2. Work sharing works. One reason why Germany's unemployment rate hasn't spiked like ours is the German government pays companies not to fire workers. It's called "work sharing," and here's how it works. Let's say you're a company with 100 employees and you want to cut 10 percent of your payroll. In the U.S., you might fire 10 workers. In Germany, if you fire nobody but instead reduce every worker's hours by 10 percent, the government will pay the rest of their wages. In short, you "share" your workers with the government. Work sharing, which has been proposed by some economists like Kevin Hassett and Dean Baker in the United States, helps employers avoid layoffs and promotes employment.
3. Health care costs matter. Germany spends half as much as the United States per capita on care. That's key because in the United States, the burden of paying for health care often falls on the employer. That makes U.S. workers increasingly expensive for reasons that have nothing to do with the quality of their work or experience. Like the United States, Germany is a high-wage, high-tax, relatively high-regulation country, but it's not an astronomically costly health care country, and that makes workers easier to afford, and add.
What we should not necessarily learn
1. Big government stimulus doesn't work. Why didn't the Recovery Act stop job losses? Economists will debate this question for years. But one compelling explanation is that the entire U.S. economy entered the recession in debt. As a result, consumers and businesses and states didn't spend the stimulus money to pay for new things (equipment, workers, goods). It used the money to pay back old things (debt, life savings, pension funds). In the U.S., the average consumer has a debt load of 122 percent of his annual income. In Germany, that number is 100 percent. German consumers and businesses saved during the boom. That's one reason why they're healthier during the recovery.
2. We can copy Germany's monster quarter. The easiest way to recover from a financial crisis is to bring in new money in exchange for new goods. In other words: exports. This makes the export-dominated German economy sound alluring. But Germany's model is not particularly, well, exportable.
If Germany were still on its own currency and growing rapidly, the Deutschmark would have gained value
against other currencies, raising the cost of German products, hurting exports, and bringing its trade
surplus down. Instead, the Eurozone crisis has battered the Euro, making German products cheap overseas. At the same time, developing countries experiencing healthy recoveries are looking for industrial machines to build new factories: precisely the thing Germany excels in producing cheaply. Germany's record quarter is something of a fluke, according to Dr. Tim H. Stuchtey, director of the Business & Economics Program at American Institute For Contemporary German Studies. "It's a historical coincidence," he told me, "not an intended effect of some wise political measures."