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Ameliorating job losses could help lead to more sustainable life styles?

April 5th, 2010 · No Comments

An unlikely duo have written an OPED advocating that the United States look to other nations’ practices of incentivizing work-sharing in private and public work forces as a cost-effective tool toward reducing unemployment. The duo, Kevin Hassett of AEI (one of the most conservative DC think tanks) and Dean Baker of the Center for Economic and Policy Research (a progressive-orieinted think tank seeking to foster more informed public debates) lay out a compelling case of using unemployment insurance savings to help reduce income losses due to ‘furloughs’ (which are implicit job sharing efforts) and explicit job share programs could help cut unemployment.

Hassett and Baker highlight that this is working around the world:

In Germany, for example, which has used work-sharing aggressively in this downturn, a typical company might reduce the hours of 50 workers by 20% rather than laying off 10 workers. The government would then provide a tax credit to make up for most of the lost pay, with the employer kicking in some as well. In a typical arrangement, a worker might see his weekly hours go down by 20%, and his salary go down by about 4%.

4% is a repeated figure.

This policy has kept the unemployment rate in Germany from rising even though the country has seen a sharper decline in GDP than the United States. The Netherlands, which also uses work-sharing, has managed to keep its unemployment rate near 4% even though its GDP also has fallen more steeply than in the United States.

Yes, it might make some serious economic sense for the US political system to look overseas for lessons on how to ameliorate the pain of economic downturns.

And, one of the (many) interesting elements is that the direct governmental costs might just balance out.

The cost to the government of going this route would be roughly the same as with the current unemployment insurance program. The big difference is that instead of unemployment benefits that effectively pay people for not working, we would be paying people for working shorter hours.

There are, however, many secondary and tertiary potential benefits that suggest this direct ‘wash’ of costs might mask some tremendous benefits. For example, could this lead to improved mental conditions of gainfully employed rather than depressed unemployed which could foster reduced domestic turbulence (including violence)? Would more job sharing fostering conditions for muting negative impacts of economic boom-and-bust cycles (as workers are already there to expand hours if a factory starts getting increased orders)?

A question to consider is whether the secondary/tertiary benefits might just extend into the energy / climate change arena.

With more time off, that four-day rather than five-day week or perhaps more (unpaid/partial paid) vacation time, along with slightly less income, many people might change their spending patterns. Would more people garden with benefits in terms of healthier food and some reduction in food mile related pollution? Would the increased leisure time actually lead to reduced pressure for extravagant, high-tempo vacations? In other words, could a partial shift in the work force’s nature and work pattern help lead toward more sustainable life-styles?

NOTE: Dean Baker is worth reading and thinking about for many reasons. Among other things, he is highly insightful as to systems-of-systems interactions, including the highlighting of how programs that make quite a bit of sense for other reasons could have tremendous benefits on the energy/climate front. For example, this piece outlines why environmentalists should be pressing for pay-as-you-go car insurance (other versions here and here):

Currently people treat auto insurance as a fixed cost of driving. They pay pretty much the same for their insurance regardless of whether they drive 1000 miles or 20,000 miles. The cost of insurance simply is not a factor in the decision on how much to drive. If the cost of insurance were instead assessed on a per mile basis, it would on average come to about 9 cents a mile. This would provide the same disincentive to drive as a $1.80 a gallon gas tax for someone with a car that gets 20 miles per gallon. …

switching to pay as drive policies would reduce driving by approximately 9 percent. This is a really big deal.

At CEPR, this type of systems-of-systems thinking is not limited to Dean Baker. Related to the job sharing issue (and a reason leading to the questioning above as to whether job sharing would help reduce pollution) is this David Rosnick and Mark Weisbro 2006 study Are Shorter Work Hours Good for the Environment? A Comparison of U.S. & European Energy Consumption

“Old Europe” currently consumes about half as much energy per person as does the United States. If Europe were to adopt U.S. practices and increase annual work hours to American levels, the paper shows, they could consume some 30 percent more energy than they do at present.

Few in the energy and environmental worlds link job practices with energy use and pollution patterns. The CEPR work suggests, strongly, that they should.

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Tags: climate change · Energy · environmental · Global Warming