Jobs for Whom? Employment Policy in the United States and Western Europe

Abstract

Policies to reduce unemployment have been an integral component of government programs in most developed capitalist countries since the end of World War II. Yet this sounds like an oxymoron of sorts in the United States. While the United States has pursued full employment policy only in fits and starts, the national governments of most Western European countries have elaborated explicit commitments to employment policies designed to decrease joblessness. These policies have encompassed the following range of programs: fiscal and monetary policy to stimulate aggregate demand; direct payments to the unemployed; job placement services; policies to reduce the labor force, including increasing job flexibility, reducing the workweek, and promoting early retirement; policies aimed at industrial mobility, primarily getting industries to locate in areas of high unemployment; and active labor market policy (ALMP), which includes programs to increase labor market mobility, training and retraining, sheltered training workshops and employer subsidies for harder-to-employ populations such as the disabled and older workers, and direct job creation in the public and nonprofit sectors. In this paper, I compare employment policy in the United States and Western Europe since World War II. This history shows that the European policies were successful through the mid-1970s, as unemployment rates of 2-3 percent prevailed, but that since then there has been increased unemployment and a retreat from this commitment. Yet participation by labor in policy formulation and a basic level of policies designed to provide a safety net for workers are still taken for granted.