With its new employment contract law, is China out of its mind—or on to something?

The new law, passed in June, promises to provide a degree of job stability for Chinese workers and strengthen their hand against management.

Business leaders criticized the law while it was in draft stage, arguing that it threatened China’s economic growth.

Chinese government leaders took some of those concerns into account, according to unofficial translations of the law. Still, the new decree gives employees—directly or through representatives—a say over work rules such as compensation, work hours and training. It specifies limited conditions under which employees can be terminated, such as serious rule-breaking. And when mass layoffs occur, the law directs employers to prioritize retaining sole breadwinners who need to provide for a minor or elderly person.

It also contains measures to help employees cope with job loss. Thirty days’ written notice, or one month’s wage, is required for terminations in a variety of situations. And severance pay regulations are spelled out, including the general rule that workers receive one month’s wage for each full year worked.

Whether or not the edict is meaningful depends to a great extent on enforcement, which historically has been spotty in China. But there’s reason to think the new law will have sharp teeth. It comes in the context of China’s top leaders stressing the importance of balancing economic growth with social harmony. And China just experienced a scandal over alleged slave-like conditions at brick kilns.

Despite the initial reservations, some U.S. business leaders in China have applauded the final version of the contract law.

In fact, there may be a lesson in China’s new law for U.S. business and political leaders back home. That is, shouldn’t America do more to strengthen its economic safety net, as China has just done?

It’s tricky to compare the U.S. and Chinese political systems. Even with some transparency and public input regarding the new contract law, China’s authoritarian government is freer to issue decrees without the messiness of the democratic process. What’s more, workers in China are often in much worse situations than their U.S. counterparts.

Still, there’s a common thread of economic insecurity in both countries. The “iron rice bowl” of steady employment has cracked in the course of China’s experiment with capitalism over the past three decades or so. While the country’s market reforms have reduced poverty and created many job opportunities, China’s working-class masses face the prospect of factory closings amid a fiercely competitive economy and heightened concerns about tainted products. Research has found that inadequate layoff compensation is a major cause of labor disputes in China.

In the U.S., meanwhile, studies point to high rates of job loss for Americans even during times of economic expansion, greater volatility of family incomes and increased numbers of Americans without health insurance. U.S. politicians have recently been talking more about rising risks for American workers and their families. But business leaders for the most part have remained silent on the question, and little has been done about a national safety net that leading economists consider too flimsy.

China’s new law may go too far. For example, its provisions related to job security could hamstring companies when it comes to shedding workers—a key factor when companies decide whether to invest in a venture. A better option might be a system of employment security through a combination of unemployment insurance, training and, when needed, government-sponsored jobs.

But like or dislike the new law, Chinese leaders deserve credit for tackling a problem that U.S. leaders are tiptoeing around.