A Better Approach to Unemployment

The GOP made great gains in the election of 2010 because many Americans expected them to tackle one of today's most vexing problems: unemployment. President Obama and the Democrats have also talked a good game in how to increase jobs in this country. But despite the fact that unemployment continues to be painfully high, neither party has done much of anything to address the situation.

Entering the sixth month of this year, not one bill has been passed in Congress specifically to address the jobs crisis and none appear to be on the near horizon.

Since our elected leaders see stymied in what to do, maybe they should take a cue from Germany.

There is an economy, however, that has figured its way around the Great Recession. Unemployment in Germany is lower now than it was before the downturn...Germany has done well because its labor-market institutions encourage employers to cut hours not workers. Instead of laying off 20 percent of workers, say, a firm can instead lower the average hours of its employees by 20 percent. Both accomplish the same goal, but from a social point of view, cutting hours is much better because it shares the pain more equally and keeps workers tied to their jobs.

The German system gives employers many incentives to cut hours instead of workers. The most obvious is their "short-time work" system, which pays partial unemployment benefits to workers who have their hours reduced. German workers who lose one day of work per week are entitled to receive unemployment benefits equal to one-fifth of the usual weekly unemployment check.

Other aspects of the German system also help. Legal protections against dismissal make it cheaper for employers to reduce hours than to fire workers. And many Germans are covered by union contracts that allow flexibility around the length of the work week and the spread of hours throughout the year.

Together, these systems helped reduce the total number of hours worked in Germany by about 4 percent between 2008 and 2009. Over the same period, total employment remained unchanged...

Yes, I know, this idea goes against the grain. Americans are the great innovators. We certainly don't need to learn new strategies from other countries. We're brighter, smarter and better than everyone else in the world.

So, we will continue to travel down a dead end street to nowhere. Who genuinely should be concerned about high unemployment when there are more wars to fight and more tax cuts to lavish on the wealthy?!