How Should We Support the Unemployed?
I think it is quite clear that the concept of a living wage extends to periods of unemployment, something the Church refers to as a “real social disaster”. Indeed, one of the basic rights of workers is to “subsidies for unemployed workers and their families.” How do we implement these policies? I will discuss three different options.
First, passive unemployment benefits. Here, the worker receives from the state (either from general tax revenues or dedicated social insurance contributions) unemployment benefits that should last the duration of the unemployment spell. To guarantee a living wage, these benefits should be relatively large and not expire after any fixed period. There is a downside, however, as this approach tends to isolate the worker from the dignity of work, leading to the problems of a social assistance state noted by Pope John Paul in Centesimus Annus.
Second, employment protection legislation. In many European countries (Italy is a prime example), unemployment benefits are low, but legislation makes it extremely difficult to fire workers. Perhaps surprisingly, it is rather difficult to show any major damaging labor market effects from this approach. For sure, it creates a dual labor market of protected insiders and vulnerable outsiders, but prime-age men (the key wage earners) usually do pretty well. It hurts younger workers, immigrants, and women. It encourages part-time work (which is not necessarily a bad thing from a family perspective). Still, I think solidarity considerations would argue against such an insider-outsider approach, especially given the social problems among some minority communities. The inherent inflexibility also works against the need to adapt to new developments, making it less appropriate during dynamic periods (such as associated with globalization).
Third, active labor market policies. This is how Scandinavian countries, such as Denmark, approach the issue. High unemployment benefits are guaranteed (sometimes as much as the last earned wage) but the money does not come without strings: instead, the unemployed worker needs to enroll in education or training. As well as supporting the unemployed, such an approach allows for the flexibility to adapt to a changing, more globalized world. In fact, Danish workers move around all the time, with very little job protection, as the underlying philosophy is one geared toward protecting workers, not jobs. The downside is that it does not come cheap, but Scandinavians are more than happy to pay for social solidarity with taxes.
I favor the third approach. One option that I do not think is valid is minimizing unemployment benefits based on some hopeful belief that unregulated labor markets will automatically clear, leaving no involuntary unemployment, or will do so after an arbitrary predetermined period of time. Nor is it an option to use the problems with a social assistance state to justify doing nothing.
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- Is There Nothing Rotten in Denmark? « Vox Nova
- Is There Nothing Rotten in Denmark? « Blackadder’s Lair
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Of the three, I would also be inclined to favor the third approach.
Incidentally, I’d note that Denmark was recently ranked one of the ten most economically free countries on earth, according to the yearly Index of Economic Freedom put out by Heritage (Denmark got 80 points out of 100, compared to 80.7 for the U.S.). In fact, if you look at the subrankings, Denmark actually scores higher on both business freedom and labor freedom than does the United States.
I think this is the first post by MM that I agree with.
Of the options, I concur with Blackadder in preferring #3. (As it happens, I’d put up a post on American Catholic today exploring the possibility that simply calling unemployment a social benefit rather than “insurance” that only applies under certain circumstances would be better.)
Where I’d question the options you lay out here is in the implicit assumption that this _must_ be something done by the state. That appears to be the assumption that the Compendium of CST is working with, but then it’s written to speak to a world in which statism is waxing and all intermediary forms of social organization and obligation are waning.
Were such a thing achievable, I would be much more in favor of this kind of safety net being provided at a much more local level. I think this would be far more in keeping with solidarity and subsidiarity (it’s hard to have any real sense of solidarity with 300 million other people, many of them thousands of miles away) and would help maintain a sense of mutual obligation: Those providing money to those needing it and those needing it to improve their lot as quickly as possible so as not to be a burden.
There’s no clear path to such a situation now, and so as a conservative I don’t advocate trying to make sudden changes. But in choosing what incremental moves to support or oppose I would tend to support things that move more in that direction and oppose things that move farther from it.
Actually, having unions manage the insurance scheme would better respect subsidiarity.
Theoretically, yes. Though I think you’d need rather different unions from what we see in America today in that case.
First off, most people don’t belong to unions and have no reason to. (Because the ones we have exist primarily for collective bargaining purposes, which most of us don’t need.)
There’s also the issue that having industry segregated unions might make them ill suited to provide unemployment assistance during an industry-wide downturn. (For example, how much help would auto worker or construction worker unions be for the unemployed right now?) This might be especially awkward if one of the main things out of work people needed assistance with was learning to work in a new industry.
How about a small local grouping, such as a parish?
Actually, having unions manage the insurance scheme would better respect subsidiarity.
Good point. Mutual aid societies used to provide a sort of unemployment insurance for their members before the State took over the role, and if something like that could occur again this would be beneficial both from a Catholic and a purely secular standpoint.
Agreed, BA.
I second essentially everything everyone else has said! #3 of the choices, but intermediary institutions would be a better place.