Why can’t Australia have unemployment as low as America?
I must admit last weekend I became really annoyed at the release of US job figures where 260,000 jobs were created in November and unemployment dropped to 3.5 per cent… the lowest since 1969.
I was annoyed because I wondered why Australia can’t get its unemployment rate down to that level… we seem to be stuck at over 5 per cent.
I was bemoaning this to Craig James from Commsec during our daily finance markets interview on Sunrise. And then I received these charts from Alex Joiner, the chief economist at IFM Investors and it explained everything.
As Alex told me, “Australian policymakers have generated plenty of jobs, but spare capacity remains, as there’s simply more people wanting one.”
“And who are these people that are coming into the workforce boosting participation? Migrants, older people and females.”
As Alex’s charts show, Australia has more people working or looking for work (as a percentage of the population) than the Americans. In fact, we have one of the highest participation rates in the world.
Fascinating isn’t it.
And here’s the kicker. If Australia had the same participation rate as the US, our unemployment rate would be just 1.3 per cent.
So more of us are working, and to an older age, than virtually any other country in the world.