Rebuilding America: Would Kurzarbeit work here?

2/13/2012 9:03 PM EST

A modest proposal for putting American workers back to work and reviving our manufacturing base.

2/14/2012 11:09 AM EST

Actually, I do suspect that there ia a growing number of experienced senior engineers in the United States who may not mind having shorter working hours; and prove to be very productive to corporations. I want to hear from both sides -- employees and employers.

What's stopping us from trying this?

2/14/2012 11:43 AM EST

"The German vocational system is deeply ingrained in the country’s culture." I would add it is a matter of national interest and national pride for countries like Germany. Also, in a diverse country like the U.S it becomes a federal/states rights issue. But the idea is good; on the job training no matter when and under any circumstance can't be bad.

2/14/2012 12:46 PM EST

After the Dot Com crash in 2000, I worked for a medium sized manufaturing company in CA. We utilized a version of kurtzarbeit. We cut the Non-Exempt workers to 4 day work weeks. Then they were able to collect un-employment for the 5th day. When business returned we were able to ramp smoothly. I have also seen Japanese manufacturing companies use this technique during the depths of the Great Recession.

2/14/2012 3:25 PM EST

Nick, you hit it right on the head - in a monocultural society like post-war Germany it is possible to spend several years instilling in workers the kind of pride and respect for one's work that is described here. However, in a multicultural country like the US this is simply not possible - too large, too many different kinds of people from dramatically different cultures. That's why when BMW started moving production to Easter Europe - Slovakia, Czech Rep., etc., quality changed dramatically - people there didn't have the same approach as in the more expensive factories back home.

Same thing happened when Japanese factories started contracting to lower-cost locations on the mainland - quality suffered because the manufacturing base there didn't have the same perspective as the more expensive Japanese workers.

2/14/2012 3:29 PM EST

see how that will work w/ the major labor unions and get back to me.......
we have a pool of E.E.'s that can be readily hired back as economy rebounds.......we do not need to adopt a socialist ideology.......oh wait the POTUS is already doing that for us.

2/14/2012 3:39 PM EST

There's very few unions left, I doubt very much that it would have an impact. Germany has more than twice the unions and it would seem to be working there. Corporate greed is much more at play here...

In 2010, the percentage of workers belonging to a union in the United States (or total labor union "density") was 11.4%, compared to 18.6% in Germany, 27.5% in Canada, and 70% in Finland.[1] Union membership in the private sector has in recent years fallen under 9% — levels not seen since 1932. Unions and many observers allege that employer-incited opposition has contributed to this decline in membership.

2/14/2012 3:53 PM EST

The concept has merit, though execution would be tricky. The key is continual on-the-job training.

Unemployment is structural: many laid off workers simply won't *get* new jobs, because their existing skills are no longer in demand, and new jobs that *are* created will be jobs they can't do.

The economy is increasingly global, and work goes to places it can be done cheapest. The challenge for the worker is to make what they do worth enough that employers will be willing to pay them their desired wage. That means continual change. You can't assume you'll you'll be doing the same thing 5 years from now that you are now. You'll be required to do new things that will require different knowledge and skills, and you may be doing it for a different employer.

It's the Red Queen's Race from Alice in Wonderland, where you run as fast as you can to stay in the same place, and to get anywhere, you must run twice as fast as that. But the world won't hold still, and you can't either.

2/14/2012 3:56 PM EST

I shorter/longer work week I doubt will have no impact on manufacturing. Age is the barrier and not skills to hiring. Manufacturing would come back, I believe, if imports into this country were all treated as commodities. The item whether a smart phone or a bag of grain must be offered for sale at the port at the declared price of entry. Small manufactures like myself could buy at the same price as mega corporations. I could add the value and compete on a equal footing. Intellectual property might be kept in country for the same reason. While some things will never come back, some will.

2/14/2012 4:05 PM EST

I would only go for this most excellent idea if we can also change the balance so that while the average blue and white collar worker is working 4 days a week, while at the same time we could bring the average honest work week of congressional and senate workers up from what, maybe a day and a half what they presently honestly work to an honest 4 days a week.

