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July 15, 2015

Poland vs the United States: work and entitlements

This is the thirteenth article in a short series about Poland, Europe, and the United States. To explore the entire series, start here.

In one of my earlier posts, I alluded to the pervasive faith in the American Dream: the national ethos of opportunity, self-sufficiency, and free enterprise that influences the political discourse in the United States. The egalitarian promise of the American Dream is simple: no matter who you are, hard work and ingenuity will surely allow you to achieve your dreams. From that, it follows that on your journey, you are not entitled to much; the government will be there to protect your freedom, but it will not give you a head start.

Unlike many of my peers, I suspect that there is truth to the cliche; the United States is a remarkably industrious nation and the home to many of the world's most innovative and fastest-growing businesses. It certainly treads ahead of European economies, still dominated by pre-war industrial conglomerates and former state monopolists, and weighed down by aging populations, highly regulated markets, and inflexible, out-of-control costs. America's mostly-self-made magnates, the likes of Elon Musk, Bill Gates, and Warren Buffett, are also far more likable and seemingly more human than Europe's stereotypical caste of aristocratic families and shadowy oligarchs.

On the flip side, the striking upward mobility of rags-to-riches icons such as Steve Jobs or Oprah Winfrey tends to be an exception, not a rule. Many scholars point out that parents' incomes are highly predictive of the incomes of their children - and that in the US, this effect is more pronounced than in some of the European states. Such studies can be misleading, because in less unequal EU societies, moving to a higher income quantile may confer no substantial change in the quality of life - but ultimately, there is no denying that people who are born into poor families will usually remain poor for the rest of their lives. And with the contemporary trends in outsourcing and industrial automation, the opportunities for unskilled blue collar labor - once a key stepping stone in the story of the American Dream - are shrinking fast.

In contrast with the United States, many in Europe reject Milton Friedman's views on consensual capitalism and hold that it is a basic human right to be able to live a good life or to have an honest and respectable job. This starts with the labor law: in much of the United States, firing an employee can happen in the blink of an eye, for almost any reason - or without giving a reason at all. In Europe, the employer will need a just cause and will go through a lengthy severance period; depending on the circumstances, the company may be also barred from hiring another person to do the same job. Employment benefits follow the same pattern; in the US, paid leave is largely up to employers to decide, with skilled workers being lured with packages that would make Europeans jealous - but many unskilled laborers, especially in the retail and restaurant business, getting the short end of that stick.

In Europe, enabling the disadvantaged to contribute to the society and to live fulfilling lives is also a matter of government policy, often implemented through sweeping wealth redistribution - or through public-sector employment orchestrated at a scale that rivals that of quasi-communist China and other authoritarian countries (for example, in France and Greece, about one in three jobs is run by the state). Such efforts tend to be more successful in small and wealthy Scandinavian countries, where the society can be engineered with more finesse. In many other parts of the continent, systemic, long-term poverty is still rampant, with the government being able to do little more than providing people with a lifetime of subsidized basic sustenance and squalor living conditions. Ultimately, when it comes to combating multi-generational poverty, financial aid administered by sprawling national bureaucracies is not always a cure-all.

Perhaps interestingly, the benefits that are most frequently described as inadequate in the US are not as strikingly different from what one would be entitled to in the EU. For example, the minimal wage is quite comparable; it is around $2.60 per hour in Poland, about $3.70 in Greece, some $9.30 in Germany, and in the ballpark of $10.00 in the UK. In the US, the national average hovers somewhere around $8.00, with some of the states with higher costs of living on track to raise it to $10.00 within a year or two; in fact, some progressive municipalities are aiming for $15.

Unemployment and retirement benefits, although certainly not lavish, also follow the same pattern. When it comes to unemployment in particular, in the States, workers are entitled to about half of their previous salary for up to six months - although that period has been routinely extended in times of economic calamity. In Europe, the figures are roughly comparable, with payments in the ballpark of 50-70% of your previous salary, typically extending for somewhere between 6 and 12 months. The main difference is that the upper limit for monthly benefits tends to be significantly lower in the US than in Europe, often putting far greater strain on single-income families in places with high cost of living. In France, the ceiling seems to be around $8,000 a month; in the US, you will probably see no more than $2,000.

Another overlooked dimension of this debate is the unique tradition of charitable giving in the United States - a phenomenon that allows private charities to provide extensive assistance to people in need. Such giving happens on a staggering scale, with citizens donating more than $350 billion a year - more than twenty times the amount donated in the UK. The bulk of that money goes to organization that provide food, shelter, and counseling to the poor. It is an interesting model, with its own share of benefits and trade-offs: private charities operate on a more local scale and have a far stronger incentive to spend money wisely and provide meaningful aid. On the flip side, their reach is not as universal - and the benefits are not guaranteed.

Many of the conservatives who preach the virtues of the American Dream vastly underestimate the pervasive and lasting consequences of being born into poverty or falling onto hard times; they also underestimate the role that unearned privilege and luck played in their own lives. The progressives often do no better, seeing European social democracies as a flawless role model, even in the midst of the enduring sovereign debt crisis in the eurozone; breathlessly reciting knock-off Marxist slogans; and portraying the rich as Mr. Burns-esque villains of unfathomable wealth, motivated by just two goals: to exploit the working class and to avoid paying taxes at any cost. In the end, helping the disadvantaged is a moral imperative - but many ideas sound better on a banner than when implemented as a government policy.

For the next and final article in the series, click here.


  1. No comment on vacation time?

    It was the single biggest reason I never emigrated to the US.

    1. It's partly what I mean when talking about "paid leave". Basically, if you're in a well-paid, skilled profession, you can probably count on paid leave (vacation time, maternity / paternity leave, etc) that are somewhat comparable to Europe, although vary from one employer to another. If you're in a low-paid job, you are lucky if they offer you unpaid leave.

  2. Europe's caste of aristocratic families? Are you aware that 10 richest Americans have only 6 surnames?

    1. It's a controversial topic and there's a lot of people who do see the American rich in a very sinister light. I always found some flavors of European wealth to be more entrenched and institutionalized than the ever-changing parade of US billionaires - but as with several other emotionally charged topics touched on in the series, it's difficult to converge on a single view.

  3. "In the States, workers are entitled to about half of their previous salary for up to six months"

    The last time I was on unemployment (back in 2001) it was not as generous as that. I was earning $4-5k a month but my unemployement benefit was around $700/month. Not even enough to pay rent in the Bay Area.

    1. IIRC, there's a state-specific upper limit on monthly unemployment benefits, so high earners or people living in ridiculously expensive places (SF Bay Area) are usually getting a bad deal. To add insult to injury, in California, that limit is on the low side.

      In Europe, I think it varies; some countries have fixed rates, many others have upper limits, although they are often more generous.

    2. I added a note to the blog post to reflect that.