Portrait of the Working Poor in France Puts Face on Failed Austerity Policy of Europe

What Republicans Would Like to Bring to the United States

This Forum has commented frequently on the austerity programs in Europe and how they are failing to do what they are intended to do, bring back economic growth and prosperity.  They are failing from a macro economic view because they have the wrong policy goal, mainly reducing government deficits.  It has been known for over 70 years that reducing deficits does not cure recessions, increasing aggregate demand cures recessions.  Reducing deficits is contractionary policy.  It makes recessions worse.

So the tragedy of Europe in the macro sense is that their policy will not cure their economic problems.  At the micro level it is a personal tragedy, and a story in the New York Times illustrates what it is doing to the working poor.

today, hundreds of thousands of people are living in campgrounds, vehicles and cheap hotel rooms. Millions more are sharing space with relatives, unable to afford the basic costs of living.

These people are the extreme edge of Europe’s working poor: a growing slice of the population that is slipping through Europe’s long-vaunted social safety net. Many, particularly the young, are trapped in low-paying or temporary jobs that are replacing permanent ones destroyed in Europe’s economic downturn.

Statistics in Europe have shown that the entrenched, older work force have protected their jobs at the expense of their children.  Unemployment among young people is incredibly high, and not likely to get better.  Despite having a so-called welfare state, poverty exists in Europe.

In 2010, the latest year for which data were available, 8.2 percent of workers in the 17 European Union countries that use the euro were living under the region’s average poverty threshold of 10,240 euros, or about $13,500, a year for single adult workers, up from 7.3 percent in 2006, according to Eurostat. The situation is nearly twice as bad in Spain and Greece.

The article focuses on France, where government spending as a percent of GDP is about the highest in Europe.  Yet the French working poor are suffering.

Today, up to 120,000 people are living in French campgrounds, according to Observatoire des Inégalités, a social watchdog group. While it is not a new phenomenon, officials say it is accelerating.

One of the villains is restrictive labor laws which make it difficult in Europe to fire people.  This of course has the unintended consequence of causing firms not to hire permanent workers. So workers are temporary or contract employees.

Contract labor has surged in the last several years and is set to increase as politicians in France and elsewhere encourage their use as a way to reduce high unemployment. But numerous recent studies by economists and social groups warn they may increase in-work poverty, because they pay less and have fewer benefits.

In 2011, temporary contracts accounted for 50 percent of all new hires in the European Union, according to Eurostat.

And in case anyone doesn’t know what life is like for contract workers, here is an illustration

For those who cannot find work after a temporary contract expires, the situation can become dire.

In the Bois de Vincennes, a park behind the parking lot where Mr. Duboscq lives, Jean, 51, an electrician who would only give his first name, warmed his hands recently over a fire in a small oil drum. He used to rent a tiny Paris studio, he said, but moved to a tent hidden in the woods three months ago after a fixed-term job expired and he was unable to secure other lodging.

By day, the forest is a playground for young urbanites. At night, however, it is home to an estimated 200 people, including families with children. Some are French, some are immigrants from Eastern Europe and North Africa.

Like many tent shelters, Jean’s is quasi-permanent. With his neighbors, he shares a rickety table and a shelf stocked with sugar, salt and an old teapot. Strips of meat hung frozen on a clothesline.

So if this is what is happening in Europe with its much larger safety net and welfare spending than the United States, anybody want to glimpse the future if Republican policies like the austerity imposed in Europe are imposed in the United States?  Really, anybody?