Americans struggle to learn from foreign experiences. The size and role of English as an international language jobs which reduces the incentive to learn other languages conspire to make us oblivious to alternative ways of life and the potential for change.
Insularity can be especially damaging when it comes to countries with which they share many similarities. Western Europe is technologically equal; labor productivity in Northern Europe is only slightly lower than productivity jobs in Western Europe. However, Europe’s policies and institutions are very different, and the United States could learn a lot from how those differences have played out. Unfortunately, any suggestion that Europe is doing something we should try to emulate is met with cries of “socialism.”
This brings me to an under-discussed aspect of the current economic situation: Europe’s comparative success in re-engaging workers idled by the pandemic.
Everyone is probably aware that the United States is experiencing what many refer to as the Great Resignation — a significant drop in the number of people willing to accept jobs at pre-Covid wages. Four million fewer Americans are employed in remote jobs than on the eve of the pandemic, but the rate at which workers quit their jobs — typically a good indicator of labor market tightness — has reached a new high, and employers scramble to find workers has resulted in rapid wage increases.
Many Republicans claimed earlier this year that labor was scarce because generous unemployment benefits discouraged workers from accepting jobs. However, those enhanced benefits vanished with no discernible effect on labor-force participation.
A comparison with Europe, on the other hand, may shed some light on the matter. As it turns out, the Great Resignation is primarily an American phenomenon. European countries have fared far better in terms of re-employment. Employment and labor force participation in France, in particular, are now well above pre-pandemic levels.
Older workers may play a role in the solution. In the United States, the labor-force participation rate has been especially low among adults over the age of 55, many of whom have not returned to work following pandemic layoffs. This may have been less of an issue in France, where workers tend to retire earlier than their counterparts in the United States. However, older adults in some European countries, such as Denmark, are more likely to be employed than their counterparts in the United States; Denmark has also avoided a Great Resignation.
Another explanation could be trans-Atlantic differences in how it was approached. Covid alleviation. While the US made some efforts to assist businesses in staying afloat and retaining their labor forces, it primarily assisted displaced workers through increased unemployment benefits. Europe, on the other hand, relied primarily on job retention schemes — government assistance designed to keep people on employers’ payrolls even if they were not currently working.
The flaws in the US approach are now becoming clear. As previously stated, there is no evidence that unemployment insurance has significantly discouraged work. However, whereas European labor support helped keep workers connected to their old jobs, allowing for a faster return, US policy allowed many of those links to be severed, making an employment recovery more difficult.
Finally, a speculative hypothesis: Perhaps one reason Europeans aren’t participating in an American-style Great Resignation is that they don’t despise their jobs as much as Americans do.
Anecdotally, one factor contributing to Americans’ reluctance to return to their old jobs is that the pandemic’s forced idleness provided many people with an opportunity to reconsider their life choices — and a significant number may have realized that low-paying jobs with poor working conditions weren’t worth having.
Source: The New York Times