U.S., Europe Are Ocean Apart on Human Toll of Joblessness

MAY 7, 2009

U.S., Europe Are Ocean Apart on Human Toll of Joblessness

By MARCUS WALKER in Hohenlockenstedt, Germany, AND ROGER THUROW in Rockford, Ill.
WSJ

In Germany, losing his factory job didn't stop Alfred Butt from taking a Mediterranean vacation this winter. Thanks to generous jobless benefits, being out of work "hasn't changed my life that much," Mr. Butt says. In the U.S., Dylan DeRoberts lost similar work -- but there's no seaside getaway for him. Instead, he's giving up life's little pleasures, like riding his snowmobile, because he lost his insurance, too. "I've learned to live at a new level," Mr. DeRoberts says.

Unemployment is taking a very different human toll on opposite sides of the Atlantic, which helps explain why Europe and the U.S. can't agree on how to attack the global recession. The U.S. is spending hundreds of billions of dollars -- including increased assistance to the unemployed -- to prop up the economy, and wants Europe to follow suit. But most of Western Europe already has a strong, if costly, social safety net, so governments feel less pressure to spend their way out of trouble.

(snip)

The differing U.S. and European approaches toward worker protections can influence recovery prospects. Unemployment is similarly high, above 8% and rising, both in the U.S. and among the 16 European countries that use the euro currency. But Europe's high payroll taxes, along with restrictions on when and how companies can lay off workers, make employers slower to rehire when a recession ends. That's one reason why economists expect the U.S. to stabilize faster than Europe. Last month the International Monetary Fund predicted that the euro-zone economy will keep shrinking next year, whereas the U.S. should bottom out by then. For Mr. Butt, losing his job as a raw-materials buyer for a German auto-parts maker was a serious blow. But state benefits will replace the bulk of his salary until May 2010. And he still has full medical insurance under Germany's universal system. Mr. DeRoberts, who lost his job at a Chrysler assembly plant in Belvidere, Ill., near Rockford, last year, saw his medical benefits expire several months later. He says he can't afford to pay the premiums on his own.

(snip)

Germany has built up a system of state-backed insurance for workers against illness, disability, old-age poverty and unemployment since the late 1800s. But benefits don't stay generous forever. Under a controversial labor overhaul in force since 2005, German unemployment benefits fall to a subsistence level after one year. The government decided the long-term jobless didn't have enough incentive to get off the dole, so it upped the pressure. Jobless benefits vary around Europe, just as they can vary state-by-state in the U.S. But in most Western European countries, the state replaces 60% to 80% of the average worker's lost salary, compared with just over half on average in the U.S., according to the Organization for Economic Cooperation and Development. European benefits also tend to last longer. In Belgium, jobless benefits have no time limit at all. In Denmark, the state replaces up to 90% of lost wages and invests over 4% of gross domestic product every year in supporting and retraining the jobless. By contrast, before the current crisis struck, the U.S. spent about 0.4% of GDP on retraining and benefits, according to the OECD.

Less-generous European countries include Greece, where initial benefits replace less than half of lost wages, on average. Heavily indebted households in countries such as the U.K. and Ireland, where property and lending bubbles have burst, are also particularly vulnerable in the recession. Economic pain in less-developed Eastern Europe is a separate and much deeper problem. The European way takes a toll in taxes. In Germany, over half the total cost of employing somebody consists of income tax and mandatory contributions to programs including unemployment insurance and pensions. In the U.S., that figure is 30% -- meaning employees take home more of the money it costs to employ them... The U.S. recently expanded unemployment and food-stamp benefits. New money for retraining the jobless, part of President Barack Obama's stimulus program, echoes government efforts in parts of Europe to give laid-off workers new skills.

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http://online.wsj.com/article/SB124155150793788477.html (subscription)

Printed in The Wall Street Journal, page A1

sigh

Reliable healthcare and decent pay? I have a college degree and I am uninsured in my job.

Same here.

citizens, especially workers, are treated like dirt--worse than dirt.

and as interchangeable cogs to generate profits.

They fought for them and then they fought, with the support of the citizenry, to maintain them. On the other hand, in the U.S., we ridicule protesters and collective action.

In Europe it started with throwing, or taking the power of the monarchy whether it was bloody, as in France, or civilized as in, say, Denmark or Holland. At some point people realized that fighting for the monarch as the only means of making a living was not the way to go.

Here, everyone wants to be rich. The "American Dream" that the roads are paved with gold and all one has to do is pick it up. Worse, the ones who have been lucky to be successful, look down on the rest of us when we lose our jobs, or our business or even get sick. Blaming us for not being prepared for this. As if anyone can.

and revolutions. Even Nixon considered a "living wage" as a solution to revolutionary foment until law enforcement solutions devised by precursors to the Heritage Foundation, directed against "urban" black folks appealed to the white middle class.

Systematically, our revolutionary history has been erased to the point that we deride most attempts of public and collective protest.

Here in America whenever someone tried to improve the working conditions of the poor or offer a better safety social net conservatives would start claiming all the benefits would go to blacks, mexicans and other 'out groups' like that. So you end up with white christians who make $9 an hour who can't take a day off of work if they get the flu saying they don't want democrats in charge because they'll let the mexicans get free healthcare.

Its a nice little tool the industrial class uses to keep us at each other's throats. Works pretty well too.

You always have to blame somebody. I usually stick to blaming the Rich, but some people (on both sides) prefer ethnic and/or religious groups.

Most European nations are truly civilized, while we are far from it.

The sixties showed promise, but fizzled out

It is time to demand and expect that we be treated like human beings.

:kick:

under Reagan? Ronald Reagan's presidential legacy included big tax cuts for the rich and record budget deficits; after denouncing the much smaller deficits of previous administrations in his first inaugural address, Reagan in a few years tripled America's national debt. His administration distorted the Russian threat, and pushed preparations for a "winnable" nuclear war that could cost "only" a few million US lives. He slashed the social safety net, and introduced deregulation leading to the savings and loan meltdown and contributing to the current crisis.http://www.truthout.org/042409R

I would hope this isn't necessary, but here it is.

:sarcasm: