Where Did the 40 Hour Work Week Go?

good questionThere was a glaring omission in Heather Brown’s recent Good Question story on WCCO meant to answer the question “What Happened To The 9-5 Job?”  In fact, one might argue that the story missed the mark entirely.  The story didn’t answer the question why as much as it explained how.  Let’s take a look.

Guest expert, Ernest Owens, a management professor at the University of St. Thomas School of Business, calls these longer hours a trade off. “‘It depends on what you want for a standard of living,’ Owens said. ‘Do you want these things? Do you want comfort? Do you want these trips?'”

Owens has this wrong.  While there certainly has been an increase in consumer spending, it certainly does not reflect higher incomes resulting from more work.  In fact, in real dollars, worker compensation has remained flat — and even declined for many workers — despite the extra hours and second jobs.  And let’s not forget, since the 1970s, most families have relied on dual incomes.  Professor Owens tells us this is what we need to do if we want comfort.

heather-brown

Heather Brown

Unfortunately, part of Professor Owens’s explanation is the correct answer.  We work more because we have to work more to have the comfort we expect.

Of course the Good Question story doesn’t end there; that’s an unsatisfactory answer.  Heather Brown tries to answer it, putting the answer into a context of lifestyle and technology.  It is about busy schedules and climbing ladders.  It is about results and getting work done rather than fixed schedules.  But ultimately it is about necessity.  Most people work more because they have to work more.

So what’s happened?  Heather Brown’s story hints at it.  She tells us “the 8 hour work day began in the late 1800s as a negotiation between managers, owners, workers and unions.”  And this is absolutely true, although she makes it sound like the three parties were drawn to this agreement mutually.

The 8 hour work day was the product of negotiations that relied on strong organized labor, i.e., unions.  Nearly all labor reforms result from strong organized labor.  There are exceptions to this.  Highly specialized talent and worker shortages can put the worker in the seller’s position, for example, but this isn’t common.  And even among highly specialized workers — professional football players, for example, or airline pilots — unions have played a significant role in building their fortunes and security.  Labor Share of GDP

Heather Brown was incorrect to suggest that these negotiated labor relations began to change after World War II, unless she means by that the late 1970s and 1980s which were indeed after WWII.  In fact the highest labor participation rate in unions occurred around 1960 with almost 35% of workers in unions.  This also marks a period of great prosperity in the United States for workers of all ranks.  Union and non-union workers alike did relatively well in the years of strong unions.

These are all important facts to keep in mind when answering the question why today’s work week averages 47 hours and not 40, 60 or more if you’re salaried.

The glaring omission in Heather’s story is the role of organized labor.  The role of organized labor has been largely eliminated from the American labor market.  While giving unions a some credit for the 8 hour work day early in her story, Heather Brown doesn’t make the connection with the role of organized labor today.

The Great Recession in particular created an even more desperate labor market, one which favors employers and managers, which further put a lid on worker rights.  As a matter of public policy, the rights of workers to organize has been attacked in recent years.  It shouldn’t surprise anyone that workers who do have jobs work harder to keep them even if that means little, if anything, in the way of additional compensation for their work.

Ernest Owens

Dr. Ernest Owens

This affects workers throughout the economy whether they work in industries traditionally represented by organized labor or not.  The lack of well-paying jobs, benefits, and long-term security compels people to work within more restricted opportunities.

Moreover, when workers compete individually, their options are restricted.  The power of one against a large employee doesn’t stand a chance.  Indeed when labor is nothing more than a commodity, the ability of one worker to compete with another is largely a matter of factors beyond a worker’s control.  This affects  low-paying wage workers to higher paying salaried and skilled workers.

Professor Owens suggests that we work more hours because we can.  And again he is right, but the context is wrong.  Certainly computers and email and all that go with it have made us both more connected and more flexible, but it has also made us more available.  It explains how we work the extra hours — checking email before leaving home in the morning or while out with the family in the evening — but it doesn’t give a satisfactory answer for why other than the simple answer that we have to do it.

US_GDP_per_capita_vs_median_household_incomeAll this technology and extra time has made the American worker more productive.  Worker productivity in the United States is at record highs.  Correlating with that productivity are corporate profits and cash reserves that are also at record highs.  Worker compensation, on the other hand, for most workers is flat or even declining in real dollars.  People work more — over 40 hours a week — and get paid no more for it, often less.  They do it because they have to do it.  Technology is just a means to that end.  It is the “how”, not the “why.”

(Remember those Utopian stories about technology meaning we would work less and have more leisure?)

There is an ongoing argument about whether the economy can support higher wages and the answer generally is yes, it can.  (Unless you’re an employer answering the question.)  Again, the American worker is producing greater wealth than ever before, however their share of that wealth is less today than it was more than 60 years ago.

While we resist making comparisons with our economic peers, it doesn’t hurt to see how other countries compare.  Workers in most other developed countries work less hours, enjoy a greater share of the wealth they produce, and have a higher quality of living.  The United States still dominates the world economy, but the profits of our economic power has not “trickled down” as once promised.

Reduced labor compensation — which includes the longer work week (NB working more hours for the same pay equals a reduction in compensation) — is a measure of trickle down failure.  Workers put in more hours because they have to put in more hours. In the past, an increase in overall productivity meant an increase in overall standard of living, workers included.  That is no longer true and that answers tonight’s good question.

Advertisements

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s