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Home Publications Blogs Beat the Press Americanizing the European Labor Market

Americanizing the European Labor Market

Wednesday, 04 December 2013 05:51

Eduardo Porter has a good piece on efforts to use the economic crisis to make Europe's labor market more like the U.S. market. One result is likely to be much higher levels of inequality.

Comments (7)Add Comment
written by JSeydl, December 04, 2013 5:58
Are we endorsing what Porter has to say about Germany? On the one hand they have good labor market policies -- work councils/sharing -- on the other inequality is too high because the German labor market resembles the American labor market too much. What's really going on there?
written by dax, December 04, 2013 6:53
Only at the end does the article mention the Germans will be increasing their minimum wage.

Look, this is precisely what American economists from Krugman on down have said Europe needs: labor costs in Germany up, labor costs elsewhere in Europe down. Inequality is awful, but the inequality resulting from a demise of the eurozone would be far, far worse.
In the Race to the Bottom, Competition Always Rewards the Winners
written by Last Mover, December 04, 2013 7:08
... the push for labor market deregulation will cascade from one weak country to the next, as all engage in a futile race to create jobs by gaining market share from one another in a world of insufficient demand.

Funny how this doesn't seem to work in the lauded world of free markets and competition for goods and services in America.

Imagine that, gain market share by reducing prices ... instead of plotting to take over markets entirely as economic predators with deregulation that reduces wages on the supply side and increases prices on the demand side.
written by Kat, December 04, 2013 7:53
Imagine that, gain market share by reducing prices ... instead of plotting to take over markets entirely as economic predators with deregulation that reduces wages on the supply side and increases prices on the demand side.

yes, except that it is more like the predators push for regulation that increases prices on the demand side.
Germany down below
written by Ellis, December 04, 2013 7:56
For once, a reporter shoots down some of the myths that liberal economists (Baker) spin about German labor conditions. Ah, those mini jobs that pay next to nothing! That's job sharing for ya! And don't forgetit was the Socia Democrats who imposed the Hartz reforms that eviscerated many of the labor protections. The Social Democrats and Christian Democrats are interchangeable.
so bottom line is higher growth = higher inequality???
written by pete, December 04, 2013 9:52
Seems to be the issue. US had higher growth since the 70s, clearly with growing inequality much like the industrial revolution, while Europe, especially southern Europe stagnated. After tax and transfer incomes to US lowest class is way above Greece/Italy etc., let alone global incomes. This is an unsustainable situation.
With free movement of people and capital should not wages tend to move toward a mean level?
written by John Wright, December 05, 2013 8:38
With the world in relative peace, and the various globalizing infrastructure in place such as communication systems, transportation systems, shipping companies (FEDEX, UPS), free movement of capital goods to other countries, relatively free movement of low wage workers from other countries to the USA, world-wide "best practice" information sharing and more English spoken around the world, is the USA simply seeing world wide labor arbitrage as the USA low wage worker wages move toward the world's lower level?

And in the view of the world wide owners of capital, who have outsized influence on Obama and perhaps all USA presidents since Truman, what is not to like about this system?

I don't see the much pressure to change in the USA, Obama will craft more inspired speeches while his administration quietly does little to help the working class.

I did see that the Obama administration IS fighting to preserve some American jobs that a foreign country wants to eliminate.

Of course these are the 46000 troops stationed in Afghanistan.

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About Beat the Press

Dean Baker is co-director of the Center for Economic and Policy Research in Washington, D.C. He is the author of several books, his latest being The End of Loser Liberalism: Making Markets Progressive. Read more about Dean.