‘The sick man of Europe” is a moniker that has been applied to every nation of any significance on the Continent in the last 40 years. From the 1970s onward, the United Kingdom, the Netherlands, France, Germany, and Italy have all been deserving of it for a time. At least half a dozen countries could stake a strong claim to it today. These repeated economic crises made the United States in the late 20th century the envy of the developed world. The robust U.S. labor market was an object of desire, and every large European country would have swapped its unemployment rate for that of the U.S. during most of the last 40 years. Most would still take that trade in a heartbeat. But behind a tumbling unemployment rate, the United States’ labor force is walking with a limp. However it’s measured, the share of Americans in work is shrinking.
The United Kingdom is probably the most relevant country to compare with the U.S. A wise decision not to adopt the euro kept Britain’s economy from being stymied by the common currency, and its relatively laissez-faire labor market looks more like that of its American cousin than that of its immediate neighbors. On the face of it, the two labor forces look pretty similar. Since the start of 2012 the benchmark unemployment rates in the U.S. and the U.K. have moved downward in tandem. In January 2012, both were at 8.2 percent, falling to about 6 percent at the end of 2014. But there are major differences beneath the surface. The slumping American labor-force participation rate has become a popular conservative talking point, and a comparison with the U.K. is unflattering. In the U.S., the participation rate is down by three percentage points since 2008 and is hovering at its lowest level since the late 1970s. During the summer of 2014, the U.K.’s participation rate surpassed the United States’ for the first time in three and a half decades.
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