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Commentary :: Labor
Work Sharing is the Answer by Dean Baker
28 Aug 2011
"The stock market’s recent plunge has caused normally sane people to panic about the economy’s prospects. It is important to recognize that the stock market has little direct impact on the economy. Few firms raise capital for investment by selling stock. The stock market primarily affects the economy through its impact on consumption."
"In short, people should not panic about the economy because of the plunge in the stock market. (The impact on your 401(k) is another matter.) However, this hardly means that everything is smooth sailing. Even before the market turmoil took over the news, the economy was largely dead in the water, expanding at a pace too slow to even keep up with the growth rate of the labor force, much less to make up for the 10 million jobs lost due to the downturn.

The best way to create jobs would be to boost demand with another round of stimulus. Any serious stimulus, though, seems to be off the table at this point. If it is not possible to increase demand enough to bring the economy back to full employment, we can go the opposite route of sharing the work that does exist.

The basic point is simple. If we encourage employers to deal with reduced demand by shortening work hours rather than laying people off, we can get back to full employment relatively quickly. Every month, firms lay off or fire roughly 2 million people. If this figure can be reduced by 10 percent through work sharing, it would be equivalent to creating 200,000 additional jobs a month.

A work-sharing policy uses the money that would otherwise go to unemployment benefits to compensate workers for part of their reduction in hours..."

to read Dean Baker's "Work Sharing is the Answer," August 12, 2011, click on
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