Canadian Unemployment Rate For decades before the 1981-82 recession, the national unemployment rates of Canada and the United States had been nearly identical. Since then, a persistent “unemployment rate gap” has emerged. For much of the 1980s, Canada's unemployment rate was consistently about 2 percentage points higher than that of the United States. The gap developed despite very similar economic performances in the two countries: the growth rate of real incomes per capita has been virtually identical since 1976. However, now, well into the 1990s, the gap has widened much more significantly . In the last five years, the United States average has in fact fallen from 6.7% to 6.5%, with a current rate of 5.2%, while the Canadian rate is and still remains at 9.4%, with a current rate of 9.7%. This substantial difference in the Canadian unemployment rate can be attributed primarily to the safety net provided by the government, including generous payments of unemployment insurance and other social services; but also to high payroll taxes; and the underperforming Canadian economy. There is no single reason for the persistent gap in Canadian and U.S. unemployment rates, but rather a combination of the above factors. "No society can be prosperous and happy, of which the majority of the members are poor and miserable." (Adam Smith) This is the theory behind the creation of social services such as unemployment insurance and welfare payments in many countries. The Canadian government provides a substantial "social safety net" to its population. Initially, this seems like a right and proper thing to do, since it is in the interest of society as a whole. However, when this generosity is exploited by undeserving recipients, problems and controversies arise. The problem of abuse of Canadian social services became prominent in 1996. The general consensus from organizations such as the Fraser Institute and the OECD is that Canada's generous social safety net constitutes a disincentive to work, leading to dependence on government, resulting in increased unemployment. When comparing the social benefits provided to Canadians and Americans, the cause of this gap in the unemployment rate becomes apparent. phenomenon, there is no single explanation for the gap in unemployment between the United States and Canada. It is clear that Canada has many contributing factors to its high unemployment rate, although most appear to be rooted in government policies and programs. Some argue that a cut to such programs instituted by the government is the only way to initiate a decline in the unemployment rate, while others disagree arguing that this would be undemocratic and violate the social contract. The US has a much less generous offering of social welfare and payroll taxes and lower minimum wages, yet this has not affected people in a negative way. In fact, there is concrete evidence that their economy is booming, proving that it is possible to have a successful society with lower public subsidies. Only when there is a cut to these programs will the Canadian unemployment rate decrease. Any change requires significant measures, with real impacts on people's lives. However, until that happens, the unemployment rate gap between Canada and the United States will remain present and long-lasting.