Why the US unemployment rate is so much higher than Germany’s

US and German unemployment rates appear to be on different planets. Below the surface, however, economic data show the two countries are experiencing similar pain.

The difference in the two country’s unemployment rates stems from differing approaches to supporting companies and workers. As lockdowns to contain the coronavirus pandemic ripped through the global economy, nations like the US and Canada have mainly relied on beefed up unemployment benefits to cushion the fall. Under Germany’s Kurzarbeit, which translates to “short-time work,” financially distressed employers can drastically reduce worker hours, and the government will pay most of their lost wages. As a result of these divergent policies, the US’s official unemployment rate spiked from 3.5% in February to 14.7% in April, while Germany’s rose from 4.7% to 5.5% over the same period.

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