Is It Too Late for Work-Sharing?
Pat Garofalo has a good overview at the Wonk Room of the idea of trying to use “work-sharing” programs, “subsidizing employers who reduce workers’ hours (and maintain their pay) instead of laying some of them off.” This doesn’t seem to be an idea anyone except Dean Baker is very enthusiastic about, though people are getting more interested in it because it’s cheaper than additional fiscal stimulus:
Something that I think hasn’t gotten enough attention here is whether we haven’t passed the moment when this would have been most helpful. Such a program, enacted 12 months ago, could have avoided a lot of layoffs. But looking forward we’re not so much worried about large additional net job losses. What we’re worried about is that given the large number of unemployed people, we need to see large net job growth but instead we could be seeing job growth so anemic that it doesn’t even keep up with labor force growth. That’s a very serious problem. But it’s not clear to be that it’s a problem work-sharing really addresses.
It’s also worth saying that even looking backwards we were in a very different situation than Germany. Germany’s export-oriented economy was heavily hit by the recession because demand for their products vanished. But in that sense they were very much a secondary casualty of the recession. The presumption was that once growth returned elsewhere, people would go back to buying German stuff and employment would return at more-or-less the same firms that it had been at in the past. In the U.S. context, it’s not clear how much help work-sharing would have provided to people working in the building trades who lost their jobs.
28 Responses to “Is It Too Late for Work-Sharing?”
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November 16th, 2009 at 3:43 pm
Keep churning, we will get good ideas to support employment. These posts are far more important than endless coverage about ‘increasing coverage’; especially when most common folks, including myself, would not know these policy smarts to increase employment. All that we know is – we need jobs and we know when those are coming / plentiful (our wage rates…).
November 16th, 2009 at 3:51 pm
There’s always a lot of churning in the labor market. Flat employment means that that there are a lot of hires and a lot of job losses that pretty much balance. Work sharing could still help on the job losses end, and thus reduce unemployment.
November 16th, 2009 at 3:54 pm
Yeah, cause work sharing worked so well 1929-1933.
Just create some jobs, dangit.
November 16th, 2009 at 3:59 pm
Isn’t it better to have someone working with half a job rather than on unemployment insurance? It seems to me like they would be more likely to spend their income in this case and thus boost the economy for everyone, not to mention saving tax dollars (which could then be spent on other stimulus programs, like infrastructure investment). There are also other benefits to that person, such as an increase in personal pride and employability.
November 16th, 2009 at 4:02 pm
Matt’s getting frantic about unemployment because it might fuck up the 2010 elections for the Dems. Problem is, there’s just no way unemployment can come down much between now and then no matter what the assholes in D.C. do. You can thank our idiot Federal Reserve and its 25 years of (sl)easy money and our GOPocratic political whores for endless deficit spending at the same time. We’re buried in debt. We borrowed against our future, and the future has arrived. More of the same won’t work this time around.
November 16th, 2009 at 4:04 pm
Isn’t it better to have someone working with half a job rather than on unemployment insurance?
Sounds to me like it’s pretty much the same in this case. Either you have one working and one on unemployment insurance, or two half-working half-on-unemployment.
November 16th, 2009 at 4:06 pm
Brian –
For a rather large number of people, half a job would bring in much less than UI. Keep in mind that UI pays out about at anywhere from $175 (down in Mississippi) to about $425 (in Massachusetts) per week, or $8400-20,400 a year. Half a job would work out to $6960 at minimum wage.
However, there is the production issue With UI, you don’t save the labor value people would have generated working.
November 16th, 2009 at 4:08 pm
kafka – in 1933, the Civil Works Administration created 4.27 million jobs in three months. I think the boundaries of possibility are a bit wider than you think.
November 16th, 2009 at 4:15 pm
This opens a can of worms you’ll have a hard time closing later. You don’t want private firms coming to the government looking for handouts any more than you already do. The fundamentals have to change favorable before unemployment can turn around and too much government interference to produce a lower unemployment rate could easily cause more harm than good. Not to sound like a Libertarian, which I’m not, but the government can’t do everything.
November 16th, 2009 at 4:24 pm
Realistically, how many workers can afford to live on a giant pay cut as the result of sharing a job? You’d end up with more foreclosures, I think, when “shared” workers lose income. So housing prices would fall further, which could trigger a new wave of bank failures due to our government’s ongoing desire to pretend that banks are healthy and filled with bonus money for their hard-working, dynamic risk taking employees.
November 16th, 2009 at 4:31 pm
No, you don’t understand. The idea of these programs is that the government will pay the difference; the workers are still paid for the whole day.
November 16th, 2009 at 4:32 pm
California has workshare, which has helped keep myself and several work collegues employed since January. We’re now returning to full time.
November 16th, 2009 at 4:32 pm
This is yet another example of the Keynesian hoax. The economy is on the verge of imminent collapse, and has been for 37 years now, because mass unemployment is the result of structural imbalances created by the debasement of the means of exchange. Monetary dilution will only make the problem worse because of the poisonous temptation of fiat money. The only solution to the current crisis is to adopt a pure gold standard, which will preserve the virginity of our coinage against Keynesian rape. The current illogical, discredited Keynesian strategy of monetary dilution will leave the economy on the verge of collapse for another 37 years.
November 16th, 2009 at 4:36 pm
Look, Matt, could you stop beating up on Germany?
We’re the fuckers with double digit unemployment, with a broader index close to a fifth of the fucking country being unemployed, and you’re going on about how the German economy was heavily hit.
We were worse, are worse, and probably will still be worse, but we create an illusion of things being better.
November 16th, 2009 at 5:04 pm
The only solution to the current crisis is to adopt a pure gold standard, which will preserve the virginity of our coinage against Keynesian rape.