Yes I know that the word Honest used in the same sentance as any of our elected officals is an oxymoron, but what can I say.

2/14/2012 4:09 PM EST

EE Times ... Thank You for championing revival of U.S. Manufacturing ... The past few years, or Decades, doesn't seem that shipping all jobs (manufacturing) overseas is a good idea or is working regarding improving the U.S. Economy. (unlike what "the experts" told us would be good for U.S.(??)). German Business Plan seems to be better than U.S. Business Plan (???) ... which is ??? ... "Free Market"! Compared to other countries who have a Business Game Plan!! Also, apprentice-ship is better than present U.S. Business Training policy (which is ... besides training H1b's ... You're on Your own !!!)

2/14/2012 5:09 PM EST

Hello all, I AM from Germany.
What you're calling "Great Recession of 2008" is referred as "die Krise" ("the crisis"). My employer did not suffer much and did prosper again before the end of the crisis.
Why ? As other companies had off-laid some workers (mostly freelance engineers) we had the chance to hire them. So much about "... that can be readily hired back ..." The crisis was not completely finished when qualified engineers were as rare as before. BUT: now they were working for other companies. Thus Kurzarbeit is also making sense for the companies, avoiding the post-crisis learning curve of new workers as well as the loss of highly-experienced professionals. These tend to be the first to find a new job - even during a crisis.

2/14/2012 5:11 PM EST

Don't look now but there is a sizable group of people that are well on their way to reviving US manufacturing. They are using the "agile" (bottom-up) method of development instead of the ineffective top-down method. I am talking about the Makers, that revival of the "craftsman" movement. I read an article saying that most employment growth takes place at small startup companies of which 1/3 or 100,000 0f the 300,000 companies in the US fit that category. We are past the time where talking about this issue will provide a solution.

2/14/2012 6:06 PM EST

It seems to me that the key is the phrase from the article: German workers are treated as assets, not “overhead,”. The fundamental assumption is whether the employees are considered assets or liabilities. All aspects of the employee-employer contract start with that basic assumption. From the article, the German companies consider the employee as an asset, and work to maintain that asset, just as they would maintain any other asset. If employees are considered liabilities, the goal is to minimize the cost of that liability, sort of use it, abuse it, and lose it.

2/14/2012 6:21 PM EST

The National Science Foundation put this out today:

http://www.nsf.gov/news/news_summ.jsp?cntn_id=123174&WT.mc_id=USNSF_51&WT.mc_ev=click

Here's the key passage:

"U.S. manufacturing has been declining as a share of our nation's gross domestic product for many decades. Our nation has lost almost 30 percent of manufacturing jobs during the last decade. Concurrently, emerging economies have vastly increased manufacturing capacity. In-depth knowledge of manufacturing processes has boosted innovation in these nations."

2/14/2012 7:19 PM EST

I think we do have a form of Kurzarbeit here in the US. Unfortunately, the intent is generally quite different. It's not uncommon for companies to cut hours just below the minimum that would qualify an employee for benefits. Granted, this is more prevalent in the service and manufacturing industries, but that just means that it is used with those least able to survive a cut in pay.

2/14/2012 8:34 PM EST

I think the author is confusing several issues.
Kurzarbeit may marginally contribute to the higher levels of employment in Germany, but it is not really essential.
I worked in Germany for a year in 1988 and even then, they had 6 weeks of vacation.
France, tried a similar approach (RTT: Reduction du Temps de Travail, 35 hour workweek). It failed to stimulate job growth, and they are trying to backpedal now.
The employment in general and the manufacturing jobs in particular are strong in Germany because of the industries they are focusing on. They are not assembling iPads or iPhones. They do very sophisticated equipment in mechanics, electromechanics, heavy machinery, medical equipment, etc. They have a huge base of small and medium size companies who are world class in their segments. They are not manufacturing Chevy's, they are manufacturing BMWs, Mercedes Benz's and Porsches.
One also has to wonder, how does Germany maintain its competitiveness despite its quite high tax rates and universal health care? Their corporate tax rate is flat 15%, nominally lower than in the US, but I doubt GE can get away with 0% there! Personal income tax rate goes up to 45% and has little or no deductions. When I worked there, coming from France (which has a rather high tax rate) I was livid when I saw my first paycheck. And they have a VAT that's higher than our state sales taxes.
We are governed by a bunch of financiers and all they care about is ROI for their own money. If they continue that way, they will have to outsource the citizenry as well...
Good luck to us all.

