The End of the European Welfare State As a Comparison Point for the USA

For years articles about everything from family leave to medical benefits started with the premise that

The United States is the only modern Western economy that doesn’t do or provide “X” for their workers

Thus the premise was the our economies were roughly equivalent and the USA was “mean” or “backwards” because we didn’t provide all those benefits and worker protections that the other countries were (apparently) able to absorb.

In the Sunday Business of the NY Times we can see where this has finally led, however – in an article about retraining European workers titled “Fake Jobs with Real Benefits” this is the end statistic:

But in a reflection of the shifting nature of the European workplace, most are low-paying and last for short stints, sometimes just three to six months. Today, more than half of all new jobs in the European Union are temporary contracts, according to Eurostat.

These jobs don’t have the famous protections for working mothers and stay-at-home dads and for medical benefits and pensions and everything else; they just set you up for a few months at a time and can just not renew your contract for any reason, including if you are legitimately hurt or ill. These are the ruthless “McJobs” that have been decried for years in the USA.

In parallel, Spain is now lurching into a political crisis similar to what is happening in Greece. Here are some statistics on Spain per this Foreign Policy article:

The Eurozone as a whole is a disaster. Whereas the United States’ economy is nearly 10 percent larger than it was seven years ago, the Eurozone’s is 1.5% smaller. And Spain is faring even worse; it’s economy is still 5 percent smaller. Nearly one in four Spaniards, and one in two young people, are unemployed. In the European Union, only Greece’s unemployment rate is higher. Many people have dropped out of the labor force (or immigrated to countries where there are jobs to be found). A lost generation is in the making.

And the governmental statistics are sobering:

Spain still has the largest fiscal deficit, as a share of the economy; in the entire EU: 5.8% of GDP last year. Public debt as a share of GDP rose by more last year than anywhere else in the eurozone and is set to top 100 percent this year.

The few remaining permanent full-time jobs are often in the governmental sector; this is closely linked to corruption. In Spain the corruption of the ruling parties contributed to their drubbing in local elections.

The net of all this is that comparing the USA to Europe is now mostly a fools’ errand. Not only has growth and productivity stalled across most of the EU, the cherished benefits that are held up as the “gold standard” are accruing to fewer and fewer workers as the young frankly have no work at all and many of the adults that do work are on these short term contracts where those protections rarely apply.

Whether or not the USA should enact various protections to our workers is a good question, with pros and cons on both sides of the ledger. However, the blanket statements that we are the last modern economy to not do “X” should be tossed in the dustbin of history, because it doesn’t apply anymore.

Cross posted at LITGM

8 thoughts on “The End of the European Welfare State As a Comparison Point for the USA”

  1. Odd this subject should come up today. Just yesterday I watched a video on the development, in just the last thirty years, of one of the largest and certainly most modern cities on earth, Chongqing. It’s a stunning endorsement of the power of free market capitalism. No social safety blankets at all, no minimum wage, no labor regulations, just people investing and earning and an enormous city springing up out of the plains. Very Honk Kong or early New York like in its genesis.

    What I finding stunning is the contrast to the Chinese society I remember from my childhood; grim, crushed people plodding along on foot carrying baskets on their backs or bicycling along dusty, unpaved roads and grimy peasant-like hovels in the background. That was just 40 years ago. Today, almost any American city would dream of being as vibrant and nice as these Chinese cities.

  2. And the irony for me is that I am now reading the last of Charles Murray’s “Coming Apart,” in which he reviews the unsustainability of European welfare states. Switzerland will do okay – it is outside the EU and has its own (morally ambiguous) method of making money. Norway, where son #4 works, has just found even more natural gas, is also not in the EU, and has put away buckets of cash to fund its social services for years to come. Plus, they have a strong work ethic, as all the Scandinavian cultures do, and are also moving to contract-style employment. They should stay afloat quite a while, even with the influx of immigrants who do not always share their virtues.

    I fear we are counting too heavily on the American (and Canadian, Australian) ability to smarten up once we see the collapse of European economies one-by-one. There’s no guarantee that 51% of the voters will see the obvious.

  3. >>There’s no guarantee that 51% of the voters will see the obvious.

    Look at any catastrophe of an American city or the public schools or social security then watch Americans vote for more the same. And listen to any Progressive, with a straight face no less, tell you how well it’s all working.

  4. “Progressive, with a straight face no less, tell you how well it’s all working.”

    Who are you going to believe, me or your lying eyes ?

  5. Most other governmental systems will do better by their citizens then the United States, for most governments don’t hate their own people. The United States government for the NYT it’s all they can do not to spit.

  6. To Michael Hiteshew – A coworker of mine who was from Northern China told me once that the two things about the US that most amazed him were the US wlefare system and Mu Shu Pork.

  7. Belmont Club today seems about as pessimistic as I am.

    “Some, like John McCain, still seem to think that a restoration after the career of king Barry has run its course will suffice to bring back the old days. But elect one decent Republican president and all will be back in the groove again. Yet this is unlikely to happen. Just as mad King George III lost America forever, so too has the current occupant of the White dismantled the post-World War 2 order.

    All that is possible is to build a new future based on whatever survives the unfolding crash. As for the president — he’ll believe everything remains fine, just fine — all the way up to the moment the janitor folds up the empty auditorium chairs and ask if he knows the way home.”

  8. It is NOT true that contract work is bad.

    I have been a contract programmer throughout the United States, Europe and South America for years. As such, I usually earned an hourly wage twice that of the captive employee at my side. Who cares about those useless benefits, especially a single, child-free guy like me? Benefits are for the married guy with 3 kids, waiting for his first divorce. With no-benefit contract jobs, I’m NOT stuck subsidizing their health insurance, filling in for their sick leave and kiddie soccer absences.

    Between contracts, I’ve taken months-long hiking trips to South America, spend weeks in London and Estonia, etc, traveled around the SE United States and the West. I get to write of some expenses. I have gone for Travel Medicine in Buenos Aires and Rio de Janeiro, at a very low price.

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