was around 25%.
What's more, Williams believes that this and other tweaks to the employment calculations over the past few decades were designed to give a more optimistic view of the economy.
"I think it's true that changes have made to make numbers look better. If you don't think the system is political, you don't know the system." "
Think about this for a moment. 17.5% means that ~ every 1 out of 5 is out of work. Look around you. Does that even seem possible. That number is like the numbers proclaiming that there are 3 million homeless in the US and that men on average have more sexual partners than women (by a ratio of ~7 to 4). Its complete bullshit and if people thought about it for just a few minutes, they would realize it.
I'm pretty sure you can explain the difference in averages between men & women's sex partners by a very large variance. E.g. village bicycles & nuns vs regular man-slut Joe six-pack.
Let us examine the Village of Virtuous Women, where there are 100 men and 100 women. 99 wives are faithful to their husbands. All the men are unfaithful with the 100th wife (except, of course, her husband -- who I really feel for).
Average number of partners per man: (2 + 2 + 2 + ... + 1) / 100 = 1.99
Average number of partners per woman: (1 + 1 + 1... + 100) / 100 = 1.99
You can also justify this with "Sum over a gender of number of sexual partners equals the sum over the gender of sexual partnerships, and if we only consider heterosexual partnerships, then this must be symmetric for both genders. Thus, since number of people in both genders is approximately equal, average number of sexual partners must be approximately equal."
So what actually causes the disparity? It has to be either a) untruthfulness or b) unsampled outliers. For example, if in the Village of Faithful Women the unfaithful wife got missed in your phone survey, you'd blow the results completely now wouldn't you.
But in the instant case, it is highly likely that the answer is in fact untruthfulness (both overreporting and underreporting).
Not quite. A ratio of 7 to 4 means that the number of heterosexual males is 7/4 times the number of heterosexual females. Since the ratio of men to women in the US is ~50-50 (as well as in most countries), If that statistic is correct, at least 42% of all men are homosexual. A laughable claim. Whenever you read statistics, _always_ take them with a grain of salt and run them through a common sense analyzer.
Unemployment is often portrayed as the cost that european countries pay for supporting developed welfare states. According to this line of thought, it is ok for the US to have much less advantages for unemployed people since it is much easier for someone who lost his job to find a new one.
If the US unemployment gets close to their european counterparts, this argument becomes harder to believe.
First, I should correct you that both the US and Europe use the International Labour Organization's definition for unemployment: "those who are currently not working but are willing and able to work for pay, currently available to work, and have actively searched for work." Europe implements this as people who are not working, have looked for work within the past 4 weeks, and are available to start work within the next 2 weeks. The US methodology differs slightly, but not in a statistically significant way stating that workers must not be employed, they must have looked for work sometime in the previous 4-week period, and they must be available work work. The last part differs, but since these are surveys, I don't think anyone being asked "are you available for work?" would interpret that to mean at the precise moment. So, the US doesn't define "in the next two weeks" and so some people might interpret it to be a longer period and some might interpret it to be a shorter period, but I don't think you can say that American numbers don't count people that European numbers do count.
So, European and American unemployment rates can be compared with decent accuracy. The fact is that governments want accurate data. Inaccurate data just makes it harder to create policy that helps those governed.
One of the nice things about the American unemployment numbers is that they're more than a gross rate. The US also publishes numbers by certain groups. That allows me to say that the unemployment rate for men is 22% higher for men than for women or that teenagers have been the hardest hit group with unemployment at 20.8% for them. Likewise, there are interesting (if not meaningful) differences in the unemployment rate changes between groups. The African American unemployment rate is up about 30% YoY while the Caucasian unemployment rate is up a whopping 64% YoY.
So, why is American unemployment a bigger issue? You already mentioned it: we've got less good stuff coming from the government when we don't have a job. Healthcare especially is a problem. Beyond that, the amount of time that unemployment benefits last, the amount of each check, etc. just aren't as good. Unemployment is more of a hardship in America than in Europe. Europe has seen very hard times and it created a system that would allow people to get through many years of tough times. America has been able to limit tough times to be much shorter periods and, generally speaking, just has a "get off your butt" attitude.
