Friday, April 1, 2011

"Thinking along the Right Lines": Creating Jobs through Longer Workweeks and Later Retirement

ABSTRACT: One of the most frequently derided fallacies in economics is the idea that there is a limited amount of work that can be done. This implicit assumption, known to economists as the lump-of-labor fallacy, fosters "the illusion that shorter hours will reduce unemployment." Curiously, though, in spite of perennial reference to the fallacy, there have been few attempts at articulating a counter-lump-of-labor job creation strategy. If it is an illusion that shorter hours or early retirement can reduce unemployment, why not create jobs by extending the workweek and prolonging working life?


This proposal takes its inspiration from a little known paper by William H. Hutt, "Full Employment and the Future of Industry," published at the close of World War II. It is proposed here to relax the overtime provision of the Fair Labor Standards Act to its pre-1940 level of 44 hours a week, to postpone the Social Security retirement eligibility age to 70 years, to expand the quota of H-1B work visas and to lift the ban on the employment of children under the age of 14. Those first three items are estimated to stimulate the direct creation of 4,249,000 jobs over two years and add $936 billion to GDP. The cost of implementing the policy would be minimal. An even broader expansion of employment and output may be anticipated when the philosophy behind the specific legislative enactments becomes clear to CEOs and union leaders.
Thinking Along the Right Lines

See also: "April Fools"

4 comments:

  1. I haven't had time to read all 15 pages, and I'll be out for the rest of the day, so it wil have to wait.

    But what you are outlines at the beginning seems to be very close to what rethug legislators are actually proposing.

    http://krugman.blogs.nytimes.com/2011/03/29/contraction-is-contractionary/

    So - are we screwed, or what?!?

    JzB

    ReplyDelete
  2. Jazzbumpa: Isn't "being screwed" a definitional component of capitalism for the lower 98%?
    --ml

    ReplyDelete
  3. Martin -

    It's a result, but not part of the definition.

    What makes it even worse today is that instead of capitalism, we have out of control corporatism.
    JzB

    ReplyDelete