Press Release
Labor Market Developments in the United States and Cnada since 2000
July 25, 2005
Note To Editors

The latest edition of the Federal Reserve Bank of New York’s Economic Policy Review, Labor Market Developments in the United States and Canada since 2000, is available. The articles are:

These articles were presented at a conference in December 2004, convened to consider the disparity in job growth between the United States and Canada—namely, while the United States was struggling to create jobs, the number of Canadian jobs was increasing. The conference was cosponsored by the Canadian Consulate General in New York, the Centre for the Study of Living Standards, the Federal Reserve Bank of New York and the New York Association for Business Economics.

The Weak U.S. Jobs Recovery

Authors Freeman and Rodgers find that the current recovery, which started in 2001, has been the worst in recent history in terms of job creation. They determine that the slow employment growth of the recovery is not attributable to the poor performance of a particular sector, nor is it concentrated in certain geographic areas.

The authors conclude that the weak jobs recovery represents a major shift in the link between the labor market and the economy over the business cycle. They also find that the slow job growth has disproportionate effects on groups especially sensitive to business cycle swings, such as African-Americans, new labor-market entrants, out-of-school youth and less educated workers.

Richard B. Freeman is the Herbert S. Ascherman Professor of Economics at Harvard University and director of the Labor Studies Program at the National Bureau of Economic Research; William M. Rodgers III is a professor of economics at Rutgers University and chief economist at Rutgers’ John J. Heldrich Center for Workforce Development.

Is Canada Losing Well-Paid Jobs?

Based on their analysis of changes in the share of jobs falling in certain real wage categories over 1997-2004, the authors suggest that well-paid jobs ($25 an hour or more) are not disappearing in Canada. Morissette and Johnson also find little evidence that the relative importance of well-paid jobs has declined or that the relative importance of low-paid jobs (less than $10 hour) has risen over the past two decades.

René Morissette is assistant director of research of the Business and Labour Market Analysis Division of Statistics Canada; Anick Johnson is an economist in the Input-Output Division of Statistics Canada.

The Recession’s Effects on State Unemployment Insurance Funding

Although the economic downturn of 2001 was one of the mildest of the past fifty years, between 2002-04, several large states experienced difficulties financing their unemployment insurance (UI) programs. Vroman discusses the recession’s effects on states experiencing UI funding problems and the borrowing options available when state trust fund reserves are inadequate. Among his findings, Vroman concludes that all of the states that had to borrow had low trust fund balances at the end of December 2000—just before the recession began—and that funding problems have been concentrated among the large states.

Wayne Vroman is an economist at the Urban Institute.

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