Partly, this is because America has allowed for drastic economic changes in a way the Europe hasn't historically. The United States is more ready to see old industries die and to start new ones in their place. And so hard times do come (it's inevitable that you can't make something perfect), but they tend not to last as long.
Before I go further, I want to say that much of this is historical. The Europe of today isn't the Europe of even 20 years ago. That said, one way of thinking about this is code refactoring. It takes time, it can be painful as things that worked stopped working as you fixed it. However, arguing that something is working and just trying to (indefinitely) prevent any non-work in order to realign things for a better future is worse.
It's my personal belief that governments can help smooth over the "refactoring" by encouraging new industries to locate near industries that are closing down. Note, this can't be a "we'll just lower our taxes" scheme. There's no point in lowering taxes on a dying industry or throwing long-term government support behind it simply because failure of that industry means unemployment. You need to be smart and find industries that are likely to be growth industries that will progressively demand more labor as time goes forward. Keeping people employed is great, but encouraging industry that increases employment in the long-term is sooooooooo much better. And government can incentivisze new industries. It's hard and often people hate it because they see it as discriminatory against industries not getting the cool incentives, but some industries do benefit communities more than others and some industries are growth and some aren't.
In closing, I'll just say this: in the face of an economic crisis, it might be a good idea to repeal the employer part of the payroll taxes (note the might qualifier since I haven't studied this). It would lower the cost to employ someone by, what, 9%? As the cost of labor goes down, employers want more of it. And when the economy gets good again, it could be reinstated or not and if not would really just be passed to workers as salary increases (just like the employer part of the payroll taxes makes them pay you less each year because they need to pay the government for your employment).
Are you suggesting that government should try to pick winners for which industries are likely to grow? How do you expect bureaucrats to do that? Industrial policy has a terrible track record in most countries.
Another factor that might explain why US unemployment is lower than European countries like France & Germany.
The barriers to hiring & firing workers are typically much higher in most European countries. In the US, the laws make it easier to hire & fire, so the employment process is more "efficient".
France has both difficult firing and minimum wage. In Germany it's not as bad: Firing is difficult, but there's no minimum wage for most jobs. Unfortunately minimum wage laws are all the rage, now.
The first sentence doesn't address differences in measurement, but I appreciate the snark.
I've read that Europe measures more than those that are seeking, meaning they overestimate (or the US underestimates) unemployment.
Scrolling down, the EU measure looks like the US measure, so maybe things changed since I heavily head econ blogs. Perhaps you can read more than the first line of some other resources and report back on the change?
Comments
I never understood American unemployment numbers. Many countries operate fine with far higher unemployment numbers. Canada was at 7 or 8% for many years, France is often around 10%.
Also, I remember reading an article that talked about the vast number of people who are excluded from the American data. People in prisons for example - 2 million people. There are also people who do not file unemployment claims or are ineligible to do so because of much higher restrictions in the US compared to more liberal societies. Therefore, US unemployment figures are always about 2% too low, but it is one of these 'psychological' stimulus the government gives. If our unemployment rate is near 0, then economy must be doing great!
Please correct me if I am wrong.
Another major difference is that unemployment benefits are much better in places like France and Holland and it encourages people to stay unemployed. Though we're not immune from this problem either. I recently met a lady who was, "on fun-employment," as she called it. "I get a card from New York City every two weeks that gives me cash from most ATM's. My rent also gets paid. I'm moving in with my future husband at his apt in the Hamptons but we're keeping my place in the city in case we want to come party for a w/e." When I asked how long things would go like that she said, "Another 15 weeks to be sure, but if I fill out some paper work I could stretch it to 40 weeks, and I hear that Obama wants to add another 9 weeks, so all it all it's about a year."
Anyone ever use fun-employment to bootstrap as startup? :)
fun-employment
Please be a dear and forward that woman's contact information to the New York Republican Party. She has excellent career prospects as a talking point. (Hey, it worked for Joe the Plumber.)
I haven't been so disgusted since my $40,000 a year university had a newspaper publish instructions on how to apply for welfare benefits, "as most students are legally entitled to them and, hey, free beer money". (Some of us worked our way through college. Surveying the few I can remember, I think all moved rightward over their four years. Wonder why.)
What is wrong with getting support from the government while you are in school?
I didn't think full-time students were eligible for anything. I worked through school but still came out with over $60k of student debt. I would have done anything to reduce that, even take government handouts.
