Monday, October 22, 2012

The 15 Hour Work Week

So I’ve been sitting on this a bit, since I had just posted a number of posts on the same theme, mostly from the Skidelsky’s (Skidelskies?). The author of the article,  Australian economist John Quiggin notes the same:

“Since long before I started blogging, I’ve been planning a big article on the prospects for Utopia, starting off from Keynes’ essay Economic Possibilities for our Grandchildren. While I procrastinated, lots of others had the same idea, most recently Robert and Edward Skidelsky. But, with encouragement from Ed Lake at Aeon Magazine, I went ahead anyway and the article has just appeared.”


Here’s the article he refers to: Prospects of a Keynesian Utopia (Aeon Magazine):
Keynes’s discussion of economic possibilities was one of the first to spell out the argument that improvements in living standards, based on a combination of technological progress and capital accumulation, might be expected to continue indefinitely.

He argued that technological progress at a rate of two per cent per year would be sufficient to multiply our productive capacity nearly eightfold in the space of a century. Allowing for a doubling of output per person, that would be consistent with a reduction of working hours to 15 hours a week or even less. This, Keynes thought, would be sufficient to satisfy the ‘old Adam’ in us who needs work in order to be contented.
But we’ve been going in the opposite direction, thanks to trickle-down economics (which he terms "market liberalism"):
In the core ideology of market liberalism, the efficient markets hypothesis is combined with the claim that the best way to achieve prosperity for all is to let the rich get richer. This claim is rarely spelt out explicitly by its advocates, so it is best known by its derisive label, the ‘trickle down’ hypothesis.

Taken together, the efficient markets hypothesis and the trickle down hypothesis lead us in the opposite direction to the one envisaged by Keynes. If these hypotheses are true, the mega-fortunes piled up in speculative financial markets are not merely justified: they are essential to achieve and maintain decent living standards for the rest of us. The investments that generate technological progress will, on this view, only be made if they are guided by financial markets driven by the desire to make unimaginable fortunes.

As long as market liberalism rules, there is no reason to expect progress towards a less money-driven society. The global financial crisis and the subsequent long recession have fatally discredited its ideas. Nevertheless, the reflexes and assumptions developed under market liberalism continue to dominate the thinking of politicians and opinion leaders. In my book, Zombie Economics (2010), I describe how these dead, or rather undead, ideas have risen from their graves to do yet more damage. In particular, after a resurgence of interest in Keynes’s macroeconomic theory, the entrenched interests and ideas of the era of market liberalism have regained control, pushing disastrous policies of ‘austerity’ and yet more structural ‘reform’ on free-market lines. Social democratic parties have failed to put up any serious resistance so far. Popular anger at the crisis has been channelled into right-wing tribalist movements such as the Tea Party in the US and Golden Dawn in Greece.
One consideration I have not seen elsewhere is the fact that Keynes did not take into account the entire world; when he was writing China, India, Brazil, et. al, were not part of the global economy the way they are today. What happens when we look at productivity growth for the entire world, not just "developed" countries?
Once we try to apply Keynes’s reasoning to the world as a whole, it’s clear that the end of scarcity is further away than he supposed. How much further? To be more precise, how much technological progress would be needed for everyone to enjoy the average standard of living of Britain in 1930 (when Keynes was writing) by working only 15 hours a week?
By 1990, 60 years after Keynes’s essay, average income for the world as a whole had just reached Britain’s level in 1930. So, it seems we need to add another 60 years, or two generations, to his timescale. On the other hand, because developing countries are mostly adopting existing technology, the average world growth rate of income per person is around three per cent, not the two per cent proposed by Keynes. In that case, an eightfold increase would take only 70 years. So, taking the entire world into account only defers the estimated end of scarcity by 30 years, to 2060 — within the expected lifetime of my children.

The problem of distribution, sharp enough in the Britain of the ’30s, is far worse for the world as a whole. A billion or so people live in destitution, and billions more are poor by any reasonable standard. Nevertheless, for the first time in history, our productive capacity is such that no one need be poor. In fact, more people are rich, by any reasonable historical standard, than are poor.
He also discusses housework and child-rearing. The final conclusion?
If work was distributed more equally, both between households and over time, we could all be better off. But it seems impossible to achieve this without a substantial reduction in the centrality of market work to the achievement of a good life, and without a substantial reduction in the total hours of work.