2/14/2012 11:58 PM EST

Less time at the same pay? Sign me up. ;-)

2/15/2012 12:34 AM EST

No, it should be for a smaller pay TFC-SD...I think in order to save jobs everyone should take 10-20% salary cut (more at the top) and work 20% less (Friday off)...Kris

2/15/2012 9:47 AM EST

This from a very good news site, "Changing Gears: Remaking the Manufacturing Belt":

"Can This TV Show Make Manufacturing Cool?"

http://www.changinggears.info/2012/02/14/can-this-tv-show-make-manufacturing-cool/?utm_source=feedburner&utm_medium=email&utm_campaign=Feed%3A+ChangingGears+%28Changing+Gears%29

2/15/2012 10:10 AM EST

On the campaign trail, President Obama is at the Master Lock factory in Milwaukee today to highlight the fact that the manufacturing company is "insourcing" jobs and the plant is back to full capacity. Why weren't they talking about this three years ago?

2/15/2012 12:41 PM EST

The closest thing we have to Kurzarbeit in the U.S. is what we refer to as furlough. Many U.S. companies did some of this during the Great Recession, to reduce payroll costs without having to do even more extensive layoffs than they were already doing.

U.S. style furlough is subject to U.S. labor laws, which don't really permit something like Kurzarbeit. For instance, during a mandatory one week furlough, salaried employees are not permitted to do any sort of work at all during that work week -- no conference calls, no checking company email, etc. To some of us, it seemed rather silly, since we can check our work email from any device that has an internet connection, and would prefer not to have to deal with a full week's worth of email when we return from furlough.

Despite the payroll cost savings, furloughs come with other costs in lost productivity and disruption of work flow. You can imagine the effect on teamwork and team output when different members of the team are taking their mandatory furlough in different weeks, or perhaps even worse, if the entire team takes the same week off.

2/15/2012 1:33 PM EST

I fear that in the U.S. such a system would be abused. Typically slow periods of the year would be guaranteed Kurzarbeit time (like around the holidays) for many industries. Employers would call for immediate two-hour Kurzarbeits while broken assembly equipment was being serviced.

I agree with the comments above that in the U.S. the furlough is essentially the equivalent of the Kurzarbeit. Many companies already have mandatory furloughs almost every year around the holidays.

I can understand why someone who is unemployed and having trouble finding work (too many people these days) would embrace this system. I certainly don't want to be insensitive. Nor do I want to cast my lot with the throngs of people in the U.S. that are increasingly crying "socialism!" at every proposed solution. But this idea troubles me, mostly for the reasons outlined above.

I worked for a company that frequently implemented furloughs. At first, we as employees took it in stride--business was down, something had to give, and a week without pay here and there seemed like a better deal than losing our jobs. But as time wore on, the furloughs kept coming back, even in years that were pretty good as far as the U.S. economy was concerned. Eventually I realized that the furlough had become a built in way for management to help us hit our financial targets (which were never transparent to us). A furlough the week between Christmas and New Year's (when, in fairness, we didn't have a lot of work to do anyway) was an easy way to bring down costs for the year. Fair enough, if that's the deal you have with your employer, but gradually I began to realize that my negotiated salary was more a target than an accurate measure of the pay I would receive in any given year. It could be cut at a whim by furloughs of varying lengths. I came to feel it was just a disingenuous way of managing a business.

2/15/2012 3:35 PM EST

While all the pros/cons of 'kurzarbeit' have been discussed, it makes one wonder as to what drives its adoption in the Bundesrepublik - longer-term approach and more importantly, employer's are incentivized. Instead of having to pay for full-time unemployment, the state compensates the employer by covering part of the worker's compensation. In effect, instead of losing a corresponding amount in pay for reduced hours, the employee only has to give up a small portion. Win-win-win for all (at least in theory).

