December provides a particularly good example of this when you compare Canada's job market to the one south of the border. Even allowing for slightly different methodologies, the unemployment rate really fails to illustrate the difference between the two economies. The American unemployment rate is 7.8% and the Canadian unemployment rate 7.1%. That alone would give you the idea that the two job markets are pretty similar. The employment rate for Canada in December was 62.1% or 61.7% depending on whether or not you adjust for seasonal differences. In the US the Employment Rate was 58.6%. All of a sudden you can see that the 0.7% gap in the unemployment rate is hiding the real story. Even with the unemployment rate dropping over the last couple of years, the employment rate in the US hasn't really come off of recession lows. Take a look at the chart below:
|Employment Rate at Year End|
As you can see, Canada never really suffered the job losses that the US did, and has recovered much closer to pre-recession highs. The unemployment rate just doesn't show this kind of weakness. The reason is pretty simple: people dropped out of the job market. Part of this is demographic. However, demographics should be impacting Canada and the US relatively evenly. After all, we both had baby booms after World War II and we both still actively allow immigrants into our countries in large amounts. Birth rates are also fairly comparable. So while we may ascribe part of the decline to demographics, most of the decline is purely economics. This is shown in greater detail when you look at the provincial breakdowns:
Employment Rate for December 2012
|Newfoundland and Labrador||54.2|
|Prince Edward Island||59.5|
As you can see, there's a huge gap between top and bottom. Job markets that are going full tilt like Alberta can have an employment rate of almost 70% even with the demographic pressures at play. That's why I don't buy a demographic argument for the steep decline in the US. I think this is a much more revealing picture of the state of the North American job market than the Unemployment Rate you'll read about elsewhere.