In the first week of April the famous British took us by sur- Editorial prise with a graph entitled "Priced out of a Job" which offered a simple answer to all the questions we have about . The real wage of a "low-paid worker" fell by an annual average of 1.5% between 1980 and 1989 in the United States. Between 1983 and 1990 the strongest increase was recorded in Germany at 2.5%. Thus, the graph seems to prove the frequently-heard hypoth- esis that German unemployment is much higher than unemployment in the United States because wages, and in particular the wages of low skilled work- ers, are too high on this side of the Atlantic Ocean. Unfortunately, the ECON- OMIST did not provide us with evidence on German and US unemployment. Instead, the as a whole was used to "prove" the flexibility of the new against the inflexibility of the old world exhibiting as it did a much higher rate of unemployment in the middle of the 1990s. The ECONOMIST's theory on jobs and wages is, obviously, a rather crude Dr. Heiner Flassbeck, one: rising wages mean rising unemployment, falling wages mean falling head of the "Business Cycle" department unemployment. What about growth? Even if the distribution of earnings about theory and statistics on jobs remains unchanged a higher growth rate of labour productivity in one country and wages: will allow higher growth rates of real wages without pricing anybody out of a job. Look at Japan in the 1960s and 1970s or many developing countries in "Priced out of Jobs?" the 1980s. Their real wages grew much quicker than in Germany, but full employment is a common feature of all these countries. The ECONOMIST may point out that, in a situation of high unemployment, real wage increases should lag behind the growth of labour productivity to create incentives for a more labour-intensive mode of production. The evidence of Germany in the period under consideration is impressive in this respect. The share of wages in overall national income fell throughout the 1980s at an unprecedented pace whereas it remained rather flat in the States. Looking closer at (west) Germany and the USA during this period raises additional questions. In 1983 when the share of wages was historically high in Germany, the German unemployment rate was 7.7%, the US rate was 9.5%. In 1992, after 10 years of consistently falling unemployment, reached a low of 4.6% in terms of the OECD standardised rate. The compara- ble rate in the USA was 7.5%. As the dispersion of income had not changed at all in Germany, the benefit of the rapid rise in wages was distributed evenly between workers of different skills. In the USA income dispersions shifted in favour of the wealthy to a greater extent than in any other country in this period, with a return of the phenomenon of the "working poor". So the trade-off between income and employment is not inevitable. Neither the slow increase or even the fall of real wages nor the flexibility in the US had any visible influence on the overall performance in terms of unemployment compared with west Germany. But the structure of unemployment may have changed in favour of the USA. Here we are short of data for the beginning of the 1980s. But in 1992, the rate of unemployment among workers with pri- mary or lower secondary education was 13.5% in the United States and 9% in west Germany. Thus a coherent story is not as simple as a graph with all its suggestive power. Such a graph fits many prejudices, but fails to do justice to the complexity of reality.