Sen. Reed cited in New Yorker for innovative job-sharing idea
John Cassidy, the New Yorker’s economics correspondent, has a trenchant article in the March 26 edition that mentions Rhode Island Sen. Jack Reed. Cassidy’s piece points out that presidential reputations often turn on economic factors beyond anyone’s control.
Timing, in politics, is everything.
As he faced an ailing economy, what could President Obama have done to make things better?
Cassidy acknowledges that the president faced a basket of challenges with no easy answers. “The country faced at least five major economic problems when he took office: a bombed-out real-estate market; an oversize, risk-riddled financial sector; a voracious demand for fossil fuels that had to be met by imports; stagnant wage and rising inequality; and a looming entitlements crisis that threatened to swallow the budget and bankrupt the country. All of these problems had been long in the making, and none of them offered up ready solutions.’’
Cassidy says that not only was Obama’s stimulus to small, “it was lacking in innovative features.’’
For example, in Germany, the government uses wage subsidies to encourage companies to keep workers during recessions rather than laying them off . “When Siemens, for example, faces a 30 percent drop in demand for its products, it is just as tempted as an American firm would be to layoff 30 percent of its workers. In Germany, however, the customary practice is to retain employees while reducing their hours and wages.’’
To help these German workers, the government pays them about 60 percent of their lost salary.
Cassidy goes on: “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 U.S. 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.’’
Cassidy notes that the White House finally adopted the idea in its 2012 budget and that Congress recently agreed to fund a version of Reed’s idea.