Labor Pains? Just Breathe
April 1,2006

Cliff Notes Version: Anyone that fears that the E.U. will supplant the U.S. as the economic power of the 21st century can rest easy (at least until Chinese insomnia kicks-in).

Hundreds of thousands took to the streets this week in both France and the U.S. While about different laws, the protests addressed the same core issue – labor. These demonstrations say much about the different labor challenges facing the E.U. and the U.S.

1) In France (and most of Western Europe), it’s the system. The French people overwhelmingly disapprove of the CPE – the new law that makes it easier to hire and fire those under age 26. Currently, the unemployment rate for this group is over 25% -- due mostly to overly restrictive labor law that calls for 35-hour work weeks, incredibly strong labor unions, and the inability to fire an employee for all but the most egregious violations of expected behavior. French companies prefer being understaffed than have to deal with such restrictive laws that stick them with poor performers they can’t get rid of.

President Chirac and PM Villepin refused to cave. They know that the future of French competitiveness requires strong labor markets. Remember the recent Muslim immigrant protests in France? Same issue. The immigrant unemployment rate is well over the 10% national rate and exceeds 50% of those under age 26. Muslim immigrants cite racism and discrimination, but it ultimately comes down to the inability to work and sustain a reasonable standard of living.

2) In the U.S., it’s access to the system. Unlike France, the unemployment rate of 4.5% is testament to labor law that encourages work and encourages companies to find workers. Thus, the problem is not the system itself, but rather who has access to the system. American immigration law is practically ignored. Eleven million people are essentially second-class citizens.

Unlike brave French politicians, American politicians are screwing it up. Bush started well, proposing a guest worker program that opened the necessary debate. Then, he blew it by demanding a “comprehensive” law that tackles immigration policy, border security, and the status of current illegals – all in one package. Bad idea. PurpleThink commented on this here. Long story short, when you discuss building walls along the Mexican border at the same time you discuss an illegal’s path to citizenship – you appear bigoted and racist. Both issues need to be addressed, but needed border reforms may go down in flames if paired with poor immigration law.

We PurpleThinkers see a bigger story here than the individual protests. Both America and the E.U. crave a stable labor market so that China, India and others don’t overtake the traditional economic powers. However, we are at different places in this battle for stability. While America battles with how to equitably administer labor opportunity, much of the E.U. battles to create that opportunity. It doesn’t look good for Europe.

So, don’t despair over America’s temporarily sharp labor pains – just breathe in, breathe out, and thank God we’re not France.

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