As a non-American I'm always surprised at how quickly people are fired there. I cannot imagine such a severe action been taking in any country I've worked in, thanks to robust workers rights.
As a European, I was also surprised to find out that the US has a very low unemployment rate compared to what I am used to. Then I moved to the US, and on a few occasions found myself in a position to be able to consider hiring a lot of people very quickly (and hence taking on a substantial amount of risk, both for the company and those employees). I can definitely tell you that if the US had the same workers rights as Europe, I wouldn't have hired nearly as many people - not even close, less than half for sure. In one instance it was the wrong call to hire so quickly, and all other instances it was the right call and generated value for both sides.
I know that in Europe you can let people go if the company is experiencing financial difficulties and all that, but there's no question that the commitment to any new European employee you hire is higher than in the case of their US counterpart. And it would be foolish to assume that by increasing the decisioning barrier there wouldn't be some kind of an action-reaction happening in the market. As an employer, you never have 100% certainty that a new initiative will pay off - there's always this doubt in the back of your mind. Well, if the cost of failure is higher in one case than another, you are simply going to initiate fewer bets and will also give fewer people an opportunity to benefit from them (and those bets that you do initiate, you will approach more carefully and with fewer people).
Does this explain the entire gap in unemployment? Of course not. But I really do think it is a factor. So what's better - a bulletproof job that fewer people have, or a more risky proposition that more people can get access to? I don't think I have an answer to this, but I certainly don't think that the answer is always in increasing the decisioning barriers.
This perceived gap in unemployment needs some actual sources.
Unemployment in northern Europe is lower than in comparable places in the US with the same labour rights.
I can imagine unemployment in Southern Europe to be higher, but I am curious what you think you are comparing.
Here is something else to think about: it's safer to hire Americans because they will work 60 hours a week, never take a sick day, won't get pregnant and even if you give them vacation days they won't use them. So they are about 3/5 of the price of your typical European employee. A much better value proposition.
In return some of this will burn them out and put them on edge. This will likely have cultural, political and social consequences. If only we could give our American friends the sleep, reflection and family time they so much deserve.
You talk about sources, and then you immediately dwelve into myths about how much US workers work. They do work more than the western Europe, on par with more hardworking EU: Poland, Romania, Greece etc. It's not 50% more https://data.oecd.org/emp/hours-worked.htm
You should also cosider wages and disposable income. The US worker will have a substantially higher wage, and because of lower taxes and living costs, a higher disposable income.
If you think its reasonable to use Poland, Romania or Greece as your benchmark for Europe, i think its reasonable to use Puerto Rico, Missisipi and Lousiana as the benchmark for the United States.
>You should also cosider wages and disposable income.
As one would consider purcasing power, healthcare costs, student debts, good public infrastructure, public spaces, physical safety, quality of water, quality of air, amount of people owining firearms, amount of conspiracy nuts, reliability of things like heat and electricity, the level of institutational racism, human rights, freedom of speech, etc. Lets not even dive in the fact that healthy high quality food is so much more expensive in the US.
This notion that you are rewarded better for the same work in the US is just not true. You have to work more, you have to put up with more abuse, you have to spend more time travelling to work, your roads are shit, your public transit is none existing. If you get into a small car crash, you have to worry for a bit if the other person will drive on (stucking you with a bill), or bring a gun (because they might just be angry and armed!). Your kids live in a cage in suburbia and after working all those hours, you will have to drive them around for them to go anywhere except their own house.
It is part of the reasoning. Another part is that Europe generally has better unemployment benefits and health care not tied to employment. This drives people to take worse jobs in the U.S.
In addition you have to ensure you look at comparable statistics on who is counted as unemployed. This is toften tied to receiving unemployment benefits or being able to work etc. so different statistics might count based on different criteria.
I’ve found most private English firms have no difficulty letting people go if they need to.
It seems a different story for public orgs like schools and government positions. But private companies have a lot more freedom than some in here have been suggesting.
It’s likely a different story elsewhere in Europe though. There’s a lot of countries with their own laws in Europe
I think the other thing is that the US can hire people for very cheap (like 2$/hour) with the idea that maybe the actual customers can contribute to the worker's salary to make it up. Often you need to get another job to reach a living wage. It's a great way to enslave people and get good unemployment numbers.
You're describing so-called "server wages," which only apply to businesses with tipped employees (and do not apply in the seven "equal treatment" states, including California and Washington). I don't think it makes a huge difference in total unemployment numbers, because tipped workers represent something like 2-3% of all US workers.
(I agree that the concept of server wage is pretty awful and should be eliminated as a matter of policy.)
there might be a correlation to how quickly companies form, projects start, and innovation progresses in America (entrepreneurship) compared to Europe, and how the robust workers' rights might figure into making companies reluctant to hire a batch of workers that they can't easily terminate.
Any such correlation wouldn't be down to causation imo. I've always assumed the American attitude of "Do first, ask forgiveness later" was the more likely candidate for many of Silicon Valley's success stories.
