Monthly Archives: November 2011

Whatever happened to the 20-hour workweek?

There’s a fascinating piece on Bloomberg that looks at why Americans work ever harder and see little as a result. European workers work fewer hours and have higher quality of life.  It’s another way in looking at the issue of the day: wealth inequality in America.

The U.S. is culturally tilted toward business, which is legally allowed to capture all of the benefit of that productivity gain. As a result the U.S. has seen higher growth rates than Europe, but at a cost to workers. The U.S. has consistently rejected any moves toward a European style philosophy — isn’t that what the Reagan Revolution was largely about.  Americans, or at least, a large segment of Americans, are unsympathetic to requiring business to give workers a share of their productivity gains – hence anti-union sentiment, anti-minimum wage sentiment, etc.  These Americans are betting that business will grow fast enough to keep them employed and reward them with a higher salary from growing profits. It’s really another way to describe the classic “American Dream.” The problem is that American business no longer sees itself as having any obligation to its workers. Business has continued to automate and outsource in search of ever greater productivity gains (and profits) — you really can’t fault executives, it’s what the culture and government allows American businesses to do. Those who manage those expanding global companies have seen big salary gains, while most of their American workers compete with computers or a worker in India and have seen their salaries stagnate or fall. It’ll be interesting to see if, in 20 or 30 years, if that stagnation is temporary until China, India, etc. develop to the point where they buy more American goods and services, and take fewer American jobs.

In Europe,  by contrast, the law and culture requires business to share those productivity gains with workers through shorter work hours and better benefits. The result has been a richer quality of life but fewer material goods. The article talks about the Netherlands, but it also applies to Germany and the Nordic countries. The big test is how these two systems will fare in the recession. In the U.S. we’ve seen high unemployment as businesses shed workers and continued to move build operations in faster-growing parts of the world. There has been an enormous public backlash against Democratic efforts to increase public benefits and increase regulation. Northern Europe remains successful, but is trying to figure out how to prop up southern Europe, which wanted to live like northern Europe without the productivity gains, and is facing its own crisis point. It’ll be very interesting to see if northern Europe can afford to continue its generous stance toward workers going forward or whether than was always just going to be temporary.

Two steps forward, one step back on jobs

WICHITA — Here’s an interesting comment from John Challenger in today’s Challenger, Gray and Christmas layoff report. October was a good month with just 43,000 announced layoffs, but he’s cautious.

“Job cuts in government and financial services dropped significantly last month, but the two sectors are not out of the woods, by any means.  Most of the government cuts this year were at the state level.  We have yet to see the full impact of mandated federal spending cuts.  Anticipated cuts at the U.S. Post Office alone could result in more than 200,000 job cuts,” said Challenger.

“Meanwhile, the European debt crisis is wreaking havoc on Wall Street.  Commercial banks and mortgage lenders are still unstable in the wake of the housing collapse.  Home sales and prices have rebounded only slightly and the millions of homes in foreclosure are basically ticking time bombs sitting on the banks’ balance sheets,” he added.

“We seem to be in a pattern of two or more consecutive months with low job-cut totals, followed by a sudden spike one month, typically resulting from a small number of large layoffs.  But, this is not surprising in light of how slow and uneven this recovery has been.  We will probably see more of the same through the first half of 2012,” said Challenger.

One of the things that feels different about this recession than previous ones are the government layoffs. Other recessions were  shorter, of course, and we didn’t have as much government debt, so there wasn’t any pressure to cut government. This time, though, just as the private sector seems to be clawing its way back, governments are being forced to cut, prolonging the jobs slump.