True or False? Europe’s economy doesn’t create enough jobs

It is a truism among Republicans that Europe has terrible employment numbers that offset the many mandatory advantages for workers that the U.S. does not offer. The premise, of course, is that strong workplace standards and a strong safety net only serve to make workers fat and lazy, and to make companies inefficient, so we should not try liberal solutions here. It’s another classic case of hearing something repeated for so long, beginning with the right-wing message machine, picked up uncritically by the mainstream media, and then assumed to be true even among many liberals. I heard a radio commentator, on Air America no less, while generally supporting what European countries do for workers as in the long vacation requirements, acknowledge that “granted, France hasn’t created a new job in a 100 years” -- or words very close to that.

Guess what: it’s a crock.

The OECD, the Organization for Economic Co-Operation and Development, is the organization of 30 leading countries that collects data and advances governance policies based on principles of democracy and market-based development. OECD’s 2006 Labor Force Statistics Handbook paints quite a different picture from the one right-wingers love to parrot when they want to oppose anything vaguely approaching a liberal idea on how the U.S. Government should manage the economy for the benefit of all the people.

The one figure that the tightie-righties cite is the official unemployment rate. Besides the fact that the integrity of the official rate has become more and more suspect in the U.S. under the Bush administration – relatively low, under 5% even as people drop like flies out of the employment picture entirely and therefore are not counted as unemployed – European countries are not uniformly taking care of armies of unemployed workers driven out of jobs by too-generous employment benefits. In fact, in the critical 25-54 age group that minimizes differences due to different national retirement policies, the following European countries had lower unemployment rates in 2005 than the U.S.: Austria, the UK, Ireland, Iceland, Norway, Denmark, Netherlands, Switzerland, Luxembourg.

Although that list aggregates to a population of over 100 million, it’s true, of course, that the biggest players, France, Italy and Germany, are missing from that list. But Germany’s picture is complicated by continuing difficulty in absorbing an economically dysfunctional East Germany. Italy’s rate (6.7% in 2005) is not all that high, and has been improving in the last decade and since 2002.

But what complicates the picture even more is that the U.S. shows up extremely poorly in actual job creation within the critical age group – the percentage of the population employed. This figure is a function of both culture – how many would prefer to have a job if one was readily available, which really means the level of acceptance of women working outside the home (and the size of a poorly educated or poorly assimilated minority) – and the health of an economy – the ability of the economy to generate enough jobs to absorb the demand. Generally, the more prosperous the country, the higher the percentage. In Turkey, for example, the figure is 54%, while in egalitarian Iceland, with little ethnic diversity but a strong welfare-state mentality, it’s 88%.

Back in 1994, the U.S. employed-to-population percentage was the highest among the major NATO countries, and was exceeded only by the Scandinavian countries (not including Finland), Austria and Switzerland. Today, not only Austria, Switzerland, Denmark, Sweden, Norway and Iceland employ a higher percentage in the critical age group, but also the UK, Ireland, the Netherlands, Luxembourg and Finland, even the formerly-Communist Czech Republic and Portugal , and, yes, France. For all that its economy supposedly stinks in job creation, France has more jobs as a percentage of the 25-54 age group population than the United States. Italy and Spain do not, but both have seen huge percentage point increases over the last decade as their cultures have changed to fit better within the EU. Germany does not either, almost certainly due to the problem noted above and not its generous employment and unemployment policies. Almost all the European counties have seen the percentage grow significantly. The U.S. has not, and after the Clinton years, the U.S. is back to where it was in 1994. For one reason or another, as always occurs when the jobs picture is weak, people have just dropped out of the workforce. They do not show up in the official unemployment rate.

So when you hear the conventional wisdom about Europe, remember that it’s wrong. The unemployment rate is one thing, and even that is a more complicated picture than such people let on. But most telling is a very simple story: the European countries with their strong social safety nets actually generate more jobs than the U.S.