Sunday, March 8, 2015

Fortune and the Four-day Workweek

What economists of the 1950s and 60s disparaged with the "lump-of-labor" hand, they typically celebrated with the "inevitable", "productivity gains", "income-leisure choice" hand. Based on past trends, the four-day week could be expected to arrive by 1980 -- presumably without legislative or collective bargaining "coercion." By now, 2015, workers would be enjoying the three-day, 21-hour week or, alternatively, three-month annual vacations. Didn't happen. But what's odd is how little thought is given to why it didn't happen and to what happened instead. The dots do connect. Rising inequality, financialization, economic instability and precarious employment -- all these cannot be entirely unrelated to the euthanasia of union arguments for shorter hours.

The Four-day week: How soon?

Daniel Seligman
Fortune -- July 1954

How far off is the four-day week? The standard five-day week has been lodged in American life for only a decade or so. Yet for some reason it is widely regarded today as something natural and immutable. Recently, Fortune mailed a questionnaire about the feasibility of a four-day week to fifty large industrial firms (more than 30,000 employees) and fifty medium-sized companies (300 to 3,000 employees). If there is a single U. S. company whose spokesmen are willing to affirm that a four-day week is possible and desirable in the fairly near future, it has not been found.

The fact that most American businessmen regard any future four-day week with misgivings and even hostility does not, of course, mean it is never coming. A quarter of a century ago there was a great debate about the five-day week. Speaking for the affirmative, but almost alone among businessmen, was Henry Ford. He had introduced the five-day week, he said shortly after the event, “because without leisure the working men— who are the largest buyers in the country—cannot have the time to cultivate a higher standard of living and, therefore, to increase their purchasing power.” Virtually all the businessmen who addressed themselves to the subject found differently. In general, they had three major objections to the five-day week: the cost would be prohibitive; the workers would not know what to do with their leisure time; and there was Biblical sanction for the six-day week.

An important reason for the cautiously noncommittal attitude of business men today is that their employees have been unionized. To declare that a four-day week might soon be feasible would be to give, gratis, a large bargaining counter to the union. On the other hand, to suggest that employees cannot look for any more leisure time would be inept public relations.

Labor leaders also appear to he preoccupied elsewhere. It is true that both the major labor federations have clearly defined ideas about affording more leisure for the American worker. But these do not include the four-day week—yet.

If both labor and management are uninterested in the four-day week, what good reasons are there for talking about it? Briefly, two kinds of reasons might be adduced: The four day week would be desirable, both for business and employees; and it would almost certainly be attainable.

The major reason for thinking a four-day week feasible is, of course, the continually increasing productivity of U. S. industry. Productivity—i.e., output per man-hour—has been rising by 2 or 3 per cent a year, taking the economy as a whole, for more than fifty years now. And, barring a war or a prolonged depression, Americans clearly have some further benefits in store. The question is whether they will take these benefits in the form of increased income, increased leisure time, or in a combination of both.

A calculation made by Fortune for the years since 1929 suggests that in the past quarter-century U. S. workers have been taking about 60 per cent of the productivity pie in the form of income, about 40 per cent as leisure. Assuming that the four-day week for non-agricultural employees will be attained when the total work week is in the vicinity of 32 hours, that productivity continues to increase at an average of 2 or 3 per cent a year, and that something on the order of the recent 60-40 ratio for income and leisure continues in effect, the 32-hour week should be spread throughout the whole non-farm economy in about 25 years.

If the four-day week seemed sufficiently appealing, of course, it could be achieved much sooner. A lot of Americans might, in other words, he willing to work nine hours a day. That, theoretically, would enable them to enjoy the four-day week when total hours of work were down to 36. If they made such a decision—if they traded the eight-hour day for the three-day weekend—then the great event would he scheduled to arrive, not around 1980, but in the 1960’s.

A large number of business men maintain that the four-day week has no applicability to their own operations. The following problems are suggestive of the wide variety of “insurmountable” obstacles that would he encountered:
Manufacturing companies with three-shift operations would run into formidable scheduling difficulties if the nine-hour day were introduced.
Companies whose total hours of operation could not be reduced would have to hire more employees.
Retailing provides a peculiarly difficult situation. To remain open six days and give their employees a four-day week, department stores would have to hire 25 per cent more workers than they now employ. 
A final question must be considered. Do workers really want more leisure? Many employers are still convinced they do not. Now there is no doubt that, given more time off, some workers might drink too much, or beat their wives, or go insane watching daytime television. Others might work themselves to death on second jobs. But the $30-billion leisure market, the remarkable emergence, almost from nowhere, of a huge, new do-it-yourself market, and even the familiar Sunday-afternoon sight of cars crawling along bumper to bumper, suggest strongly that most American workers have a pretty good idea of what to do with their time off.

Meanwhile, in the income-leisure choice for the years ahead, there will be one strong pressure for leisure: The workers who have been energetically pushing their way into the middle-income class have, naturally, become increasingly preoccupied with federal tax demands. "If we get more dough," said one AFL man recently, "the government can take back part of it. But they haven’t yet figured out a way to tax your day off."

1 comment:

Jacob Richter said...

I’ve just read key parts or Robert LaJeunesse’s Work Time Regulation, and this book reminds me of one of your works on working hours. That’s what’s inspiring this comment.

I’ll start with an unusual critique of Job-and-Income Guarantee and Employer of Last Resort by itself, unusual coming from a usual supporter. These facilitate the commodification of work previously outside the labour market, like household work and eldercare, so by definition aggregate labour time is increased!

The two job sharing policies, meanwhile, may have quite a radical impact. However, such impact is only at first. It doesn’t have the protracted but more systemic impact that, say, the more successful anti-smoking campaigns and regulations have had – essentially limiting smoking to individual residences. This same problem is shared by the most optimistic and sympathetic interpretation of the Trotskyist sacred cow known as the “sliding scale of hours” (i.e., assuming no upward adjustments to working hours), the sloganeering of which is put forward for reasons other than reducing aggregate, social labour-time.

A few years ago I wrote about behavioural political economy and economy-wide indicative planning, but I made only one scant comment about working hours. After this re-acquaintance with working hours, I think there’s a better approach, one that may not look as radical at first, but one that is more protracted and systemic.

We all know about stagnant or depressed real wages, if not about stagnant or depressed real disposable income, over the past three-and-a-half decades or so. However, based on the references cited above, I think there may be one justifiable anchor for the policy-based maintenance of stagnant (not depressed) real discretionary income: slow but long-term decline in working hours.

Each increment of such decline could be made on an annual basis and tied for the most part to inflation, some cost of living measure, or some productivity per capita measure. Unlike a sliding scale, however, there would be no upward adjustments to working hours. Some math is necessary below to show the slow but long-term decline in working hours under such actually radical policy.

Assuming end-of-period compounding calculations, a 1% annual decline in working hours, and a base value of 40 hours:

Year 1 working hours = 39.6000
Year 5 working hours = 38.0396
Year 10 working hours = 36.1753
Year 20 working hours = 32.7163
Year 30 working hours = 29.5880
Year 50 working hours = 24.2002

Assuming end-of-period compounding calculations, a 2% annual decline in working hours, and a base value of 40 hours:

Year 1 working hours = 39.2000
Year 5 working hours = 36.1568
Year 10 working hours = 32.6829
Year 20 working hours = 26.7043
Year 30 working hours = 21.8194
Year 50 working hours = 14.5668

Now that is work time / working hours "regulation," no? Just think of further declines if immediate pressure for a 4-day, 32-hour workweek (without loss of pay or benefits) were to erupt and succeed.