Great German, Small American Employment Progress

The German labor market continues to strengthen, with employment up by 1.3% compared to the previous month. Given the fact that the German population is stagnating and the fact that Germany had almost no job losses during the recent slump, this is quite good. Germany is thus one of the very few countries to have a significantly higher employment to population ratio compared to 2007. The reason for this is mostly the free market labor policies implemented in recent years.

Meanwhile, employment is picking up in the U.S. as well, with the household survey showing a 291,000 gain (slightly more than 0.2%) and the payroll survey showing a 216,000 gain (slightly less than 0.2%). However, unlike in Germany, the employment to population ratio is despite the gain in the most recent month actually slightly below (58.5% versus 58.6%) year ago levels. The alleged drop in unemployment during the latest year thus simply reflects a lower labor force participation. And because the employment to population ratio fell so much during the slump, it is unlike in Germany significantly below 2007 levels.

With both the average work week and nominal average hourly earnings unchanged, real wages likely also fell.