# Unemployement rate; Canada down, USA up **URL:** \ **Category:** Miscellaneous and Personal Stuff I Must Share\ **Created:** [October 9, 2009, 10:26pm UTC](https://boards.straightdope.com/t/unemployement-rate-canada-down-usa-up/513247 "2009-10-09T22:26:34Z")\ **Posts on this page:** 4\ **Page:** 1
**Author:** ![Euphonious\_Polemic](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/euphonious_polemic/32/3002_2.png) [@Euphonious\_Polemic](https://boards.straightdope.com/u/Euphonious_Polemic)\ **Post date:** [October 9, 2009, 10:26pm UTC](https://boards.straightdope.com/t/unemployement-rate-canada-down-usa-up/513247/1 "2009-10-09T22:26:34Z")
Unemployment stats just came out; Canada’s unemployment rate just dropped from 8.7% to 8.4% [cite](http://www.theglobeandmail.com/globe-investor/strong-jobs-data-drives-loonie/article1318407/) While at the same time, the US rate hit a [26 year high](http://www.ft.com/cms/s/0/617cc13c-af49-11de-ba1c-00144feabdc0.html) of 9.8% The amazing thing about this is that the unemployment rates for the two countries were identical in the early '80s at 7.6%. Since then, the rates have diverged, with the US consistently having a better (lower) rate. This gap has been getting smaller - it fell to a 2 percentage point gap in 2002. Only recently though, has the unemployment gap been turned on its head, with Canada outpacing the US in job creation/retention. This is even more startling when one realizes that part of the reason for the gap in the first place is that the US measures unemployment differently, which has resulted in the Canadian rate being [1% lower if measured using the same US concepts](http://findarticles.com/p/articles/mi_m1153/is_6_123/ai_65159958/?tag=content;col1) This would mean that the current rates (measured in US concepts) are; US 9.8% Canada 7.4% Is this going to be maintained? Is this a new era not seen in 30 years? ---
**Author:** ![RickJay](https://avatars.discourse-cdn.com/v4/letter/r/bb73d2/32.png) [@RickJay](https://boards.straightdope.com/u/RickJay)\ **Post date:** [October 10, 2009, 2:42am UTC](https://boards.straightdope.com/t/unemployement-rate-canada-down-usa-up/513247/2 "2009-10-10T02:42:45Z")
It’s a very strange thing indeed, and it’s so recent and new that it’s hard to say for sure why it’s happening. I suspect, but can’t prove, that it’s a temporary effect of the U.S. economy being in very bad shape, while Canada’s economy has weathered the fiscal crisis better than most countries. Historically, the two economies have boomed and busted more or less at the same time; in this bust, however, there was a very substantial difference; Canada did not have a financial industry collapse. Canada simply didn’t have the bank meltdowns and massive credit dryups that killed a lot of businesses in the USA. If I’m correct, then the difference will shrink as the American economy returns to normal. ---
**Author:** ![Northern\_Piper](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/northern_piper/32/5304_2.png) [@Northern\_Piper](https://boards.straightdope.com/u/Northern_Piper)\ **Post date:** [October 10, 2009, 3:34am UTC](https://boards.straightdope.com/t/unemployement-rate-canada-down-usa-up/513247/3 "2009-10-10T03:34:56Z")
But there is a question what “normal” now is for the US economy. There was an interesting story in TIME about the unusual unemployment rates in the US: [Jobless in America: Is Double-Digit Unemployment Here to Stay?](http://www.time.com/time/business/article/0,8599,1921439-1,00.html). > [@](#): > > The problem is related to a hiccup in an economic rule called Okun’s law. First mooted by economist Arthur Okun in 1962, the law (it’s really more of a rule of thumb) says that when the economy grows, it produces jobs at a predictable rate, and when it shrinks, it sheds them at a similarly regular pace. It’s a labor version of how the accelerator on your car works: add gas, go faster; less gas, go slower. > > What made Summers’ frank comment important is that it suggests this just-add-gas relationship may now be malfunctioning. The American economy has been shedding jobs much, much faster than Okun’s law predicts. According to that rough rule, we should be at about 8.5% unemployment today, not slipping toward 10%. Something new and possibly strange seems to be happening in this recession. Something unpredicted by the experts. “I don’t think,” Summers told the Peterson Institute crowd — deviating again from his text — “that anyone fully understands this phenomenon.” And that raises some worrying questions. Will creating jobs be that much slower too? Will double-digit unemployment persist even after we emerge from this recession? Has the idea of full employment rather suddenly become antiquated? Is there something fundamentally broken in the heart of our economy? And if so, how can we fix it? > > … > > When compiling the “worst case” for stress-testing American banks last winter, policymakers figured the most chilling scenario for unemployment in 2009 was 8.9% — a figure we breezed past in May. From December 2007 to August 2009, the economy jettisoned nearly 7 million jobs, according to the Bureau of Labor Statistics. That’s a 5% decrease in the total number of jobs, a drop that hasn’t occurred since the end of World War II. The number of long-term unemployed, people who have been out of work for more than 27 weeks, was the highest since the BLS began recording the number in 1948. Jobless figures released Sept. 4 showed a 9.7% unemployment rate, pushing the U.S. — unthinkably — ahead of Europe, with 9.5%. > > America now faces the direst employment landscape since the Depression. It’s troubling not simply for its sheer scale but also because the labor market, shaped by globalization and technology and financial meltdown, may be fundamentally different from anything we’ve seen before. And if the result is that we’re stuck with persistent 9%-to-11% unemployment for a while — a range whose mathematical congruence with that other 9/11 is impossible to miss — we may be looking at a problem that will define the first term of Barack Obama’s presidency the way the original 9/11 defined George W. Bush’s. Like that 9/11, this one demands a careful refiguring of some of the most basic tenets of national policy. And just as the shock of Sept. 11 prompted long-overdue (and still not cemented) reforms in intelligence and defense, the jobs crisis will force us to examine a climate that has been deteriorating for years. The total number of nonfarm jobs in the U.S. economy is about the same now — roughly 131 million — as it was in 1999. And the Federal Reserve is predicting moderate growth at best. That means more than a decade without real employment expansion. We seem to be in unknown territory here. ---
**Author:** ![Markxxx](https://avatars.discourse-cdn.com/v4/letter/m/5daacb/32.png) [@Markxxx](https://boards.straightdope.com/u/Markxxx)\ **Post date:** [October 10, 2009, 4:36pm UTC](https://boards.straightdope.com/t/unemployement-rate-canada-down-usa-up/513247/4 "2009-10-10T16:36:04Z")
> [@Euphonious\_Polemic](#): > > This would mean that the current rates (measured in US concepts) are; > > US 9.8% > Canada 7.4% > > Is this going to be maintained? Is this a new era not seen in 30 years? It’s obvious all the unemployed Canadians have left Canada and started looking for jobs in the good old USA. Since these unemployed Canadians aren’t in Canada, their unemployment rate drops. That means our unemployment rate rises. 🙂 Seriously though in order to compare numbers correctly you have to make sure the way the nations are calculating their unemployment is the same or similar enough. Also you have to factor in under-unemployment. Working 24 hours and getting food stamps may get someone by, but it’s not really being employed. You’re underemployed.