Labor Dilemmas

Some of the reasons America has more job creation than Europe.

The core problem with the European economy, most here agreed, is labor-market inflexibility: Thanks to powerful unions, wages are high. But there is little incentive to create new jobs in Europe, so high unemployment persists. The United States, in contrast, has flexible wages and low unemployment.

"Europe is losing the competitiveness game," Ollila told the group. "We Europeans have to change our view of the world — and act accordingly. . . . We don't need new studies or committees. We simply need action."

On every European executive's wish list would be reform of product, labor and capital markets. Red tape and rigidity in all three impose unnecessarily high costs on European businesses. Executives also worry about Europe's failure to match rising U.S. productivity. Some European unions are still strong enough to block the adoption of labor-saving technologies, which reduces the incentive to innovate.

It's a give and take situation. We can have higher minimum wages, better benefits, etc., but it will cost us some economic growth. People complain about "the poor" in America (and yes the lack of income mobility is a concern), but overall, from an historical perspective, the poor in the U.S. have incredible lives. Most all of them have cars, televisions, cellphones, plenty of food, etc. But as long as someone else has more, people will always be unhappy.

Found via PrestoPundit.