NCPA - National Center for Policy Analysis

Creating vs. Destroying Jobs

November 1, 1994

The United States and Japan have lower unemployment than Europe - about 6 percent in the United States and about 3 percent in Japan versus an average of over 10 percent for members of the European Community - because they have created jobs in the private sector of the economy. In European countries, on the other hand, there has been a net destruction of jobs in the private sector.

  • Between 1980 and 1990, 48.9 private sector jobs were destroyed per thousand working-age population in France, 26.4 jobs in Germany and 27.7 jobs in Italy.
  • Over the same period, 34.1 private sector jobs were created per thousand working-age population in the United States and 7.3 jobs in Japan.

For the whole economy, including employment in both the private and public sectors:

  • 36.5 jobs were destroyed per thousand working-age population in France, 13.3 jobs in Germany and 15.7 jobs in Italy.
  • 55.6 jobs were created per thousand working-age population in the United States and 15.8 jobs in Japan.

Moreover, the large number of service jobs created in the United States are, when measured by wages and by the technical skills required, good jobs.

  • The U. S. created 47 new professional, technical, administrative and managerial jobs per thousand working-age population, versus only 26 in France and 20 in Germany.
  • Germany and France have improved the average skill required in jobs primarily by destroying low-skill jobs rather than by creating high-skill jobs.
  • By 1992, median weekly wages in
  • the U. S. stood at $481 in the service sector versus $500 in manufacturing.

The main reason Europe has failed to create jobs in the private sector is government regulation. Among the regulations are restrictions on cable and satellite communications, tough zoning laws, restrictions on hiring and firing in retail and restrictions on retail hours of operation. - David R. Henderson.

Source: McKinsey Global Institute, "Employment Performance," November 1994, McKinsey & Company, Inc., 1101 Pennsylvania Avenue NW, Washington, DC 20004, (202) 662-3100.

 

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