Historically the unemployment rate in the USA was lower when compared to European countries due to the US economy being dynamic and vibrant. The policy of hire and fire by companies was accepted by the society as a means of keeping the economy strong. However this situation is changing due to the continued rise in unemployment rates in the past couple of years.
The US unemployment rate is getting closer to unemployment rate in Europe as the charts show below (click to enlarge image):
Source: International unemployment rates and employment indexes 2007-2009 (seasonally adjusted), Bureau of Labor Statistics, Division of International Labor Comparisons
The US unemployment rate exceeded Germany’s rate in April and was very close to the rate in France. This is highly significant since these two German follow socialism and have always had high unemployment rates. For example, in France it is normal to have unemployment levels above 8%. In the above chart, the US rate is higher than all countries except for France. While governments in Europe dole out liberal unemployment benefits, it is not the case in the US where unemployment benefits are capped and stop after some weeks. Another factor is in the US, health insurance is a huge expense for the unemployed. In Europe, due to national health insurance, unemployed workers do not have to worry about medical care.
The US unemployment rate for the month of May was 9.4% which is higher than the 8.9% shown in the chart above.To put this in perspective, in April France had an unemployment rate of 9.2%.
Unemployment levels in Spain and Ireland have been rising at a steep pace in the last few months.In Spain it exceeds an incredible 18% primarily due to the collapse of the real estate boom.
