The U.S. is taking small steps toward looking like Sweden and the Netherlands when it comes to the economic safety net. And those aren’t bad places to be, whether you’re an employer or an employee.

A recent report from the National Employment Law Project advocacy group shows many U.S. states are changing their laws on unemployment benefits to qualify for $7 billion in funding included in the stimulus package signed by President Obama earlier this year. Those state modifications amount to expanding the reach of unemployment insurance to cover more low-wage workers as well as other groups including part-time workers.

Over the past four months, 25 states have enacted unemployment insurance reforms that qualify for incentive funding, according to the National Employment Law Project.

In addition, according to the project, 21 states changed their laws to provide “extended benefits” when their unemployment rates reached 6.5 percent, helping about 1 million workers who are exhausting their state and federal benefits.

Apart from expanding the coverage and duration of jobless benefits, the stimulus package boosted weekly payments by $25. U.S. unemployment insurance checks have been paltry: The average weekly benefit in 2008 was $297, or just 35 percent of the average weekly wage.

Those payments have been part of a skimpy safety net overall in the United States. Other developed nations have had much more generous jobless benefits, with northern European countries such as Denmark, Sweden and the Netherlands among those providing the most assistance.

Such social welfare policies typically carry the price tag of higher taxes, either on corporations or individuals. Higher tax levels also have been accused of slowing economic growth. In the first quarter, both Sweden and the Netherlands saw their economies contract at a faster pace year-over-year than the U.S. economy did.

But those two nations outperformed the U.S. in another key measure of business strength earlier this year. Public relations firm Edelman’s annual trust survey found that while trust in business plunged in the U.S. and slipped worldwide last year, it rose in both the Netherlands and Sweden. (It also rose in fast-developing Brazil and China.) Just 38 percent of U.S. respondents to the survey said they trust business to do what is right, compared with 62 percent of respondents from the Netherlands and 51 percent of respondents from Sweden.

In addition, the survey found that the most trusted global companies are headquartered in Sweden. The Netherlands ranked fifth on that list, behind Germany, Canada and the U.K.

Given how important trust is among an organization’s employees and in the broader consumer population, those northern European countries and the businesses located there are well-positioned to climb out of the current global recession.

I would argue that part of the business trust in Sweden and the Netherlands has to do with the fact that citizens in those countries have a significant degree of economic security. If a firm goes out of business or someone loses a job, the ability to survive and provide for a family isn’t nearly as jeopardized as it is in the United States. In America, getting the ax hurts a lot more. And that pain likely translates into anger at companies.

If the U.S. is looking for guidance out of the current trouble, it could do worse than to follow Sweden and the Netherlands.

A recent essay in the liberal-left magazine The Nation makes a bold proposal: The federal government should create a grand strategy to get nearly every American a job. Does such a full-employment policy deserve the backing of businesses?

This idea merits at least some consideration from the corporate world. After all, one of its authors is a former captain of industry—Leo Hindery Jr., who served as CEO of AT&T Broadband.

Hindery’s co-author is Donald Riegle Jr., a former U.S. senator from Michigan.

(Riegle was one of the Keating Five, faulted for his interference in a probe of failed thrift Lincoln Savings and Loan Association. He has since joined Hindery at the Smart Globalization Initiative, part of the New America Foundation think tank.)

Hindery and Riegle say the nation’s economic priority ought to be creating 24 million jobs so virtually every American interested in working can find employment and the economy can reverse course.

“The right way to earn our way back to long-term prosperity is through stimulus efforts that will help develop, broadly deploy, fairly compensate and, especially, fully employ our human capital, which will always be our greatest source of national wealth,” they write.

Part of their argument is that the official unemployment rate dramatically understates the extent of a job shortage in the U.S. While the official unemployment rate was 8.5 percent in March, a broader Department of Labor measurement of labor “underutilization” indicates the situation is nearly twice as bad. The so-called “U-6” figure adds in people who want full-time work but had to settle for a part-time schedule and “marginally attached workers,” who aren’t working or looking for work but who want and are available for a job and have looked for work in the recent past. The U-6 rate was 15.6 percent in March. 

Pointing to the country’s still-skimpy safety net and Hooverville-like tent cities emerging around the nation, Hindery and Riegle say the billions being funneled into the financial sector bailout and first stimulus package aren’t up to the task of getting Americans back to work.

