…what are the alternatives to a job creation program -- especially a a work-sharing program and permanent reductions in the hours work, what John Maynard Keynes called the "ultimate solution" for unemployment.
"...the full employment policy by means of investment is only one particular application of an intellectual theorem. You can produce the result just as well by consuming more or working less. Personally I regard the investment policy as first aid. In U.S. it almost certainly will not do the trick. Less work is the ultimate solution (a 35 hour week in U.S. would do the trick now)."Econospeak
Jobs Guarantee vs. Work Time Reduction
Snadwichman
15 comments:
Shorter work week for everyone including salaried employees, longer vacations, earlier retirement. Is it going to happen? Not in my lifetime.
The problem with shorter weeks is of course what do people do with the additional time. They spend it doing things - which then need servicing by more staff.
So you never really end up sharing out the unemployment fairly. Unemployment is more than a lack of a job. It is an open prison that forces a lack of economic engagement.
The mess of the French 35 hour week programme shows the difficulty of making time distribution work.
You can get a little somewhere by concentrating it at the retirement end and the student end. But the drive from business is always to increase the availability of staff, not shrink it.
Nope, Neu. The "mess of the French 35 hour week programme" only shows the effectiveness of a media propaganda campaign based solely on repeating an assertion unsupported by evidence. Have you actually read any objective evaluations of the program? I have.
It is very difficult to separate out results from the effects of other, concurrent events but analyses consistently point to a positive effect of the program on jobs. Even the more skeptical analyses concede job gains, just not as much as hoped for. You wouldn't know these results from the Anglo-American press reports that rely on press releases from employers' organizations or that simply give a platform to right-wing think-tank propagandists.
A shorter 32 week solution is only if you earn the same income as if working 40 hours so that agregate demand doesnt fall and employment picks up.
Sure that effect of 35 is lessened if income is reduced and productivity goes up. It will produce very little of new jobs. Shorter week is positive on employment and less income is negative.
A shorter 32 week solution is only if you earn the same income as if working 40 hours so that agregate demand doesnt fall and employment picks up.
Sure that effect of 35 is lessened if income is reduced and productivity goes up. It will produce very little of new jobs. Shorter week is positive on employment and less income is negative.
The idea that a shorter working week (or earlier retirement, longer holidays etc) reduces unemployment is a tired old myth that keeps rearing its ugly head. It’s complete nonsense, and for a reason which Sandwichman is never going to understand, though it’s quite simple. (I’ve tried explaining it to him before, but he never gets it). It’s thus.
Inflation (demand pull inflation to be exact) gets excessive when unemployment is sufficiently low that employers have difficulty locating the types of labour they want, which is say at the X% unemployment level. At that point, demand cannot be increased further. If people work shorter hours and demand stays the same, employers will still have EXACTLY AND PRECISELY THE SAME difficulty in locating the specific types of labour they want. E.g. the number of people with plumbing or computer skills on each local labour market will not magically increase just because everyone works fewer hours.
I have my doubts about such a policy. A big part of the cost of employing someone is the various benefits like health insurance. Are people with employer health insurance in the US going to accept a reduction in their coverage? By reducing the number of hours, benefits become an even larger percentage of compensation. This increases the wedge between employer expense and disposable income.
A lot of employers would just keep the same staffing levels, and expect the workers to be more productive. And for salaried employees, not too many that I know of actually work only 40 hours a week.
If you want to create jobs, create jobs.
Ralph, when is the last time we had demand-pull inflation? All inflation in my lifetime has been driven by the cost of energy.
Labor unions were accused of causing demand-pull inflation in the 60's and 70's but in hindsight it had more to do with the Middle East.
A tight labor market is only inflationary when wage increases exceed productivity increases, which has never happened save perhaps for a short spell after WWII when wage and price controls were lifted.
Agree with Brian's mention of salaried employees working long hours which is why I suggest the shorter work week should be universal and apply to salaried employees, too, effectively making everyone an hourly employee entitled to time and a half for overtime. Is it going to happen in this political environment? No, but that's another story.
I say - create jobs and universal healthcare should take priority.
"what John Maynard Keynes called the "ultimate solution" for unemployment. "
Praise be to the Holy God Keynes.
Dan,
First, I think your comments are amongst the best on this site.
As to inflation, it's always difficult to separate out demand pull from cost push inflation. I'm not sure about the US, but there are various periods in the UK over the last few decades where it's widely recognised that inflation stemmed from excess stimulus. See:
https://en.wikipedia.org/wiki/Lawson_Boom
But even if there has not actually been any demand pull inflation, that doesn't alter the fact that if demand is bumped up enough, excess inflation ensues at some point. And that inflation stems basically from employers' inability to find suitable labor. You could argue that it also stems from shortages of materials or equipment, but that's very debatable because the large majority of plant and equipment runs at less than 100% capacity about 95% of the time.
Thanks for your kind remark, Ralph, and same to you. :-)
Correlation between Lawson Boom inflation and oil. Use the sliders to zoom in on the Lawson years. Note the correlation between oil and UK CPI seems strong during the 80's but has weakened in recent years.
Correlation between US inflation and oil. Correlation begins around 1973 and continues to this day.
Correlation between employment level and inflation? Yes until about 1973, no after that.
Yes if demand is bumped up enough and if the labor market is tight then there may be wage-driven inflation. If you are a worker, that's the kind of problem you want to have.
The key issue that everybody forgets is the structure of the job market.
In the job market people come up with a job and try and fit people to the job. Eventually you run out of fits and job vacancies get left unfilled, and that happens long before you run out of people that want jobs.
The neo-classical response to this is to denigrate the unemployed for being inflexible, asking for too much money, not being prepared to invest, etc. It doesn't work. Ultimately you can't make a silk purse out of a sows ear, and it costs a certain amount to live. People need to get hired to live, businesses only hire when there is a profit to be made.
The solution, of course, is that you need something that provides jobs for the people. A mechanism by which a job is created for a person *as they are* and pays them the living wage for that job. And that is what a Job Guarantee programme does. It's approach of 'jobs for the people' is why it is a different mechanism from anything else out there.
"analyses consistently point to a positive effect of the program on jobs"
I didn't say there wouldn't be job gains. I said that the unemployment isn't distributed evenly.
Look at the exemptions and restrictions on the programme. It is not universal. It has bumps in it due to the political difficulty of getting it in in the first place.
And you can only push it so far before you run into fungibility issues. The far left really struggles with the idea that everybody is very different and everybody has severe limitations on what they are able to do. Some things that we need doing are rare in the population and some things are overly common. A situation which 'training' can only adjust slightly.
@Neil said "The far left really struggles with the idea that everybody is very different and everybody has severe limitations on what they are able to do."
Well said, Neil, though I'm not sure that perception is confined to the "far left."
In the U.S. the "uneven" distribution of unemployment is mostly racial. Also we have a problem with long term unemployment of 55+ workers due to age discrimination. Blacks and older workers are the first to be laid off and the last to be hired.
Black unemployment vs. white unemployment
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