Dean Baker of the Guardian newspaper in the United Kingdom reports that the United States could solve its unemployment problem if the government encouraged businesses to spread out their work to include more people. Some people would take a cut in hours so that others could step in and take up the slack. Baker points out that people in Germany and the Netherlands work 20 percent less than we Americans. However, there are some serious flaws in his logic.
One is that the US middle class is working more and earning less, which is the reverse of what is going on in Germany. Also, the German economy didn’t experience a housing or a tech bubble, so people aren’t underwater on their houses in Germany to the same degree as in the USA. Millions of people in the US need to keep working more and more just to stay afloat. They can’t afford to take a cut in hours.
There are a ton of other differences between the two nations, all in favor of the Germans. How about this?
Half of the seats of every board of directors in every German corporation are filled by labor union members. These people most likely aren’t all that interested in shipping their jobs to China and Vietnam and redistributing the difference between the higher paying jobs in Germany and the new lower wages in some third world country from the 99 percent of Germans to the 1 percent via higher corporate earnings, rising share prices and soaring dividends. That’s a primary reason why the Germans have higher wages and rising standards of living, which is the opposite of their American counterparts.
That’s why Dean’s logic to cut worker hours is utterly ridiculous. The German economy is managed so that the vast majority of Germans share in their rising prosperity, while US economic policy for 30 years has been to redistribute the income and wealth of the 99 percent to the 1 percent. Both governments have been extremely successful in their policy objectives.
Click on the link below, if you like, and read Baker’s article.
I do not think that this could honestly happen in the United States because part of the American culture is you have a 40 hour work week and anything less means you are not working enough hours.
I think you have missed the point of the miracle that is the German economy. If the German middle classes standard of living isn’t retrenching right now it is because it didn’t increase all that much in the last decade or so. If Germans are keeping their jobs it is for the specific reason that German Labour has let corporate germany keep a substantial share of revenues in profits. By giving up labour concessions (stagnant salary growth through the 2000′s) German companies have not felt compelled to outsource jobs.
If you like there was a bubble in manufacturing employment remuneration in many parts of the world (especially the US) and it has burst…. because Germany didn’t have such a salary inflation, no bubble burst.
And lastly German’s are some of the (if not THE most productive people on earth) basic economics says your wage equals your marginal productivity, if your MPL goes up so will your remuneration, if your MPL is stagnant but MPK (marginal productivity of capital) goes up wage will stagnate but labour employment will be substituted for machinery and equipment. Herein lies the US’s problem in my opinion.
Cheers tho,