Unemployment: do we want to follow Cameron or Obama’s way?


9:20 am - September 10th 2012

by Richard Exell    


      Share on Tumblr

I suspect many readers have been watching the Democratic Party’s Convention over the past week.

I have been struck by the assumption that the economy will be a negative factor for the Obama campaign – last week’s US employment figures were seen as bad news for the Democrats.

Certainly, American unemployment shot up much faster than British in the first months after the recession struck.

But this was mainly before President Obama was elected or before any decisions he made could have any effect – and before David Cameron was elected Prime Minister.

Look at what has happened to unemployment in the two countries since the UK general election in May 2010:

This is important: Mr Romney effectively wants to copy Britain’s failed programme of austerity for the poor and tax cuts for the rich.

This is the wrong way round, if lessons need to be learned, we should be taking them from the USA.

    Share on Tumblr   submit to reddit  


About the author
Richard is an regular contributor. He is the TUC’s Senior Policy Officer covering social security, tax credits and labour market issues.
· Other posts by


Story Filed Under: Blog ,Economy

Sorry, the comment form is closed at this time.


Reader comments


Nice fixing of the numbers.

If you show unemployment rates not ‘rebased’ numbers then you will see that UK unemployment is falling and US unemployment is rising. You will also see that US unemployment is higher than UK unemployment.

The really shocking US numbers are actually the ’employment’ numbers. The US has a record low percentage of people in employment. For women it is lowest since 1993. For men it is lowest since after WW2. See zerohedge http://www.zerohedge.com/news/biggest-shock-fridays-payroll-report-sorry-men

What is happening? People are leaving the job market in the US, not even looking for work. That could be because the US limits unemployment benefits and after you run out you are on your own. Maybe LibCon is proposing we do the same in the UK to keep unemployment numbers down. Shame about all the millions in absolute poverty, but anything to reduce unemployment, right?

The IMF has just come out with this warning:

“US tax increases and spending cuts set to take effect by the beginning of next year pose one of the biggest risks to the global economy, International Monetary Fund Managing Director Christine Lagarde said today.”
http://www.businessweek.com/news/2012-09-09/u-dot-s-dot-fiscal-cliff-endangers-world-economy-lagarde-tells-apec

With that cliff hanger, it’s hardly surprising that business investment and hirings are being held back pending the outcome of the US Presidential and Congressional elections in November.

Do not trust official unemployment figures from the UK, all that is being counted is the number of people claiming jobseekers allowance. We’ve come up with lots of extraordinary ways of ‘disappearing’ unemployed people from the figures. Workfare being the most recent.

4. Chaise Guevara

[Before reading] It’s going to be Obama, isn’t it?

Chaise, actually no.

Except in the sense that you’re absolutely right.

7. Chaise Guevara

@ Jack C

Once again, men quail before my supernatural powers of pattern-recognition!

1. Nonny Mouse

Oh the UK’s employment record is spiffing alright. Except when you read beneath the headline number you see that the difference is the British declare themselves self employed or take on low paid temp or part time work.

Whoopee.

Actually I guessed that one as well Chaise. Your powers will only be confirmed if you can also guess:

Do we want to follow the US or European economic model?

10. Chaise Guevara

@ 9 That’ll be Europe, one suspects.

I’m sure it would be in real-life, but not on the basis of the above, and the data used.

That’s what comes from building an argument on a single fact I guess.

“Do not trust official unemployment figures from the UK, all that is being counted is the number of people claiming jobseekers allowance. ”

There are two separate measures of unemployment.

– monthly figures based on the Claimant Count; unemployment rates based on Claimant Counts are available for Parliamentary constituencies.

– a quarterly figure based on a sample survey – the so-called ILO unemployment rate which is comparable across western European countries. The ILO figure will include those who are looking for work but who are not eligible for “job-seekers allowance”

Try this for illumination:
http://www.ons.gov.uk/ons/taxonomy/index.html?nscl=Unemployment+Rates

It’s as well to compare what is happening to the “employment rate”.

As for UK employment figures, try ONS Labour Market Statistics, August 2012

“The employment rate for those aged from 16 to 64 for the three months to June 2012 was 71.0 per cent. This is the highest figure since the three months to May 2009 and it is up 0.4 percentage points on the previous quarter. The number of people in employment aged 16 and over increased by 201,000 on the quarter to reach 29.48 million, the largest quarterly increase since the three months to July 2010. The number of people in employment was 96,000 lower than the pre-recession peak of 29.57 million recorded for March-May 2008.”
http://www.ons.gov.uk/ons/dcp171778_273802.pdf

The questions are how much of this is due to the London Olympics and how much will stay once the Olympics are over?

Iain Duncan Smith is complaining about BBC reporting:

“Shadow work and pensions secretary Liam Byrne said: ‘It looks like about 90% of the fall in unemployment has been in London where there has obviously been a boost from the Olympics.’

“‘In about half of Britain’s regions you’ve got unemployment going up. I think the government needs to act now to to put a lot more fuel in the tank of its back to work programmes before things get any worse.'” [BBC website 15 August 2012]

@nonny mouse

> The US has a record low percentage of people in
> employment.

Not correct. The data you link to is *not* the overall labour participation rate. You can find that here:

http://research.stlouisfed.org/fred2/series/CIVPART?rid=50&soid=22

(which if you follow the links through from your linked article, happens to be the same source site).

You also have to be cautious regarding demographic changes that underpin some figures. A more representative picture is:

http://research.stlouisfed.org/fred2/series/LNS14100000?rid=50&soid=22

and perhaps the single most useful measure is this:

http://research.stlouisfed.org/fred2/series/LNU02300000?rid=50&soid=22

I recommend clicking the graph and adjusting the date to start in 2007 to see when the job situation deteriorated, and when it broadly stabilised.

News as reported by the PA on 12 Septmber 2012:

While the fall in the headline rate of unemployment was lower than many economists were expecting, the drop in the claimant count was far higher than forecast.

The figures also showed the number of people out of work for over a year was the highest for more than 16 years – at 904,000, up 22,000 on the previous quarter. [PA 12 September 2012]
http://www.google.com/hostednews/ukpress/article/ALeqM5jOI5jK7C2t6NA75D8q0NZ4P6fA3w?docId=A2984281347442209A000007

In today’s news:

(Reuters) – Next and John Lewis, two of Britain’s best performing retailers, warned of a slowdown in an already troubled sector, dampening hopes that consumers might help return the economy to growth.
http://uk.reuters.com/article/2012/09/13/uk-britain-retailers-idUKBRE88C0GG20120913

We are looking to increases in consumer spending, business investment and net exports to make up for the cuts in public spending. Also in the news:

Unemployment figures reveal slowdown in public sector job cuts – Number of civil servants declined by 5,000 in quarter, and number of health workers is higher than three years ago [Guardian 12 September 2012]


Reactions: Twitter, blogs
  1. Jason Brickley

    Unemployment: do we want to follow Cameron or Obama’s way? http://t.co/mS9wuo9m

  2. leftlinks

    Liberal Conspiracy – Unemployment: do we want to follow Cameron or Obama’s way? http://t.co/7adima0A





Sorry, the comment form is closed at this time.