As the battle rages on in France over the implementation of an employment at will policy for workers under the age of 26 a new round of smugly jingoistic commentary here at home has spewed forth. The editorial page of the Los Angeles Times linked high French unemployment rates to existing labor policy and proclaimed

the youth labor law doesn't go far enough, but it's a start.

Never mind that the empirical support for this proposition in general is quite weak as Economists, Glyn, Howell and Schmitt illustrate.

Of course, as the accidental philosopher H. Simpson once opined facts can be used to prove anything that’s even remotely true. So why be bound by facts at all? Here is a quote from Michael Mandel at BusinessWeek on last November’s French riots and high youth unemployment rates:

Such sky-high levels of idle youth are a by-product of the welfare-state mentality that's still pervasive across much of Europe. The idea is that government's main role is to provide a safety net for the population, in terms of jobless and health benefits. Generating growth and creating jobs takes a distinctly lower priority, resulting in high unemployment, especially among the young. By contrast, in the U.S. economic model, rapid economic growth and low unemployment can help pull young people over racial and ethnic hurdles.

Interesting. Here are some statistics on the U.S. labor market from a recent New York Times article:

In 2000, 65 percent of black male high school dropouts in their 20's were jobless — that is, unable to find work, not seeking it or incarcerated. By 2004, the share had grown to 72 percent, compared with 34 percent of white and 19 percent of Hispanic dropouts. Even when high school graduates were included, half of black men in their 20's were jobless in 2004, up from 46 percent in 2000.

Cross country comparisons of employment statistics are quite difficult to make both because of differences in measurement and because narrow measures obscure the totality of economic well-being. As the research reported in the New York Times illustrated matching official unemployment figures to statistics on incarceration paints a much more troubling picture of the employment situation facing unskilled minorities here at home. And as Mark Weisbrot points out differences in overall unemployment rates are more heavily influenced by overall demand and by extension factors like interest rate policy than by the common set of rules governing the employment relationship.

The truth is that every flavor of market system (French, German, American, Japanese) has flaws that require thoughtful policy attention. The U.S. and French systems both have serious flaws with respect to low-skilled youth. Under the banner of Laissez Faire advocates here and abroad argue that shrinking the safety net and regulating market outcomes to favor wealthy interests will spark an employment boom which will in turn lead to the elimination of social problems like those that sparked the French riots last November. For example, an amateurish cultural anthropologist whose keen powers of observation lead her to conclude that the ongoing French protests are childish argued last November :

If the government would back away from its stranglehold on the economy, it wouldn't have to resort to barricades and curfews to keep the have-nots under control. Instead, they could get jobs, and their future would look less like a high rise slum and more like Rue du Faubourg du Temple.

Wow it must be true if a stereotypical “ugly” American in Paris says so, right?

To the contrary, focusing on unemployment benefits, Glyn, Howell and Schmitt argue that there is evidence that less generous benefits lead to lower unemployment rates through less attachment to the formal labor market rather than through greater rates of employment. In the U.S. context where most labor market protections (not just the generosity of unemployment benefits) are decidedly less generous than in many other developed countries, unemployment rates are lower. But the official statistics which don’t account for the impact of incarceration hide the gruesome failure that rewriting the social contract in favor of the wealthy here at home has been. Bruce Western writing about inequality concluded:

Adjusting for racial disparities in joblessness and incarceration suggests that young black men have experienced virtually no real economic gains on young whites in the 15 years from 1999.

And this occurred in a period of decline in the purchasing power of the minimum wage, welfare reform, rapid growth in non-unionized sectors of the economy, and a long list of other changes that have both reduced the bargaining power of workers and weakened the social safety net. Rather than sparking a new expansion of the middle class taken together these policies have increased earnings inequality. Adjusting for inflation, low wage earners in Pennsylvania make less today than they did in 1979.

Philadelphia

The 2000 Census provides snapshot of the circumstance facing Philadelphia’s youth and young adults. Just over one in four young people age 16 to 29 living in the city of Philadelphia were not working and not enrolled in school in 2000. This was true for just under in one in ten youth living in Delaware, Chester, Montgomery and Bucks County.

For unskilled youth the picture is decidedly grimmer. Half of high school dropouts between the ages of 19 and 29 were not working and not enrolled in school. The picture improves somewhat for high school graduates with just over a third reporting not being enrolled in school and not employed. In the four surrounding Pennsylvania counties 30 percent of high school dropouts were neither employed nor enrolled as were nearly 20 percent of high school graduates between the ages of 19 and 29. As in Paris, Philadelphia has a serious idle youth problem.

Obvious avenues for long term improvement include reducing the number of dropouts in the region through universal access to high quality day care and early childhood education. And here is the real lesson that last November’s rioting and the ongoing battle over French employment law teaches. Better educational outcomes while indispensable are not enough! The French education system is well regarded. The key is linking disconnected youth and low wage workers in general to good employment opportunities. That is connecting them to firms with career ladders and or training opportunities. Making the connection between the young adults and jobs has many dimensions. While training is an obvious need it is important to remember that gaps in mass transit are a serious barrier for many workers. A local institution attempting to address this problem is the Philadelphia Unemployment Project which uses minivans to link city residents with their jobs in the suburbs.

As if the scale of the task before us was not daunting enough, better matching between employees and employers is also not sufficient. We need higher quality employment opportunities. This means that the institutions we construct to plug the gaps in safety net must also create value for employers. For example, industry partnerships by pooling training costs could in theory lower the cost of training for employers as well as create a much larger potential pool of qualified applicants for growing firms. These partnerships could even create a socially advantageous kind of employment flexibility. What most Laissez Faire advocates want when they demand more employment flexibility is the capacity to use employment at will to bid down wages and suppress dissent. But it is possible to have a different kind of flexibility that includes security. Unlike most workers, unionized construction workers move from employer to employer enjoying good pay and portable benefits (health and pension) as construction contractors expand and contract employment in response to demand. Training costs are shared by employers and workers and all firms that are signatories to a collectively bargained contract draw from the same pool of skilled labor. The end result is a good career, a high quality product and a flexible employment relationship.

No economic system, no institution, no solution to any problem is perfect but we have a moral obligation to work towards shaping our world in a way that creates broadly shared prosperity for all workers young and old.

Mark Price in his day job is a Labor Economist at the Keystone Research Center (http://www.keystoneresearch.org) a research and policy development institute, which was created to broaden public discussion on strategies to achieve a more prosperous and equitable Pennsylvania economy. However the views expressed here are his alone.