By What Measure? A Comparison of French and U.S. Labor Market Performance with New Indicators of Employment Adequacy

The unemployment rate is conventionally relied upon to measure national employment performance, and has been the main indicator justifying comprehensive labor market reforms, generally in the direction of deregulation and benefit reduction. The starting point of this working paper is that a well-functioning labor market should produce not just enough jobs, but enough “decent” jobs. We compare U.S. and French performance according to three indicators, calculated from each country’s main household survey for 1993-2005 by age, gender and education group. With low wages defined as less than 2/3 of the full-time median and inadequate hours defined as working involuntarily part-time, we calculate: 1) the low-wage share of employment; 2) the underemployed share of the labor force; and 3) the adequately employed share of the working age population. France performs well above the U.S. on all three indicators, particularly for less-educated workers, and the French advantage has grown substantially since the late 1990s. In 2005 the underemployed share of the male labor force with less than a high school degree was 64% in the U.S. and just 23% in France; for the female labor force, these figures were 84% in the U.S. and 41% in France. The adequately employed share of the prime-age (25-54) population with just a high school degree was 64% for U.S. men and 80% for French men; among women, these rates were 39% for the U.S. and 63% for France. These results indicate that accounting for adequate pay and hours of work has large effects on the measurement of labor market performance. The authors conclude by recommending that indicators such as these, and not just the unemployment rate, should have a central place in discussions of national labor market reform.This paper was revised in November 2008.