2/15/2012 4:07 PM EST

"Kurzarbeit" or better shortened work time is not just for the workers, getting their salaries reduced by 10-20%, working 3-4 days a week. A real approach is that managers accept pay cuts by 10-20 % as well and the entire supply chain is able to handle the reduced demand over max. 24 month.
If business comes back, everybody to be fast and flexible. Workers to use the "free time" to improve skills, qualify also for other tasks and jobs. Its a good approach that worked in Germany.
Enrico

2/16/2012 10:30 AM EST

I do not if the reduced work hours could really help Germany. The main reason for the companies to lay off is that they are moving to LCC to reduce the operational costs and also to be close to the native market.

2/16/2012 1:30 PM EST

The link below is relevant to this thread, an essay on the downside of constantly seeking greater efficiencies and the negative consequences for manufacturing and job creation. Mitt Romney's Bain Capital days are used as an example: the goal was to maximize profits, not necessarily to create or destroy jobs.

"The Danger of Too Much Efficiency":


http://www.nytimes.com/2012/02/19/opinion/sunday/the-danger-of-too-much-efficiency.html?hp

2/17/2012 2:08 PM EST

In an entrepreneurial culture the idea of working less is hard to grasp. 'Don't develop that product in time for the market, work less and develop it for next year'. Ummm....

In a small service-industry venture, when trade drops off, taking time off doesn't work for the founders because the overheads are still there and you need to work on improving things for when it picks up again.
However, if you have hired help, and you have no work for them, you really need their cooperation in working short hours.
If you can part company without rancour then when your business returns, they may be willing to work for you again.

The question is, what can everyday people do, on their own, that will generate income and wealth for themselves? What can they do that others value enough to pay for? In may cases, no much. So what to do?

I predict that cooperatives will return, to leverage the power of people working together to achieve what they cannot do separately. The Internet is a great factor in this kind of social development.

2/17/2012 2:32 PM EST

You represent a common view prevalent in America @sharps_eng...but in Europe they work less than we do (6 weeks vacation are typical, and I have friends who take 10 weeks, I get only 3 weeks) and yet their standard of living is the same (give or take)...how would you explain that? Kris

2/17/2012 9:29 PM EST

I suspect an even greater crisis may lie ahead before change comes. We may not like the change, either.

2/21/2012 11:41 PM EST

I think "Kurzarbeit" would definitely make for a more humane work place, so it should be implemented for that reason.

2/23/2012 8:15 AM EST

Been there, done that. I was Kurzarbeit-ed for 15 months when the auto industry crashed recently. It gave me stability and enough income that I wasn't forced to look for another job, kept me up to date on projects the company was working on--and also gave me (much-enjoyed) 4 day weekends every week. I appreciate that the company viewed me as a resource they didn't want to lose. Much, much better than being laid off.

3/3/2012 3:40 AM EST

Decouple CEO and executive pay from short term stock price gains - incentivize them for retaining their workforce and not just for goosing earning numbers.

3/3/2012 10:04 AM EST

How about reduce executive pay? The maximum to minimum compensation ratio has been the highest in the last 80 years...Kris

3/14/2012 8:46 PM EDT

Reader Verne Olsen sent us this:

George,

I read with interest your article in EET about German kurzarbeit, and the question “Could it work here?”. My son has been working in the US for a company that has been implementing this for the past four years (that I’m aware of). He’s had a job all the way through this recession/depression; albeit, at 32 hour weeks the paycheck is harder to stretch to cover all his needs. He is making his house payment, putting food on the table, and contributing to the local economy. The company is Marvin Windows in Warroad, MN; I think at least part of the reason they can do this is because they are a private company, managed by local people with local concerns, and not responding to the whims of Wall Street. It’s not always been an easy road, but from my perspective it’s a positive way of responding to the downturn.

http://www.marvin.com/benefits-features/about-marvin/

Verne Olson

4/22/2012 11:36 AM EDT

Maybe we could start with the 30 million Gov employees. Either paycuts or pay for their own ins.