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Saturday, January 29, 2022

Opinion | What Europe Can Teach Us About Jobs

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Americans have a hard time learning from foreign experiences. Our size and the role of English as an international language (reducing our motivation to learn other languages) conspire to make us oblivious to alternative ways of living and possibilities for change.

Our isolation can be particularly harmful when it comes to countries with which we have a lot in common. Western Europe is our technological equal; Labor productivity in Northern Europe is slightly lower than here. But Europe’s policies and institutions are very different from our own, and we can learn a lot by looking at how those differences emerge. Unfortunately, any suggestion that Europe is doing something we might want to emulate tends to yell with cries of “socialism”.

Which brings me to a well-discussed aspect of the current economic landscape: Europe’s comparative success in bringing workers unemployed due to the pandemic back into the workforce.

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You may be aware that the United States is experiencing what many are calling the Great Resignation – a significant decrease in the number of people willing to accept jobs, at least at pre-Covid wages. There are four million fewer Americans working than it was on the eve of the pandemic, yet the rate at which workers are leaving their jobs — usually a good indicator of labor market tightness — has hit a record, and employers’ rush to find workers. for rapid increases in wages.

Earlier this year, many Republicans insisted that employment was scarce because generous unemployment benefits were discouraging workers from accepting jobs. However, these enhanced benefits have faded away without any apparent impact on workforce participation. What is happening?

Well, a comparison with Europe may shed some light on this topic. It turns out that the Great Resignation is largely an American phenomenon. European countries have been more successful than we have been in getting people back to work. In France, in particular, employment and labor force participation are now well above epidemic outbreak levels. What explains this difference?

Part of the answer may involve older workers. In the United States, the decline in the workforce has been particularly sharp among adults over 55, many of whom have not yet laid off workers due to the pandemic. This may be less important in France, where workers tend to retire earlier than their counterparts in the United States. However, older people in some European countries, such as Denmark, are actually more likely to be employed than their counterparts in the United States; However, Denmark also avoided a major resignation.

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Another answer may lie in the transatlantic differences in how we handle Covid relief. While the United States has made some efforts to help companies stay afloat and retain their workforce, we have primarily helped displaced workers through enhanced unemployment benefits. On the other hand, Europe has mainly relied on job retention schemes – government aid aimed at keeping people on their employers’ payroll even if they are not currently working.

The problems with the American approach are now clear. Like I said, there is no evidence that unemployment insurance has significantly discouraged work. But where European labor support helped keep workers tied to their old jobs, facilitating their quick return, US policy allowed many of those ties to be severed, making employment recovery more difficult.

Finally, let me make a speculative premise: Perhaps one reason Europeans did not engage in great American-style resignation is that they do not hate their jobs as much.

Anecdotally, one factor behind Americans’ unwillingness to return to their old jobs is that enforced inaction during the pandemic has given so many people an opportunity to reconsider their life choices — and many may have realized that low-paying jobs with poor working conditions didn’t exist. t worth it.

Of course, Europe is by no means a workers’ paradise. But some of the stressful, low-paying jobs here are less terrible on the other side of the Atlantic. McDonald’s in Denmark are known to pay more than $20 an hour and offer six weeks of paid vacation each year. This may be an exception, but the United States really stands out among the rich nations for having a low minimum wage, because it offers so little vacation time, and because it doesn’t offer parental and sick leave. The poor quality of American jobs may be one reason why many American workers are reluctant to return.

The opinion of the American elite, especially on the right, has long assumed that improving jobs would be counterproductive, because higher labor costs would reduce employment opportunities. But European experience says otherwise. Even before the pandemic, many European countries were doing well in creating jobs; France, for example, has consistently higher employment rates among adults of the age of majority than the United States.

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And now, in the wake of the nightmarish turmoil of working life, pro-labor policies seem to be helping European economies make a faster job recovery than we’re managing it here. Are we sure we have nothing to learn from their experience?

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