I'm glad you had the courage of your convictions not to apply for the benefits, though.
I would have done anything to reduce that
I sympathize with the aversion to debt but have to note that, empirically, you were not willing to do "anything" to reduce that because you could have gotten a sheepskin from a perfectly acceptable state university for about a fifth of the price.
Now there are many reasons to prefer what you did to what you could have done, but I think paying for your choices is your responsibility, not the responsibility of the rest of us. For example, had you gone on public assistance merely because it was possible due to a bug in the law, you would be transferring money to yourself from folks without college degrees who work much, much harder than you or I ever will. There is no justice in that. The hypothetical availability of that as an option also corrupts your incentives to choose cheaper options like that state school I was just talking about. When you replay those distorted incentives across the whole market, this just increases education prices for everyone.
(This is why I think that subsidies for higher education, such as grants and subsidized loans that I favor in principle, need to be carefully kept in check for them to have any meaning. Otherwise you end up with a bidding war between the colleges and subsidizer for who can pull a higher number out of thin air, with the number eventually footed by the taxpayer. Which is exactly where we have been for the last two decades, with tuition galloping in front of inflation every year.)
I note in passing that you, or any student similarly situated, should be more than willing to take on $60k of student debt in return for any undergraduate education that results in a profession because the delta in earnings outcomes exceeds the loan payments (including interest) by a stupidly high margin.
Sorry, you are wrong.
I went to the cheapest school I could go to.
Only one small correction: if the unemployment rate really approaches 0, then you have trouble, because growing businesses won't be able to hire, and there'll be missed growth opportunities.
The same is true in a consulting firm, for example. You want "chargeability" to be as high as possible, but if everyone is always out on projects, and there's no one on the bench, then you can't staff new projects that come up - which may hurt your existing client relationships, or prevent you from building up new clients, etc. So ideally you still want to have some people on the bench, free to take up new projects.
Even if everybody is employed, people would still be looking out for better jobs than what they currently have. So I don't think there would be missed growth opportunites.
This idea, in itself, seems erroneous. For a system where everyone is employed and no missed opportunities vs. the counterpart (per swombat), you assume that the liquidity of human capital is the same, by virtue of people constantly looking. It seems incredulous that it will.
I'm actually less interested in whether your statement is correct or not, but more in the reasons why you believe this (and why there are people who agree with this idea).
The scarcer employees get, the more will employers be willing to pay to get them. So yes, I think the liquidity of employees will remain roughly the same.
I forgot to mention something in my last post. It isn't so much the assumption of liquidity, but the assumption that given the particular kind of liquidity, the efficiency (in terms of opportunity cost) can be the same.
When I said liquidity of human capital, I did not want to mean person P moves from company X to company Y. I wanted to mean person P's production power (in terms of output, factoring in creativity, and the myriad of other factors), within the system (which also factors in P's capacity to induce disruptive changes) gets transferred seamlessly from X to Y. Again, this does not seem at all possible. Neither does this factor in effects of people spontaneously regrouping (i.e. forming startups). Having people in stable structures inherently slows down regrouping quickly, and you cannot assume that capital (money, enticement, whatever) can induce it to become efficient, simply because transfer of resources takes time and distance.
Of course, with the ideal assumptions of perfect information and instantaneous transfer of all resources, this would seem to work, but these are the same assumptions that ground many economic models permanently in theoretical territory.
Now, is there still a good reason to think the systems can be the same?
"Having people in stable structures inherently slows down regrouping quickly, and you cannot assume that capital (money, enticement, whatever) can induce it to become efficient, simply because transfer of resources takes time and distance."
So you argue that having some people unemployed will in the long run prove more profitable for the economy? Then inevitable a market will evolve around this and someone will come around and pay people to remain unemployed (possibly requiring a fee when they finally take a job).
"Of course, with the ideal assumptions of perfect information and instantaneous transfer of all resources, this would seem to work, but these are the same assumptions that ground many economic models permanently in theoretical territory."
If you're strictly talking about the real world, then I agree that unemployment will never reach zero and that it may be true that having unemployment may lead to more economic growth. But it may also lead to less growth. We can't be sure. Therefore we have to assume some kind of ideal model.
