The new year is a perfect time to resume my blog posts, which fell victim to a heavy schedule of speaking about Plenitude as well as two new courses at Boston College, where I teach full time. It’s a pleasure to be writing again, and to have the opportunity to send greetings for a good 2011. I hope you are healthy and thriving, despite the difficult political and economic circumstances in which the US and the world finds itself.
In the months since I’ve last written, I’ve become more convinced that the economic analysis in Plenitude was on-target. A major prediction, indeed premise of the book is that the labor market was unlikely to recover any time soon. This has now become the new conventional wisdom, in sharp contrast to the official story when the book was written, and for much of 2009 and even the first part of 2010. The punditry now reports that the unemployment rate is expected not to fall below 9% in 2011. Not much is being said about 2012. But sadly, we pessimists are looking too correct. At the current time, after a year of recovery, the economy is producing only as many jobs as are needed to absorb new entrants—the young people who leave school each year (with or without degrees). If the private economy doesn’t do better than this, the people who have suffered from the 8.5 million or so jobs lost in this recession/depression will never be employed again. There are currently 14.8 million Americans officially unemployed, with many more under-employed, discouraged and marginally attached to the labor force. The November figures for that more comprehensive measure are 26.6 million.
As I noted in the book, GDP growth, the solution for unemployment that remains virtually the only large-scale approach to joblessness, is no longer a viable one. In December, economist Robert Scott of the Economic Policy Institute reported that while US corporations did create 1 million domestic jobs in 2010, they created far more abroad—1.4 million. Outsourcing will continue and is a major reason why just increasing the rate of growth of GDP cannot solve the nation’s unemployment problem. There are currently more than 4 people looking for each available position. And the GOP take on the unemployed is that they are lazy slackers, unwilling to search for work. This is a lie that is likely to become more prevalent. There is increasing cultural pressure to deny the reality of unemployment, as those affected become more socially excluded and less politically potent. A key goal for 2011 is to keep the unemployed in the public eye and active in the political arena. Efforts to organize the unemployed are going on around the country, with informal groups such as UWAG, and official efforts by the AFL-CIO and some individual unions (eg., the Machinists), but these fall well short of what’s necessary to put these folks back to work.
That’s why it’s time for the 80% solution. It’s a fresh idea that solves a number of problems: unemployment, work-family pressure, and an impoverished civic sphere.
At the beginning of the 1980s, there was a sharp worldwide downturn, and Western Europe was hard hit. The Netherlands took an especially pro-active stance, opting for stable real wages and declining hours of work in order to get people back to work. New government employees were hired at 80% of a full-time schedule. Many got a four-day workweek, which was well-suited to a small country where quite a few young people commuted by train to their places of employment. The 80% schedule caught on, and by the time I arrived in the Netherlands in 1995 as a Professor at Tilburg University, the nation was heavily invested in 80% schedules. Public sector workers were joined by academics. It was possible to be not only an 80% time faculty member, but also a 60%, 40%, or even a 20%, i.e., a one day a week professor. And in what is likely to be most surprising to American readers, the whole banking industry had gone to 80% schedules and a four-day workweek. People weren’t filling up their garages with consumer goods, but they did have loads of time. By 2000, the country passed the Working Hours Adjustment Act that gave every employee the right to reduce their hours, without losing their job, hourly pay rate, health insurance or benefits. (Benefits are pro-rated).
Dutch hours stood at 1367 in 2009 (2010 not yet available) in comparison to the US, where hours are 364 higher. (That’s about 9 weeks more work here than in the Netherlands). Dutch productivity per hour has been considerably higher than in the US, although right now (2010) it is at rough parity, because they haven’t laid many people off since the 2008 downturn, in comparison to the US, which has had massive employment losses. In the Netherlands, part-time work is the new full-time. Three quarters of Dutch women workers are on PT schedules. Twenty-three percent of men are also on PT schedules, with an additional 9% on a compressed 4-day workweek. What began as an extreme gender imbalance is being eroded as men have also begun to prefer shorter hours of work. Life satisfaction, the well-being of children, and a variety of other quality of life measures are far higher there than in the US. Worktime is a big part of why.
If the US started down the 80% solution road it would make a huge dent in unemployment. Employers could hire 5 people for every 4 jobs that are available. It’s a shorter worktime policy that doesn’t require cutting the hours and pay of people who have jobs. Instead, new people come on at 80% pay and work only 4 days. It’s especially feasible for younger workers who are getting salaries for the first time and for many of whom shorter hours are appealing.
While 80% pay may not be feasible for people in very low wage jobs, if these schedules become more widespread across the higher-wage parts of the labor market, they will raise wages. Shorter hours eventually lead to “tighter” labor markets, in which employees can capture more of their productivity gains. Right now workers can’t get those gains, because their labor market position is so poor. With this huge unemployment pool, downward pressure on wages is strong, especially for the lowest-paid. Through this mechanism, the 80% solution could also serve to help alleviate poverty and low incomes. Combined with a minimum wage increase, it would do even more.
So spread the word and put the 80% solution on the table at the local, state and federal level, as the debate about persistent unemployment and the economy drags on through 2011.