It's also worth noting that there's plenty of innovation happening in Europe too.
edit: I'll add a little more detail as to why I don't agree with your theory: in Europe you can still make employees redundant relatively easily. So if a company hires 100 employees then realises it's not cost effective, it can easily make 80 of them redundant. The catch is you cannot rehire for the same roles (basically you cannot make someone redundant to get around firing them), but given the purpose of your thought experiment was to cull staff after initial growth, redundancy works perfectly fine here.
Europe also has such as thing as short term contracts. Not contractors, though we obviously have that too, but FTEs that are hired for 6 months / 1 year rather than indefinitely. I'm sure America has this too.
So there isn't really any need to hire people with the intention of firing them shortly after. In fact any company that does this would get a pretty bad reputation pretty quickly. That's true for America too.
I've also seen people fired at short notice in the UK too so it's not like it can't happen in Europe even with greater worker rights. Heck, I was unfairly fired from one job -- but I hated the job anyway so it wasn't worth my time taking the company to court. Instead I used that energy to find a job I did like.
Chill buddy, I wasn't claiming to know the answer. I was just saying I think your hypothesis is unlikely and gave a counter-theory. That's generally how discourse works and it's definitely not a personal attack.
I will say calling your own hypothetical link as "sensical" is a little presumptuous though. The very fact I disagreed in the first place should be evidence that it's sensical to everyone. :)
I heard all sorts of hypothetical links suggested in microeconomic circles. Some of them contradict other hypothetical links and it's hard to really prove these things given the huge number of variables involved. However this particular suggestion still seems rather unlikely to me.
It's the at-will employment where employer or employee can cancel the relationship without cause. In ENG you have crazy lengths of time to give notice like 2-3 months. Not a very pleasant experience for the employee. You also see attempts by European employers to AVOID taking on permanent workers. E.g. in ENG it used to be 2 years of contracting required a FTE contract but they'd cancel the contract three months shy. You also have terrible zero hours contracts in ENG.
I think that many companies prefer to fire their employees immediately in exchange for money, typically what the employee would have been paid if he stayed for the notice time.
It is expensive, but often better than dealing with a disgruntled employee for 2 months.
Honestly I could see this happening in Europe, mainly when such high profiles are involved.
Even with robust workers rights this still happens a lot. If the company wants you out they'll get their way. Employees can always dispute at the employment court, but it's overwhelming so few do so and companies leverage that.
It's crazy to me as someone who believes in mutually consensual relationships in all things (including business and trade) that doing something last week is implicit requirement that one does the same thing next week, and that withdrawing consent to additional future trade is seen as a "severe action".
"A job" is really a fictional abstraction. Every day one works is additional services-for-money. Either party should rightfully be able to say "no thanks, that's enough, tomorrow is a new day" at any time.
This is a fine mentality when you're running a lemonade stand, but gets complicated when you're talking about a person's livelihood in a country where something like 60% of people are living paycheck to paycheck. If ONLY we lives in a society that valued itself over the profits of a few individuals.
It's nothing to do with livelihood and everything to do with the liquidity of the labor market.
If a person can get another job immediately, you aren't harming them by declining to continue to be a customer. In fact, you employing them is no power over them at all (unless you were overpaying them relative to their market value).
It regularly happens in reality. I know people who have walked out of one job, crossed a street, and walked in to another less than a half hour later. With construction, bartenders, kitchen and waitstaff, bussers, and security it is ridiculously common.
It becomes more common the lower skill the job becomes, as the fungibility of the worker increases.
Notice how the USA is the top country in the world for getting ahead. If you want to work hard and become rich, that's your spot. Places with "robust workers rights"? Not-so-much.
I disagree with this actually - the effective savings rate is generally lower in the US compared to a lot of countries with "robust workers rights" if you're working in the US you end up losing a lot of wealth to problems that are generally societally insured elsewhere in the world.
I would look into stats on social mobility by country.
Social mobility in the US is still pretty good last time I checked. Most European countries have have lower income income inequality, but less mobility. Eg, the difference between the bottom and top 25‰ is smaller, but your birth class is more predictive of your future income.
Unfortunately, no data on social mobility was used in the making of this ranking.
The authors picked several factors like which they assume lead to improved social mobility (like births/woman), score countries out of 100, then perform a simple numerical average them to form the mobility index. Look at page 205 of the report for the list. They don't validate that the factors are actually related in any way to mobility outcomes.
Sure, it takes other things than income into consideration as well, but it's probably better that way if you really want to understand how easy it is to improve your life in each country. They do consider income as well: "In Denmark or Finland, for example, if one’s parent earns 100% more than another, it is estimated that the impact on a child’s future income is around 15%, compared to about 50% in the United States...".
That's quite possible. Americans also lose a lot of money unnecessarily to utilities (the cellphone bills are ridiculous) and keeping-up-with-the-joneses expenses like a starbucks a day. I think it's pretty hard to distinguish those costs as we can see similar or higher standards of living elsewhere - but I do think the out of pocket expenses hurt a lot (and they hurt even more when you stop drawing an income - retiring in the states is a huge gamble).
Starbucks and fastfood, etc, I don't see it as keeping-up-with-the-joneses expenses.
I feel in the US there is a lot of subconscious decision making that's essentially about buying more time with money, but in an actual monetary transaction as opposed to some implicit trade off. They seem to be chronically starved for time.