The first step would be to go back to the social democratic agenda associated with postwar Keynesianism. Although that agenda has largely been on hold during the decades of market-liberal dominance, the key institutions of the welfare state have remained both popular and resilient, as shown by the wave of popular resistance to cuts imposed in the name of austerity.

Key elements of the social democratic agenda include a guaranteed minimum income, more generous parental leave, and expanded provision of health, education and other social services. The gradual implementation of this agenda would not bring us to the utopia envisaged by Keynes — among other things, those services would require the labour of teachers, doctors, nurses, and other workers. But it would produce a society in which even those who did not work, whether by choice or incapacity, could enjoy a decent, if modest, lifestyle, and where the benefits of technological progress were devoted to improving the quality of life rather than providing more material goods and services. A society with these priorities would allocate most investment according to judgments of social need rather than market signals of price and profit. That in turn would reduce the need for a large and highly rewarded financial sector, even in relation to private investment.
And this is followed by a discussion of the Guaranteed Minimum Income, which we have also discussed here. I will save the reality of this, or lack thereof, for another day. Quiggin also does not take into account our energy or population situations; those are beyond the scope of the article.

So since this essay was published, I’ve run across two almost staggeringly stupid responses. I almost didn’t want to include this one, from Forbes, because it is so staggeringly idiotic. But what the heck, it shows just how ridiculous the arguments against this are getting. His argument, and I am not making this up, is that people would spend every single minute of their leisure time vegging out on the sofa watching the boob tube. This would soon lead to an obesity crisis, causing an expansion of the dreaded nanny state to take our chips and Haagen-Dasz away from us. Wow. So keeping us chained to our desks for forty hours a week is preventing an obesity health crisis. And this person is paid to write.

And this one, from Slate writer Matt Yglesias, looks at the precipitous fall in individual working hours and concludes that we actually are approaching the utopia of leisure predicted by Keynes. I’m not sure how the Harvard-educated Yglesias can stick by a position so incredibly stupid and divorced from collective reality, unless the bubble he is in in Manhattan is even worse than I thought. Of course these statistics are actually due to a combination of unemployment, the explosion of temporary/part-time jobs (with the resultant uncertainty and hand-to-mouth lifestyle), and those forced into school for “more training” (and more debt). This exists alongside a reality of never-ending stress and rampant overwork for the small technocratic/elite class thanks to ubiquitous electronic devices (although this is probably overreported –see this). There may be some who are able to work less by choice, but they are certainly a minority. The rising costs of everything don’t help, along with the fact that you don't get health care benefits if you work less than 30-35 hours per week in the U.S. As I commented on the article, by the same logic the decrease in doctor visits by the poorest Americans must mean that they’re getting steadily more healthy.

Ultimately it’s not about grinding away long hours – that doesn’t make anybody rich, nor does it make a society prosperous. It’s all about productivity.
According to the OECD, the rich world's think tank, the average number of hours worked each year by someone employed in the United States is 1,787. In Britain, it's 1,625 hours -- or about 20 fewer working days. In Germany, the engine of Europe's economy, the average employee works just 1,413 hours a year -- that's more than 12 workweeks off. Nobody ever accuses Germans of being lazy; a lot of that is because the European Union mandates four weeks of paid vacation a year. But if you live in the United States, the government guarantees exactly zero paid vacation time. Thanks to the lack of any legal holiday requirement, nearly a quarter of workers get no paid vacation or holidays at all. Japan, the next stingiest among industrial countries, mandates 10 paid days off, with more the longer you have worked.

But doesn't working harder make you richer? It's true that at the individual level there is a link between working hard and being paid more. Nearly two-thirds of high-earning U.S. workers surveyed for the Center for Work-Life Policy clocked more than 50 hours a week, and one-third logged more than 60 hours. At the other end of the income scale, of course, many of those in poverty can't find a job to put in the hours at all. It's also true, however, that in many low-income families, parents are working two jobs just to stay above the poverty line. Poor people are poor because they don't get paid much per hour -- not because they don't work hard enough.

