Debate the strength of the U.S. job market all you want, but one thing is clear: It’s getting better here faster than most places.
The Organization for Economic Cooperation and Development said this morning it expects the unemployment rate among its 34 member countries to inch down from 7.4 percent to 7.1 percent by the end of next year. That’s still significantly higher than it was before the global financial crisis but a big improvement from the previous three years when it was stuck at 8 percent.
The driving force behind those gains is the American labor market, the report said. The rapid decline in the U.S. jobless rate over the past year to 6.2 percent has surprised even some of the world’s top economists. The OECD predicted unemployment will reach 5.9 percent at the end of 2015. The drop from the end of 2013 through next year would beat the average decline of its member countries.
This chart shows how far governments around the world have come toward reducing joblessness. You can see how much progress the unemployment rate is expected to make by by 2015 by comparing the distance between the black dot (the pre-recession rate) to the white diamond (the 2015 forecast). The blue bar shows the level of unemployment in each country at the end of 2013.
In a handful of places, including Israel and South Korea, joblessness is actually below its pre-recession level. But the United States is much farther along than places such as France, Ireland and Australia -- and that may actually be a conservative estimate.
The mid-range of the Federal Reserve’s most recent forecast for unemployment next year is 5.4 to 5.7 percent, though critics say that outlook is too pessimistic. The nation’s central bank has consistently underestimated the prospects for the job market.
The OECD emphasized the trend of achingly slow progress that has bedeviled policymakers around the world. Half of all workers have seen their real wages decline, whether because of reductions in pay from less overtime and fewer bonuses or because earnings growth did not kept pace with inflation. Nearly 17 million people were without a job for at least a year at the end of 2013, according to the OECD, representing about a third of those unemployed. And some of the increase in joblessness since the crisis may be permanent.
Still, the United States is expected to continue its winning streak Friday when the government releases its monthly snapshot of the job market. Analysts expect the economy created 230,000 jobs in August and the unemployment rate inched down to 6.1 percent. If that trend keeps holding up, the improvement in the U.S. job market won't just be relative.
Correction: A previous version of this story did not clearly state the pace of decline of the U.S. unemployment rate as forecast by the OECD.