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Article Artículo

The Doom and Gloom in Denmark and the Washington Post

Denmark has long cold rainy winters where the sun only shows up briefly. It is understandable that someone can get pretty sour living in these conditions. But that is no reason for the Washington Post to run scurrilous screeds from Scandinavia that inaccurately impugn the region.

That is a reasonable description of Michael Booth's Sunday Outlook piece, which managed to get most of the important points wrong in a piece titled, "Stop the Scandimania: Nordic nations are not the utopia they are made out to be."

Going in order of importance, Booth somehow thinks that the McDonald's workers in Denmark getting paid $20 an hour pay 75 percent of their income in taxes. He better try to explain that one to the OECD. It puts the tax rate for the average worker at 26.7 percent. Booth is apparently adding in the 25 percent valued added tax, which would still leave us just over 45 percent (the 25 percent tax is applied on 73.3 percent of income left over after-tax). That's pretty far from 75 percent.

Booth then turns to mocking the employment record of the Scandinavian countries:

"last month the Times assured us that 'A Big Safety Net and Strong Job Market Can Coexist. Just Ask Scandinavia.' (*Cough* unemployment is 5.6 percent in the United States, vs. 8.1 percent in Sweden, 8.9 percent in Finland and 6.4 percent in Denmark.)"

According to the European Commission, the employment rate for people between the ages 20 and 64 is 73.3 percent in Finland, 79.8 percent in Sweden, and 75.6 percent in Denmark. All of which are above the 71.1 percent rate in the United States.

He then goes to Sweden, which he rightly attacks for its strong anti-immigrant movement, but then adds:

"This has distracted from the slowing economy, increasing state and household debt levels, and one of the highest youth unemployment rates in Europe."

Again, he'll have to explain his calculations to the folks who do this stuff for a living. The European Commission has a category for young people who are not working or in school or a training program. The share of young people in Sweden in this category about 7.5 percent, near the bottom of the European Union. As far as state indebtedness, the I.M.F. tells us the government has a deficit of about 2.0 of GDP and total debt equal to 42 percent of GDP, that less than 70 percent of the level in the United States.

Dean Baker / January 20, 2015

Article Artículo

December Was a Good Month, but We’re Far From Fully Recovered

Last Friday, the Bureau of Labor Statistics released its December 2014 jobs report. Most media outlets have focused their reporting on the U-3 unemployment rate, which fell to 5.6 percent last month.

However, the U-3 unemployment rate is an imperfect measure of joblessness. In order to be counted as unemployed, a prospective worker must “have actively looked for work in the prior 4 weeks.” This means that if someone has been searching for work for a long period of time, but has become dissatisfied with their job prospects and hasn’t applied for any jobs over the previous month, he or she is no longer counted as “unemployed.”

Some have tried to correct for this bias by looking at labor force participation rates (LFPR); this is also misleading, mostly because labor force participation doesn’t distinguish between employment and unemployment. (A prospective worker is counted as being part of the labor force if he or she is either employed or unemployed and searching for work. This means that if 50 percent of a country’s citizens were employed and 30 percent were unemployed, its LFPR would be 80 percent; however, the LFPR would also be 80 percent if 75percent were employed and only 5 percent were unemployed. Obviously it’s important to distinguish between these two scenarios.)

CEPR and Nicolas Buffie / January 15, 2015