A similar story applies across countries. The United States is more productive than the European Union -- with annual output of around $42,500 per person, about 19 percent higher than Germany and 30 percent higher than France. But not much of that difference is due to working more hours. Take an example from a benighted country in Southern Europe: OECD data suggest that, in 2011, the average Greek who was actually employed worked 2,032 hours that year. The average German worked 30 percent less than that. For all that hard work, however, Greek GDP per hour worked was only $34 -- compared with $55 in Germany. When it comes to relative economic strength, more efficient German production (alongside higher overall employment) completely outweighs those long hours the Greeks put in at the office.

And it's not just Greece. The link between work hours and output is pretty weak in general. In 1974, Britain was gripped by the threat of a coal miners' strike that forced the government to impose a three-day workweek to ensure there was enough electricity to go around. Despite the dramatically reduced number of hours worked, industrial production in those two months fell only 6 percent. In 2000, France cut its 39-hour workweek by four hours, but the country's GDP per capita climbed from $27,396 to $28,520 between 1999 and 2001. After President Nicolas Sarkozy effectively rescinded the 35-hour workweek in 2008, however, France's per capita GDP fell from $30,466 in 2007 to $29,169 in 2009. Clearly, the financial crisis was to blame for that decline, but the point is that working hours didn't do much, if anything, to move the needle in either direction.

So why do Americans fetishize hard work when the link between labor and economic strength is so tenuous? The bottom line is that productivity -- driven by technology and well-functioning markets -- drives wealth far more than hours worked. And very few jobs in developed economies nowadays are classic assembly-line positions, where working 20 percent longer will mechanically produce 20 percent more widgets. Psychology plays a role here too: At least 40 years of studies suggest that people work harder if you limit their time to complete a certain task. In some cases, working too hard can actually reduce output. Long working hours are also associated with ill health, which means lost labor in the long term, as well as higher medical costs for employers and government. A study of hospital interns found that young doctors who worked longer shifts made almost 36 percent more serious mistakes, like giving the wrong dose or the wrong medicine altogether to patients.

Working too hard has societal costs as well. Nearly two decades ago, Harvard University professor Robert Putnam warned that the "social capital" of the United States was decaying as Americans spent less time with family, friends, neighbors, and community organizations and more time "bowling alone." Over the last quarter of the 20th century, Putnam recorded a 58 percent decline in attendance at club meetings and a 43 percent drop in family dinners. He blames television and commuting for much of the decline. But note also that the hyperactive U.S. worker put in over 20 percent more hours at the office than the average French worker in 2011. All that extra parental time at home might be why French kids are so much better behaved -- rather than greater parental neglect, as suggested by the recent U.S. parenting hit Bringing Up Bébé.
Work More, Make More? (Foreign Policy)

Finally, about long hours as synonymous with being a good worker:
Firms that bill by the hour are not alone in emphasizing hours over results. For a study published most recently in 2010, three researchers, led by Kimberly D. Elsbach, a professor at the University of California, Davis, interviewed 39 corporate managers about their perceptions of their employees. The managers viewed employees who were seen at the office during business hours as highly “dependable” and “reliable.” Employees who came in over the weekend or stayed late in the evening were seen as “committed” and “dedicated” to their work.

One manager said: “So this one guy, he’s in the room at every meeting. Lots of times he doesn’t say anything, but he’s there on time and people notice that. He definitely is seen as a hard-working and dependable guy.” Another said: “Working on the weekends makes a very good impression. It sends a signal that you’re contributing to your team and that you’re putting in that extra commitment to get the work done.”

The reactions of these managers are understandable remnants of the industrial age, harking back to the standardized nature of work on an assembly line. But a measurement system based on hours makes no sense for knowledge workers. Their contribution should be measured by the value they create through applying their ideas and skills.

By applying an industrial-age mind-set to 21st-century professionals, many organizations are undermining incentives for workers to be efficient. If employees need to stay late in order to curry favor with the boss, what motivation do they have to get work done during normal business hours? After all, they can put in the requisite “face time” whether they are surfing the Internet or analyzing customer data. It’s no surprise, then, that so many professionals find it easy to procrastinate and hard to stay on a task.

