One year into the global recovery, the U.S. is lagging far behind other major economies in restoring jobs lost in the recession. A Wall Street Journal analysis of employment trends in 11 countries suggests that manageable debt burdens and healthy banking systems--areas in which the U.S. doesn't excel--are proving to be crucial factors in creating jobs.
Brazil and Chile, neither of which suffered banking crises, have seen the strongest job growth since the beginning of the recession, according to data from the Organization for Economic Cooperation and Development and the International Labor Organization. In April, total employment in the two Latin American countries was up 4.5% and 6.8% from December 2007, respectively.
Proximity to the booming economies of Asia has helped job creation in some cases. Australia has managed to boost total employment by 3.7% through May, thanks in part to trade in commodities such as iron ore with Asian countries that never went into recession.
Australia's banks also emerged from the financial crisis largely unscathed.
By contrast, total employment in the U.S. in June was down 4.8% from December 2007. Businesses have been reluctant to hire amid difficulties getting loans from financially wounded banks and uncertainty about how long it will take consumers--a key driver of the U.S. economy--to pare down their large debt loads.
As of March, U.S. household debt stood at 122% of disposable income, down from a peak of 131% in early 2008 but still well above the 100% economists tend to see as sustainable.
The picture isn't much better in the U.K., where consumers are even more indebted than in the U.S., and where the hard-hit financial sector accounted for a much larger share of total employment.
As the country's new coalition government implements harsh economic austerity measures in order to get its budget closer to balance, hiring remains tepid. In March, total employment was still 2.0% lower than in December 2007.
Source: Wall Street Journal | MARK WHITEHOUSE
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