In all of our grumbling about the deficiency of policy making in Australia, it is easy to lose sight of the fact that the economic situation facing most Australians is still more favourable than most other nations, where job creation has in many cases been anaemic over many years and unemployment remains well above pre-Global Financial Crisis (GFC) levels.
One such nation is the United States, where despite recent strong jobs growth – i.e. four straight months of growth above 200,000 (the first time this has occurred in 14 years) – it has taken more than six years for employment to surpass its pre-GFC peak, which is by far the slowest jobs recovery since the Great Depression and twice as long as any other post-war recovery. The below chart from the Financial Times tells the story:
While the recovery in jobs is very welcome, it is also important to point out that the US population has risen by some 15 million over the same period – a point acknowledged in the New York Times over the weekend – which is a key reason why the US unemployment rate remains stubbornly high, despite the percentage of working age people looking for work near record lows (see below charts).
And then there is the issue of poor wages growth. According to the New York Times:
The average private-sector worker took home $838.70 a week in April. In January 2008, if you use April 2014 dollars, that was $818.31. In other words, in the last six and a half years, the average private-sector American worker has seen a total inflation-adjusted pay increase of only 2.5 percent, a lousy $20 a week.
Clearly, the US economy needs many more months of strong jobs growth, along with rising wages and increasing labour force participation, before anyone can credibly claim that it has “recovered”.
