Overtime Instead of New Hiring

According to the Bureau of Labor Statistics, the American unemployed have surged to 15 million in October 2009, bringing the rate of unemployment to 9.8%, i.e. exactly double of what it was in January 2008. But what worries US analysts the most is the forecast according to which, even in the prospect of a recovery, employment will lag behind for a long time, so that it will take years to absorb the unemployment caused by the present recession.
The US labor market, among the most flexible in the world, has been very quick in expelling workforce in excess, but not equally prompt in rehiring laid off workers. American firms, even if their economic performance is improving, are reluctant to hire new personnel, preferring to lengthen the workweek of the existing workforce, which is compelled to put in ever longer hours. This datum is a blow for the common view according to which legal protection for workers is a factor of labor market rigidity. In Italy, there has been endless debate on reforming labor law, which has taken as dogma the conclusion that existing laws regulating and limiting lay-offs were the main cause of inertia in the labor market and of the sluggishness in the labor market participation rate. The US case shows that the behavior of firms concerning new hirings is in reality not very sensitive to the degree of laissez-faire in labor law. If American firms are not hiring, it's certainly not due to the fact that they can't fire, since US employers have almost complete freedom in this respect. Many are going back to the experience of the Great Depression to draw lessons for today's predicament. The fundamental political intuition of Franklin Delano Roosevelt was that, in order to instill trust back into firms, bring back workers into factories and kickstart the country's economy, it was necessary to rebalance the American social pact, which had been compromised by the excessive shift in power and wealth from labor to capital. Thus, true to the spirit of the New Deal, in 1935 the US Congress passed the National Labor Relations Act, a law which empowered unions and their organizing drives vis-à-vis corporate capital, rather than putting government itself in charge of the labor market. The world has changed a lot since 1935, but the need for socially sustainable economic growth is as true today as it was then. It's not by accident that the Obama administration has made a commitment to pass the Employee Free Choice Act, which would give an enhanced role to organized labor, whose decline in membership and influence has eliminated any kind of social control over the creation and distribution of wealth in recent decades.

So while in the US the crisis calls for pragmatic solutions to improve and extend collective bargaining, in Italy precious time and resources are being wasted looking for the unattainable model of ideal labor legislation which would supposedly solve all employment problems.