> If you want to work hard and become rich, that's your spot.
Maybe, maybe not. I'd argue there are far more who tried and failed than who succeeded, but I don't know if that ratio of success is better or worse than in other countries today (yes, today - not when the US economy was booming relative to other countries, or when immigration was easy, or in the early days of Silicon Valley, or back during the Gold Rush(es) etc).
In any case, though, I would argue this argument applies to a narrow slice of the population, namely those whose main goal is to get rich. Not everybody wants to "work hard and become rich". Not everybody wants life to be a competition to get ahead. Plenty of people are not deeply invested in a career and simply want to work 40h/week for a decent salary and still be able to afford a decent life.
Others feel a calling to a profession that will generally not make you rich, but is still valuable to society. Case in point: teachers. Extremely valuable to society and extremely badly compensated in the US. If I wanted to be a teacher, I'd much rather be in most European countries than in the US.
> Switzerland and Luxembourg are way WAY richer per capita than the US, and have much robust employee rights.
When you say per capita, are you referring to median or mean figures?
Hong Kong is richer per capita than Switzerland at the median and does not have nearly as robust of employee rights.
The US is richer at the median than Germany and does not have nearly the worker protections. The US also has vastly more low skill labor immigration (for 40+ years now), which persistently debases its median figures. Why are German workers so relatively poor, if the claims about worker rights is accurate? Surely the dynamo of Europe, the German economy, combined with such potent worker protections, should lead to enormous median wealth.
Luxembourg has 613,000 people. That's a pretty ridiculous comparison. You're comparing a giant country of 330 million to a modest size city like San Francisco.
germany is only 10% or so behind the US in terms of PPP. They also have more vacation, fewer layoffs, cheaper housing, generally lower cost of living (by more than 10%), and many other things.
Perhaps they made a different trade off, more leisure, less work?
I've only brought up the two most obvious examples (there many others) that negate entirely that silly notion that somehow human rights are incompatible with technological advancement, which borders on hate speech.
I mean, should we really go back to slavery to become space-faring species? Not the kind of future I want to live in.
Could it be that NYC is simply garbage to begin with?
Norway (lets ignore because oil, but really it's not oil), Sweden, Finland, Denmark, Iceland - also better? Longer vacations, better transit, definitely less hobos from what I remember, and no pervasive urine odour.
And bigger median annual incomes.
The weather is brutal in some parts of Nordics, I'll give you that. Not sure if I'd trade cold weather for urine vapours though. Very very difficult question, so I guess NYC isn't entirely hopeless just yet.
Interesting, because this sounds like wild speculation - yet you've stated it as if it is a cold hard fact. Do you have any sources or statistics to back this up?
In 2018 the Swiss financial sector accounted for 9.1% of GDP. For comparison, in 2018 the US financial sector accounted for 7.4% of US GDP. To claim that it is _entirely_ banking is just plain wrong. To insinuate that there is no innovation elsewhere, (but there sure is in good ol' America), is just insulting.
>Financial markets in the United States ... In 2018, finance and insurance represented 7.4 percent (or $1.5 trillion) of U.S. gross domestic product[0]
>Switzerland’s financial sector ... as a share of gross domestic product (GDP). In 2018, it represented 9.1%[1]
Somewhat more true of Luxembourg than of Switzerland.
> Luxembourg remains a financial powerhouse – the financial sector accounts for more than 35% of GDP - because of the exponential growth of the investment fund sector through the launch and development of cross-border funds (UCITS) in the 1990s. Luxembourg is the world’s second-largest investment fund asset domicile, after the US, with $4 trillion of assets in custody in financial institutions.
3rd most globally competitive economy in the world.
Sure, yeah. no innovation at all at Sandoz, Nestle, Novartis and Roche, and ~200 other companies in life sciences and another 300 in precision manufacturing.
Many are simply legal predators using their enormous funds for legal lobbying. Selling repackaged water, sweetened water, sparkling sweetened water, coloured sweetened water.
I never understood it either. It's usually the wrong, honest, helpful employees that get fired first.
I'm not a loyal employee. I do most jobs just good enough to get by, and alway looking for a angle to extract more money out of an organization. (It was easier before being surveiled with cams). I always like a few coworkers, and we become friends, but despised the corporation, and everyone in charge.
I know that in Europe you can let people go if the company is experiencing financial difficulties and all that, but there's no question that the commitment to any new European employee you hire is higher than in the case of their US counterpart. And it would be foolish to assume that by increasing the decisioning barrier there wouldn't be some kind of an action-reaction happening in the market. As an employer, you never have 100% certainty that a new initiative will pay off - there's always this doubt in the back of your mind. Well, if the cost of failure is higher in one case than another, you are simply going to initiate fewer bets and will also give fewer people an opportunity to benefit from them (and those bets that you do initiate, you will approach more carefully and with fewer people).
Does this explain the entire gap in unemployment? Of course not. But I really do think it is a factor. So what's better - a bulletproof job that fewer people have, or a more risky proposition that more people can get access to? I don't think I have an answer to this, but I certainly don't think that the answer is always in increasing the decisioning barriers.