Don’t forget about our precious bodily fluids! We need to keep those pure too!
November 16th, 2009 at 5:13 pm
re Bob at 13:
The economy is on the verge of imminent collapse, and has been for 37 years now
I’m pretty sure this is empirically wildly false. The only way you can put forth a claim like that is if you have a prior ideological commitment, impervious to any empirical data, to the notion that adopting a fiat currency system simply means by definition that “the economy is on the verge of imminent collapse.”
November 16th, 2009 at 5:22 pm
I would also note that anything that lasts for 37 years, with an potentially open-ended option for another 37 years, hardly qualifies as “imminent.”
And Bob, I would only point out that back when the U.S was on the gold standard, we had recessions in 1797-9, 1802-4, 1807-1810, 1812, 1815-1821, 1822-3, 1825-6, 1828-9, 1833-4…and so on and so on through the 19th century. The gold standard is many things, but it is not stable. In fact, the constant push-pull of gold standard deflation (as money falls out of the economy due to hoarding, while the supply fails to match the rate of economic growth) and gold standard inflation (whenever there’s a gold strike) is the textbook definition of unstable.
November 16th, 2009 at 5:44 pm
Re: The only solution to the current crisis is to adopt a pure gold standard, which will preserve the virginity of our coinage against Keynesian rape.
I can name a number of nations in times past which experienced both high inflation and/or ruinous deflation despite the gold standard.
November 16th, 2009 at 5:47 pm
but instead we could be seeing job growth so anemic that it doesn’t even keep up with labor force growth
Maybe we should do something to stop the growth of the labor force (cough, cough, immigration, cough, cough)?
November 16th, 2009 at 6:10 pm
I can understand the logic that MR Yeglesias is using in promoting work sharing.And for all i know it might work.But it sounds very familiar to the Speenhamland System that was used in England in the early 19th century.
Basicly the British government subsidised wages below a certain level. Of course, the result was that the farmers lowered the wages that they were paying and they let the government make up the difference.
Like the work sharing plan, it was a good idea on paper.
November 16th, 2009 at 7:31 pm
Pete –
Speenhamland is the exact reason why wage insurance – supported by the Rubin wing of the Democratic Party – is a terrible, terrible idea.
November 16th, 2009 at 9:55 pm
Regarding comment #s 20& 21
MR Atwell
I think that the worst thing about the Speenhamland System was not that it bankrupted the local governments that administired it[ though it did bankrupt them].It was the fact that it turned hard working farm laborers into recievers of government charity.This efect on their moral should not be underestimated.
Nor should it be underestimated nowdays. Too often nowdays people talk about whats the most “efficient” way to help the unemployed.But these are human beings we are talking about.And i dont think that MR Yglesias realises how little most Americans want to recieve government benifits.
The fact that so many people are on unemployment is horrifying to me because i know that for many people in America unemployment or food stamps are things that you try to advoid .I volunteered at a food bank today and the lady in charge said that as soon as they got food they shipped it out to food pantries in the area.The demand at the pantrys is very high.For most Americans, it must be a painful decision to have to go to a food pantry.I believe that this kind of demoralisation cant be measured in dollars or statistics.
This sort of thing is very demoralising for most Americans.
MR Atwell i know that you are interested in the history of the CCC and the WPA.In my opinion these two organisations greatest accomplishment wasnt how much they built[although that was remarkable].It was the fact that they gave pride and dignity back to millions of Americans.
I would rather our government focused on helping the unemployed not just by financial means.But also help them keep their pride .And i hope that the govrnment will advoid using any subsidising techniques that basicly turn working men and women into welfare recipients.
November 16th, 2009 at 11:08 pm
You are confusing net flows and gross flows. Many people lose their jobs in periods of steady or rising employment. Many people are hired in periods of declining employment. The gross flows of hiring and of laying off +firing + quitting are huge compared to their difference, that is, the change of employment.
Even if employment were growing there would still be a high rate of layoffs so employment would grow more if layoffs were reduced.
November 17th, 2009 at 2:06 am
No, it’s the EITC that’s an equivalent of Speenhamland.
November 17th, 2009 at 3:37 am
My “But looking forward we’re not so much worried about large additional net job losses.”
What makes you think that, Matt. What happened in 1937? Unemployment skyrocketed. Right? And where are we headed right now? 1937! Obama has made it clear, no more fiscal games, it is time to balance the budget, just like we did in 1937.
But the problem is, Matt, we are in far worse shape heading into our 1937. The New Deal in the 30’s was working. And remember, all those millions of people working for the CWA and other works projects in the mid 1930’s were counted as unemployed, so when you see 14.3% unemployed heading into 1937, it wasn’t nearly that bad. And we are at 17.5% unemployment, using 30’s numbers. Unemployment, right now, might be 5 or 6 points higher than it was at the end of 1936, using REAL, comparable numbers!
And what is our plan? Oh yes. Sit back and pray that Ben Bernanke can blow a new magic bubble -and save us.
November 17th, 2009 at 6:10 am
Re: But the problem is, Matt, we are in far worse shape heading into our 1937.
I would suggest looking more closely at the 1930s. We are a long way from being in that bad of shape.
November 17th, 2009 at 9:37 am
Matt — You’re looking at it through the wrong lens:
It’s not time for work sharing, it’s time for the 4-day work week. A 32-hour/4-day work week would add jobs, add leisure time (of the voluntary kind), increase productivity, help families, reduce greenhouse gas emissions…
November 17th, 2009 at 11:06 am
Max – if you take the Darby numbers that adjust for New Deal jobs programs, unemployment in 1937 was 9%.
Abb1 – the odd thing though is that EITC hasn’t had a Speenhamlike effect, as far as I can tell.