How Europe’s Pandemic Labor Policies Have Bested the U.S.
How Europe’s Pandemic Labor Policies Have Bested the U.S.
An old debate in economic circles is whether Europe’s strong safety net and worker protections are preferable to America’s more company-friendly labor rules. Now this classic argument is getting a fresh look, as economies on both sides of the Atlantic bounce back from pandemic work-stoppages. The U.K. and many euro-area nations adopted generous furlough programs that subsidized worker wages after Covid-19 halted business, and consequently kept workers on payrolls. The U.S., meantime, allowed companies to fire employees and then compensated the newly jobless workers with unemployment insurance payments.
On this week’s Stephanomics podcast, Bloomberg reporters Carolynn Look in Frankfurt and Reade Pickert in Washington share the ups and downs of the European and American approaches to pandemic worker relief. By one measure, Europe’s furlough strategy proved superior: the euro area’s unemployment rate peaked at 8.6% last year, far lower than the U.S.’s 14.8% high. Finally, Adam Posen of the Peterson Institute for International Economics shares with Stephanie Flanders why he prefers the euro area’s approach.
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