I'm actually not making any argument about profitability in the long run. Simply about whether swombat's comment about missed opportunities, or your comment that there won't be missed opportunities, holds.
I am now able to see how your situation would work, so I will abandon my deep skepticism. But I have also come think it's far more complex than any of these comments. They now both seem plausible, and I don't think either of you can be certain without substantial justification. :D
I think your comment advances a common misconception, that unemployment percentage figures are derived from unemployment insurance benefit filings.
They're not. The unemployment percentage figure comes from a household survey by the federal government that simply asks people if they lack work and are looking. Whether one is eligible for, has applied for, or is receiving unemployment benefits is irrelevant.
from:
http://money.cnn.com/2009/01/09/markets/thebuzz/index.htm?po...
"But one prominent critic, John Williams, an economist and publisher of the research site Shadowstats.com, said that when you take into account the large number of people who have been so discouraged by job market woes that they have not been actively looking for work for more than a year, the unemployment rate is actually as high as 17.5%
Williams explains that prior to 1994, all people who were "discouraged workers" were counted in the unemployment survey. But that's no longer the case. So he believes his number is more of an apples-to-apples comparison to some of the numbers cited about the peak level of unemployment during the Great Depression, which was around 25%.
What's more, Williams believes that this and other tweaks to the employment calculations over the past few decades were designed to give a more optimistic view of the economy.
"I think it's true that changes have made to make numbers look better. If you don't think the system is political, you don't know the system." "
Think about this for a moment. 17.5% means that ~ every 1 out of 5 is out of work. Look around you. Does that even seem possible. That number is like the numbers proclaiming that there are 3 million homeless in the US and that men on average have more sexual partners than women (by a ratio of ~7 to 4). Its complete bullshit and if people thought about it for just a few minutes, they would realize it.
I'm pretty sure you can explain the difference in averages between men & women's sex partners by a very large variance. E.g. village bicycles & nuns vs regular man-slut Joe six-pack.
That wouldn't do it by itself, actually.
Let us examine the Village of Virtuous Women, where there are 100 men and 100 women. 99 wives are faithful to their husbands. All the men are unfaithful with the 100th wife (except, of course, her husband -- who I really feel for).
Average number of partners per man: (2 + 2 + 2 + ... + 1) / 100 = 1.99
Average number of partners per woman: (1 + 1 + 1... + 100) / 100 = 1.99
You can also justify this with "Sum over a gender of number of sexual partners equals the sum over the gender of sexual partnerships, and if we only consider heterosexual partnerships, then this must be symmetric for both genders. Thus, since number of people in both genders is approximately equal, average number of sexual partners must be approximately equal."
So what actually causes the disparity? It has to be either a) untruthfulness or b) unsampled outliers. For example, if in the Village of Faithful Women the unfaithful wife got missed in your phone survey, you'd blow the results completely now wouldn't you.
But in the instant case, it is highly likely that the answer is in fact untruthfulness (both overreporting and underreporting).
Not quite. A ratio of 7 to 4 means that the number of heterosexual males is 7/4 times the number of heterosexual females. Since the ratio of men to women in the US is ~50-50 (as well as in most countries), If that statistic is correct, at least 42% of all men are homosexual. A laughable claim. Whenever you read statistics, _always_ take them with a grain of salt and run them through a common sense analyzer.
Unemployment is often portrayed as the cost that european countries pay for supporting developed welfare states. According to this line of thought, it is ok for the US to have much less advantages for unemployed people since it is much easier for someone who lost his job to find a new one.
If the US unemployment gets close to their european counterparts, this argument becomes harder to believe.
Until you look at France et al. and find that they have > 8% unemployment in the good times.
First, I should correct you that both the US and Europe use the International Labour Organization's definition for unemployment: "those who are currently not working but are willing and able to work for pay, currently available to work, and have actively searched for work." Europe implements this as people who are not working, have looked for work within the past 4 weeks, and are available to start work within the next 2 weeks. The US methodology differs slightly, but not in a statistically significant way stating that workers must not be employed, they must have looked for work sometime in the previous 4-week period, and they must be available work work. The last part differs, but since these are surveys, I don't think anyone being asked "are you available for work?" would interpret that to mean at the precise moment. So, the US doesn't define "in the next two weeks" and so some people might interpret it to be a longer period and some might interpret it to be a shorter period, but I don't think you can say that American numbers don't count people that European numbers do count.
