UK Independent: U.S. Isn't Working, Rest of World Should be Alarmed

Economic Life: There are deep-seated concerns that the US workforce has too long a tail of less-skilled people doing jobs that can be done abroad by workers on lower wages

The "jobless recovery" has become a catchphrase to describe what is happening in the US, and could also be applied to Continental Europe. In recent months, employment in the US has inched up, despite what seemed at least to be decent growth, while (and this has really shocked me) the eurozone has created no net new jobs at all in the past three months. The UK has at least managed to create 300,000 over this period.

In a way the failure of the US to generate jobs is even more worrying than that of Europe. Levels of unemployment are broadly similar at 10 per cent. But Europe does at least have the "excuse", if that is the right word, of a relatively inflexible labour market. Employers in Europe can be expected to be reluctant to take on new labour as demand rises because they are not able to shed that labour if the rise in demand falters. But in the US there are fewer such inhibitions, or at least there should be. Yet the rise in employment this cycle has been the lowest since the Second World War. As a result unemployment has remained stubbornly high. Why?

The answer is complex, so we should be suspicious of pat responses, but it is clear that there are several forces at work. One is simply that the sectors that have shed most labour are in no shape to rehire. The main losses during the downturn were manufacturing, transport and construction, three industries that have been particularly savaged by the recession, as the top graph, above, shows.

Since the recovery began nothing much has happened in terms of additional employment in any industry, whereas in previous recoveries even the construction industries were busy rehiring.

http://www.independent.co.uk/news/business/comment/hamish-mcrae/hamish-mcrae-america-isnt-working-and-the-rest-of-the-world-should-be-alarmed-2081579.html