A second stimulus package should focus on employment, they argue. Among their specific proposals are several that business leaders—especially the leaders of multinational firms—are unlikely to like. These include passing the Employee Free Choice Act designed to make unionization easier and a strong “Buy American” requirement for federal government purchases.

On the other hand, business leaders probably can appreciate the authors’ call for tax incentives for business investments in such things as new laboratories, innovative products and manufacturing equipment. Also appealing to the business crowd should be Hindery and Riegle’s push for more public investment in infrastructure, improved trade adjustment assistance, additional aid to state and local governments and expanded job training for young people in skills such as advanced welding and computerized machine tool operation.

They also say the government ought to help create millions of jobs for American adults, in part through a new program that emulates the best of New Deal initiatives—the Works Progress Administration and Tennessee Valley Authority.

“None of the actions we call for will be easy to accomplish, nor will they come cheap. Yet we need all of them so that American workers can be fully employed in jobs that pay fair wages. We need them to rebuild, and sustain, the great commercial engines that fostered the broad American middle class of the past century and underpinned the global prosperity of the past quarter-century. We need them to bring an end to America’s sorry status as the world’s largest debtor nation. And we need them for our national and economic security.”

Yes, Hindery and Riegle’s “Jobs Solution” runs the risk of bureaucratic waste and higher corporate taxes in the long term. And companies historically have feared full employment for the bargaining clout it gives workers. But businesses rely on healthy consumers, who ultimately are just workers wearing a different hat. Given the dead-end nature of growth fueled by consumer debt, decent jobs for average Americans is the way forward for both workers and firms. A full-employment economy, in other words, may be the best solution out there for employers.

Any more Leo Hinderys in the house?

An economic stimulus idea now gaining currency is a natural fit for the HR community.

The proposal is a payroll tax holiday, and it could be a win-win-win for workers, employers and the concept of a sustainable economy.

A payroll tax holiday would involve suspending for a year or two the federal taxes now levied to pay for Social Security and Medicare. These taxes are tied to wages, hit both employers and employees, and amount to more than 15 percent of much of the wages paid in America.

Because it’s a tax break, a payroll tax holiday appeals to Republicans. And as a means to put money in the hands of average workers, it appeals to Democrats.

Indeed, this approach to goosing the economy has found support among both camps. Senate Republican leader Mitch McConnell and the former Labor Secretary in the Clinton administration Robert Reich both have endorsed some version of the idea.

Recently, the lead commentary piece in The New Yorker magazine backed a payroll tax holiday, another signal that the notion is gaining momentum.

Fatter paychecks would put a smile on employees’ faces.

Pausing payroll taxes makes sense for employers, too. Businesses would have a lighter tax load and a happier workforce, which would get a de facto raise even amid salary cuts and pay freezes. Plus, workers are likely to spend more, stimulating the demand that companies desperately need these days.

Of course, there’s a catch to putting the kibosh on payroll taxes. It jeopardizes the funding for Social Security and Medicare.

But as Hendrik Hertzberg writes in The New Yorker, those programs are too well-entrenched to be imperiled by a payroll tax holiday. In fact, he calls for eliminating the payroll tax altogether and replacing it with taxes on things we as a society want to get away from, like pollution, oil imports and excessive consumption.

“This wouldn’t be just a tax adjustment,” Hertzberg writes. “It would be an environmental program, an anti-global-warming program, a youth-employment (and anti-crime) program, and an energy program.”

Advocacy group Get America Working! argues that shifting from payroll taxes to equivalent taxes on materials, energy and land ultimately “would create tens of millions of jobs, help the environment, and in all likelihood lead to a net tax reduction.”

Radically changing the tax structure is an ambitious goal. But as Hertzberg suggests, the economic crisis at hand opens the door to dramatic changes like eliminating what is essentially a tax on work.

HR folks could be among those saying this is change we can believe in.

President-elect Barack Obama and other political leaders have talked about taking swift action to get the economy back on course and aid struggling Americans. But missing from the debate is close attention to the skimpy, counter-productive U.S. safety net, even as hundreds of thousands of Americans are tumbling toward it.

The scale of that collective fall was made clear last week: Nearly a quarter-million payroll jobs were slashed in October, on top of some 284,000 jobs lost in September. The unemployment rate jumped from 6.1 percent in September to 6.5 percent in October. On Monday, a report from research group the Conference Board indicated employers will continue to “aggressively reduce payrolls well into 2009.”