So, European and American unemployment rates can be compared with decent accuracy. The fact is that governments want accurate data. Inaccurate data just makes it harder to create policy that helps those governed.
One of the nice things about the American unemployment numbers is that they're more than a gross rate. The US also publishes numbers by certain groups. That allows me to say that the unemployment rate for men is 22% higher for men than for women or that teenagers have been the hardest hit group with unemployment at 20.8% for them. Likewise, there are interesting (if not meaningful) differences in the unemployment rate changes between groups. The African American unemployment rate is up about 30% YoY while the Caucasian unemployment rate is up a whopping 64% YoY.
Full data: http://www.bls.gov/news.release/pdf/empsit.pdf
So, why is American unemployment a bigger issue? You already mentioned it: we've got less good stuff coming from the government when we don't have a job. Healthcare especially is a problem. Beyond that, the amount of time that unemployment benefits last, the amount of each check, etc. just aren't as good. Unemployment is more of a hardship in America than in Europe. Europe has seen very hard times and it created a system that would allow people to get through many years of tough times. America has been able to limit tough times to be much shorter periods and, generally speaking, just has a "get off your butt" attitude.
Partly, this is because America has allowed for drastic economic changes in a way the Europe hasn't historically. The United States is more ready to see old industries die and to start new ones in their place. And so hard times do come (it's inevitable that you can't make something perfect), but they tend not to last as long.
Before I go further, I want to say that much of this is historical. The Europe of today isn't the Europe of even 20 years ago. That said, one way of thinking about this is code refactoring. It takes time, it can be painful as things that worked stopped working as you fixed it. However, arguing that something is working and just trying to (indefinitely) prevent any non-work in order to realign things for a better future is worse.
It's my personal belief that governments can help smooth over the "refactoring" by encouraging new industries to locate near industries that are closing down. Note, this can't be a "we'll just lower our taxes" scheme. There's no point in lowering taxes on a dying industry or throwing long-term government support behind it simply because failure of that industry means unemployment. You need to be smart and find industries that are likely to be growth industries that will progressively demand more labor as time goes forward. Keeping people employed is great, but encouraging industry that increases employment in the long-term is sooooooooo much better. And government can incentivisze new industries. It's hard and often people hate it because they see it as discriminatory against industries not getting the cool incentives, but some industries do benefit communities more than others and some industries are growth and some aren't.
In closing, I'll just say this: in the face of an economic crisis, it might be a good idea to repeal the employer part of the payroll taxes (note the might qualifier since I haven't studied this). It would lower the cost to employ someone by, what, 9%? As the cost of labor goes down, employers want more of it. And when the economy gets good again, it could be reinstated or not and if not would really just be passed to workers as salary increases (just like the employer part of the payroll taxes makes them pay you less each year because they need to pay the government for your employment).
Are you suggesting that government should try to pick winners for which industries are likely to grow? How do you expect bureaucrats to do that? Industrial policy has a terrible track record in most countries.
Another factor that might explain why US unemployment is lower than European countries like France & Germany.
The barriers to hiring & firing workers are typically much higher in most European countries. In the US, the laws make it easier to hire & fire, so the employment process is more "efficient".
France has both difficult firing and minimum wage. In Germany it's not as bad: Firing is difficult, but there's no minimum wage for most jobs. Unfortunately minimum wage laws are all the rage, now.
the BLS labor statistics only count people actively looking for work, and leave out 'discouraged' workers.
You're correct. The US only counts those looking for work.
AFAIK, everyone only counts those who are actively looking for work but can't find it: that's what the "unemployment rate" means.
http://en.wikipedia.org/wiki/Unemployment
No, people that don't have jobs but aren't seeking them are not counted in the US.
Right, but they aren't typically counted anywhere else, either. Did you read even the first sentence of the WP article?
The first sentence doesn't address differences in measurement, but I appreciate the snark.
I've read that Europe measures more than those that are seeking, meaning they overestimate (or the US underestimates) unemployment.
Scrolling down, the EU measure looks like the US measure, so maybe things changed since I heavily head econ blogs. Perhaps you can read more than the first line of some other resources and report back on the change?