Weekend Economists Toast the Apostle of Ireland March 14-16, 2014

[Demeter]

19. Work Like a German By GLENN HUTCHINS

I THINK THIS IS A STUPID AND FALSE EQUIVALENCE...I THINK WE SHOULD BE ALLOWED TO WORK AS AMERICANS...WHICH MEANS DETHRONING, DIS-EMPOWERING AND ASSET-STRIPPING THE 1%. THAT'S WHAT THE AMERICAN REVOLUTION (AND THE CIVIL WAR, REVOLUTION PART 2, WERE ALL ABOUT). BUT THEN, THIS IS A BROOKINGS INSTITUTION GUY...

http://www.nytimes.com/2014/03/15/opinion/work-like-a-german.html

SOME of our workplace programs, like Unemployment Insurance and Disability Insurance, parts of which date from the 1930s, desperately need updating. The original designers did not envisage such large numbers of people unemployed for long periods of time or living on disability benefits. If we could convert these programs into ladders of upward mobility, they would disproportionately benefit the disadvantaged, as well as strengthen the economy. We need to focus on enabling workers to stay in work — rather than having to compensate them after they have lost their jobs.

We need only turn to Germany to see how much more effective such an approach can be. In 2009, Germany suffered a more precipitous drop in gross domestic product than the United States, but it experienced almost no change in unemployment. Here, it doubled. Today, unemployment in Germany is actually lower than it was pre-crisis, and long-term unemployment is negligible. With America’s unemployment rate stuck above 6.5 percent, the contrast is stark.

In the German job-share model (known as “Kurzarbeit”), if an employer cuts an employee’s hours so that income is reduced by more than 10 percent, the government compensates workers for a large portion of wages lost. This enables companies to cut costs during downturns without having to lay workers off. And then they’re better placed for a recovery because they’ve been able to preserve their pool of skilled labor. America should have a similar program to enable people to share jobs and to give employers an incentive to cut hours rather than staff.

When people lose their jobs but find work at lower wages, the new program could plug the gap by supplementing their income. For the long-term unemployed who take significantly lower-paying jobs (typically, at minimum-wage levels), the unemployment benefits could offer stop-loss insurance to put a floor under their losses. The new program should also subsidize employers to provide paid sick days, family leave and child care support — measures that are especially important for disadvantaged women in the work force.

AND THERE'S MORE..YOU SHOULD SEE WHAT THIS ELITIST THINKS ABOUT DISABILITY!


Glenn Hutchins is a co-founder of the technology investment firm Silver Lake Partners and the vice chairman of the Brookings Institution.