On his campaign Web site, Obama calls for updating the federal Trade Adjustment Assistance system, which gives some workers dislocated by trade such benefits as income support and a health coverage tax credit. Obama would take steps such as extending TAA to service industries and creating flexible education accounts to help workers retrain.

These are worthy steps. But Obama’s plan appears to overlook the many folks who lose their job for reasons unrelated to global trade. Construction employment, for example, fell by 49,000 in October.

The push by Democrats in Congress to extend unemployment insurance benefits also is promising but only a partial solution.

In particular, U.S. political leaders seem oblivious to how paltry unemployment checks are. In California, for example, unemployment payments top out at $450 a week. That’s about half the income of someone earning annual wages of $46,700. It’s hard to get by on half your income. And in a way, the cap is tougher for someone used to making roughly $70,000—say a software programmer or accountant—who has to make ends meet with a mere third of their wages.

In the past decade, Americans have become more open to government helping the needy. But unemployment benefits in the U.S. still reflect a philosophy of rugged individualism, and they are among the most miserly in the developed world.

Apart from stingy payments, there are gaps in unemployment insurance coverage. And the federal law requiring firms to give advance notice of mass layoffs and plant closings is weak.

Obama is right to think about large-bore measures like a major public investment in a “clean energy” economy. But it would be a serious oversight to ignore America’s flimsy safety net.

The combination of sudden job losses and scant unemployment payments is sure to worsen the U.S. economy. People in such circumstances could well lose their homes, exacerbating the housing market collapse.

They would have little money to spend to boost the economy. And the stories of their hardship—retold through family, friends and the media—would further shake consumer confidence.

A more generous, taut safety net could help restore that confidence, underpin personal spending and lead to calmer, more productive employees.

Weaving a stronger net also would be humane and embody the sense of national solidarity that Obama has spoken about so eloquently.

If change is coming to America, shouldn’t it come to our economic safety net too?

The Bush administration has sought to help out workers and businesses in these trying times by launching a new Web site with a number of resources. But www.EconomicRecovery.gov has shortcomings. And they call into question yet again the administration’s decision last year to shut down the public job board America’s Job Bank.

The new site offers assistance on topics including unemployment insurance, local job openings and retirement security information.

“We want to make information easily accessible and quickly available to American workers affected by the economic downturn,” Secretary of Labor Elaine Chao said in a statement.

Kudos to Chao and other officials for trying to create a helping hub for workers, who confront decimated 401(k) retirement accounts, ever-clearer signs of a recession and an unemployment rate that climbed 1.4 percentage points from September 2007 to September 2008, to 6.1 percent.

But key information is not necessarily “easily accessible” or “quickly available” on the new site. Finding local jobs, for example, can be byzantine and slow. Trying to look up accounting jobs in the New Jersey area, for example, can take you seven clicks or more. And two clicks in, you see a list of resources for New Jersey that doesn’t even directly mention job listings: You have to guess that either the “New Jersey State Gateway” or “New Jersey Department of Labor” sites will get you to the jobs.

And what if you’re willing to relocate across the country to find a job? You can eventually get to private-sector national job banks like JOBcentral, National Labor Exchange or Monster.com from the EconomicRecovery.gov site. But it’s not immediately clear how. And if you click on “One-Stop Career Center,” it still takes four more clicks to get to JOBcentral.

It all would be much simpler if America’s Job Bank were still around. Dating to 1995, the site was one of first job boards on the Internet and remained one of the biggest, with about 2.2 million jobs, when it was closed in mid-2007. It was national in scale, allowing people to find jobs locally and across the country.

Chao’s department said America’s Job Bank had outdated technology and duplicated what was already available in the private sector. But businesses and state officials appreciated the site, which offered free job listings to employers. It contained many postings for lower-skilled jobs. And other evidence, including internal Labor Department research, argued for its preservation.

At a time when thousands of U.S. workers are losing jobs and many more face that possibility, the absence of America’s Job Bank is all the more confounding. If it were around today, would it be helping Americans better respond to the economic challenges at hand? Quite possibly.

It seems a pro-privatization ideology may have helped kill America’s Job Bank. Ironically, the Bush administration recently did a philosophical about-face on free markets, bailing out huge firms in response to the financial industry meltdown.

That change of heart was too late for America’s Job Bank, leaving the country to wonder once again if it was shortchanged.