There is an obvious solution here: Instead of counting the hours you work, judge your success by the results you produce. Did you clear a backlog of customer orders? Did you come up with a new idea to solve a tricky problem? Did you write a first draft of an article that is due next week? Clearly, these accomplishments — not the hours that you log — are what ultimately drive your organization’s success.
They Work Long Hours, but What About Results? (New York Times)

On a side note, Aeon Magazine seems to be a fairly new addition to the scene, and it really has some amazing articles.

5 comments:

  1. Why work too hard at getting stuff done in the office, it will be there tomorrow or even next week. Feels like I live at work and visit home, leave home at 7 to get to work for 8. Stuck there during lunch then leave at 5, getting home at 6. Eat dinner, check some blogs, then it's off to bed around 9pm too tired to exercise or go out to see people. Health is deteriorating, stressed, anxious, and no social outlet except for fake work friends. I'd love to work part time and look after my health, work on self development but can't too that. Too tired from working all day everyday. I only need about half my income but switching to part time work would pay half as much per hour. Need to stay at the full time job for health benefits, a lot of folks stay at their jobs just for health coverage.

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  2. Health coverage/insurance should not be linked to employment at all; it should be universal on a national scale -- and not for profit! Why are right-wingers so against this? It would be a huge gift for companies large and small.
    If you can vigorously save half your income, Dave, you can leave the full-time workforce in a decade or so: check out the Mr. Money Mustache blog (it's funny, too).
    I observed, years ago, at the New York Hall of Science, and at several schools, that the support employees would goof off and talk all day and get to work when overtime kicked in. Not that working overtime for free is any good, but just being present and logging time are not the same thing as producing results.

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  3. Dave, that's my philosophy too. If I have to be there 40 hours, I'm going to parcel out the work to take up that time, rather than getting it done as efficiently as I can. That's why the NYT article (which I surreptitiously posted at work) hit a cord - I am billed out by the hour. So our clients are ultimately the ones getting screwed. How is that "efficient." Since I'm now licensed, I don't get overtime, so any additional time is free labor. I thought we abolished that some time ago. Studies have shown that work expands to the time allotted to it, and that workers with more time off are more efficient. too bed we're hamstrung by the Calvinist fetishization of overwork. The sad thing is that it's so damn unnecessary. theoretically this should be the golden age of leisure with the peak of fossil fuels and ubiquitous microchip computing.

    As you would expect, my ultra right-wing principal sees brutal overwork as the sign of a good employee. Since I realized I had no chance of advancement in such a political environment, I stopped doing that. I do come in extra against my better judgement if I truly do have extra work to do and a looming deadline.

    The Mr. Mustard blog is good, as is Early Retirement Extreme. I'm lucky in that I live close to work. I feel for you. At least you know you have a lot of company, and some have it even worse. Take care of yourself. I truly beleive there's always a solution if you look hard enough.

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  4. About that health care thing, I believe employers know that it's a lash to keep employees docile, and they are willing to pay the premium, which is truly sick when you think about it. But then we're a sick society. As long as profits are made, who cares who is suffering. That was also the philosophy behind the slave trade.

    I remember a story told by Louis Fortis, the publisher of our local newsweekly. He was serving on some government commission studying ways to decrease healthcare costs. Of course, statewide socialist medicine was by far the best answer. Here's the thing - even when he showed CEO's of major corporations how much money they would save, they refused to even entertain the notion. "But you would save all that money." Fortis told the CEO. The CEO would have none of it, because it was "socialism." He would rather lose money hand over fist and continue to be gouged to prevent socialism from taking root. This is probably widespread.

    In other words, these bottom-line oriented businessmen were willing to go bankrupt before signing on to anything they perceived as "socialist." You've got to wonder at the judgment of these societal "decision makers." There was something that meant even more to them than making money - ideology, which is why I so often compare them to their counterparts in the Soviet Union.

    I wonder if these CEO's carried any kind of insurance whatsoever, since by their definition all insurance is socialist. I wonder if they ever called police or firefighters - both government run agencies. Hidebound ideology is crippling us as surely as it did the Soviets. As I like to say, I'm not a socialist or a capitalist - I'm a pragmatist.

    The sad thing is, I believe Obama when he says that his awful health reform plan is the best we can do in this political environment. truly a sad state of affairs. And if Americans elect the venal Wall Street corporate raider as president next month just four years after bailing out Wall Street, well we won't even get that.

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