Skip to content

A Comparison of American and Canadian Employment

Monday, May 12, 2014

By David Andolfatto, Vice President and Economist

U.S. employment remains depressed relative to where it stood prior to the recession of 2007-09. Some commentators suggest that no further recovery should be expected, arguing that current developments in the labor market are largely attributable to secular changes in demographics, such as an aging population.

If this view is correct, then one might reasonably expect Canadian and American employment rates to be roughly the same over long periods of time. This should especially be the case for U.S. states that share a border with Canada, as these states are the most similar to Canada in terms of their economic and demographic makeup.

The figure below plots the employment-to-population (working age) ratio for the U.S. and Canada. To control for factors related to secular changes in age and gender characteristics, we report the employment ratio only for “prime-age” males (ages 25-54). We divide the U.S. into two regions: border and nonborder states.1

American and Canadian Employment

The prime-age male employment ratio across both countries shows a modest secular decline over the sample period. The employment ratios in all regions averaged between 85 percent and 87 percent.

The cyclical behavior is quite different, with Canada experiencing a major recession in the early 1990s and the U.S. experiencing its major recession more recently. The Canadian prime-age male employment ratio is now at 85 percent, close to its historical norm. But the same is not true in the United States. In both border and nonborder states, the prime-age male employment ratio is less than 83 percent, far below its historical norm and significantly below its Canadian counterpart. The data presented here suggest that demographics are not the main driver behind the lackluster recovery in U.S. employment. The explanation is more likely to reside in economic policy and circumstances.

Notes and References

1 The border states in the U.S. are Washington, Montana, North Dakota, Minnesota, Wisconsin, Michigan, Ohio, New York, Vermont, New Hampshire and Maine.

Additional Resources

Posted In Labor  |  Tagged canadadavid andolfattoemploymentgreat recession
Commenting Policy: We encourage comments and discussions on our posts, even those that disagree with conclusions, if they are done in a respectful and courteous manner. All comments posted to our blog go through a moderator, so they won't appear immediately after being submitted. We reserve the right to remove or not publish inappropriate comments. This includes, but is not limited to, comments that are:
  • Vulgar, obscene, profane or otherwise disrespectful or discourteous
  • For commercial use, including spam
  • Threatening, harassing or constituting personal attacks
  • Violating copyright or otherwise infringing on third-party rights
  • Off-topic or significantly political
The St. Louis Fed will only respond to comments if we are clarifying a point. Comments are limited to 1,500 characters, so please edit your thinking before posting. While you will retain all of your ownership rights in any comment you submit, posting comments means you grant the St. Louis Fed the royalty-free right, in perpetuity, to use, reproduce, distribute, alter and/or display them, and the St. Louis Fed will be free to use any ideas, concepts, artwork, inventions, developments, suggestions or techniques embodied in your comments for any purpose whatsoever, with or without attribution, and without compensation to you. You will also waive all moral rights you may have in any comment you submit.
comments powered by Disqus

The St. Louis Fed uses Disqus software for the comment functionality on this blog. You can read the Disqus privacy policy. Disqus uses cookies and third party cookies. To learn more about these cookies and how to disable them, please see this article.