Jack Reed’s push for ‘work-sharing’ praised in The New YorkerMarch 20th, 2012 at 10:50 am by Ted Nesi under Nesi's Notes, On the Main Site
In a long review of “The Escape Artists,” Noam Scheiber’s new book about the Obama administration’s economic strategy, The New Yorker’s John Cassidy argues that the original $787 billion stimulus law was not only too small but also too unimaginative to get the economy back to full employment after the financial crisis.
And who had the kind of idea Cassidy thinks Obama should have pushed for to make the stimulus more effective? None other than Rhode Island’s own U.S. Sen. Jack Reed, who finally got Congress to approve his cherished work-share program just last month.
In Germany, the government uses wage subsidies to encourage firms to hoard workers during recessions rather than shedding them. … To make this job-sharing system work and help out the affected employees, the government pays them about sixty per cent of their lost salary. Despite a global recession and a European debt crisis, the German unemployment rate is lower now than it was in January, 2009.
Germany’s labor-market institutions are a product of the country’s history; introducing them wholesale to the United States wouldn’t be easy. But until recently the Obama Administration barely moved in this direction. It was left to Senator Jack Reed, of Rhode Island, to champion a federal job-sharing scheme, which was based on financing local initiatives, such as one in his home state. The White House finally adopted the idea in its 2012 budget, and Congress, in a recent agreement to extend payroll-tax cuts and unemployment insurance, agreed to fund a version of it. If the scheme is still in effect when the next recession begins, perhaps it will make the situation less severe.
• Related: WSJ says RI’s work-sharing program could be national model (Nov. 21)