John Buell

Full Employment Without Busting the Budget

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. That experience itself is likely to lead the Fed to tighten interest rates well before those on the bottom have any real market power. Late ’90s 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 be viewed 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. Dean Baker has pointed out that despite a growth rate generally no higher than the US, Germany has managed to keep unemployment rates much lower than ours: 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 20%. “Under work sharing, if firms cut back a worker’s hours by 20%, the government makes up roughly half of the lost wages (10% of the total wage in this case). That leaves the worker putting in 20% fewer hours and getting 10% 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.

Baker goes on to add “There is no escaping the logic that more workers and more hours per worker are alternative ways to meet a growing demand for labor. There are good reasons for preferring the more worker route to the longer hour route.”

This logic goes the other way as well. With productivity steadily increasing in all modern industrial economies, unemployment rises unless consumer demand continues to grow commensurately. Orthodox economists assert that consumer demands are insatiable and that we work hard to meet those demands. Yet it is just as plausible to argue that long work hours coupled with the US practice that increases in productivity can be taken only in the form of higher wages rather than shorter hours encourages an emphasis on more consumption. And as working hours in ever more inegalitarian workplaces have increased, the pressures for conspicuous consumption have grown. (Witness the recent Kia ad which tells us that luxury is a function of how we feel about a product and “how it makes others feel about us.”) At the very least long hour jobs give workers few opportunities to experience satisfactions other than more commodities.

University of Leeds economist David Spencer wonders about the broader spiritual ethos encouraged by a society where some are workaholics and others are permanently unemployed. Should we “be asking society to tolerate long work hours for some and zero hours for others. Surely we can achieve a more equitable allocation that offers everyone enough time to work and enough time to do what they want? A reduction in work time would offer a route to such an allocation.”

And a world of extreme work for some and no work for others can also be associated with the demonization and racialization that is such an ugly feature of our politics. Inner doubts lodged in the minds of workaholics about what all this work is for and about the work and spend treadmill can be stilled by demonizing those who do not or cannot find work. There is however a positive spin. More equal distribution of work can alter perceptions of those formerly excluded from work and the experience of more leisure can curb the sense that work is the exclusive meaning of life. Curbing an obsession with consumption while enhancing the ability to collaborate on non- market solutions to common problems is likely to become all the more imperative as the global climate crisis intensifies. Work sharing is a short term imperative with the potential both to grow and to encourage other positive changes in our political economy.

John Buell lives in Southwest Harbor, Maine and writes on labor and environmental issues. Email Jbuell@acadia.net.

From The Progressive Populist, June 1, 2014