Towards Full Employment and the Democratic Prospect

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https://www.commondreams.org/view/2014/07/02-3



Despite all the talk about economic recovery, the US remains mired in slow growth and persistent unemployment. That we are far from full employment becomes clear if we recall recent history. During the final months of the Clinton Administration, unemployment dipped below 4% Those on the bottom of the income distribution began to make modest gains. Unfortunately, recollection of that history is likely to lead the Federal Reserve to tighten interest rates well before those on the bottom have any real market power. Late nineties gains, however welcome as they were to those on the bottom were also the product of a speculative bubble fed by irresponsible and often criminal banking practices. A full employment agenda with more enduring base would involve a green New Deal with substantial funding for alternative energy, conservation, and public transit. Unfortunately, such an approach is currently off the political radar.

How might we move closer to full employment without relying on speculative bubbles, easy money, or more robust federal spending? And what do we mean by full employment? Should this concept be defined as providing every healthy worker the promise of forty hour per week throughout his or her working life?

Europe can be one source of inspiration on both of these questions. Though Eurozone leaders –especially Chancellor Merkel—remain committed to a destructive fiscal austerity, Germany has provided some positive examples. Dean Baker has pointed out that despite a growth rate generally no higher than the US, Germany has managed to keep unemployment rates lower than ours throughout the Great Recession. Under the German work sharing system, if a firm’s decline in orders requires a 20% cut in workers, rather than lay off a fifth of its workforce it cuts each worker’s hours twenty percent. “Under work sharing, if firms cut back a worker’s hours by 20 percent, the government makes up roughly half of the lost wages (10 percent of the total wage in this case). That leaves the worker putting in 20 percent fewer hours and getting 10 percent less pay. This is likely a much better alternative to being unemployed.”

US law includes provisions that make such work sharing practices more attractive, but Baker points out that these options have not been well publicized. This is unfortunate, and progressives should do well to spread the word. In the medium and longer terms a politics of hours reduction could be one key to addressing the environmental and ethical inadequacies of contemporary capitalism.

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