An interesting article from the Economist. It compares the working hours of Americans to their European counterparts and suggests that if everybody in America worked less, then we could be more productive or have better welfare? I'm skeptical. The article calls to attention the role of government intervention in these decisions. I myself would be highly skeptical of any moves the legislature might make to regulate a work week. I like the idea of employees and employers negotiating a work schedule based on their mutual interests. Read the article and let me know what you think.
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Relax! It's the law
May 19th 2005
From The Economist print edition
Would Americans like to work as little as Europeans? What's stopping them?
MOST people greet the weekend with gratitude. But some economists view it with puzzlement. Why, they wonder, does the bulk of the population rest on the same two days each week? Why does everyone's week end at “the” weekend? From an economic point of view, it would surely be more efficient to stagger days of rest throughout the week. That way, expensive pieces of equipment would not lie idle for two days in seven, and infrastructure would be less congested the other five.
One person impressed by this logic was Josef Stalin, who rationalised the Soviet calendar in 1929. Workers were given every fifth day off, but their shifts were staggered, so that factories could run without interruption. The staggered week appealed rather less to the people who worked it, however. According to Witold Rybcynski's 1991 book about leisure, “Waiting for the Weekend”, Stalin's four days on, one day off, was unpopular, even though it was less onerous than the six-day week that preceded it. Families and friends rarely had the same day off; administrative staff rarely worked at the same time. After less than three years, the staggered working week was abandoned.
Echoes of Stalin's discovery can be found in a recent paper* by Alberto Alesina and Edward Glaeser, both of Harvard, and Bruce Sacerdote, of Dartmouth College. The authors begin from the premise that Stalin unwittingly proved: people complement each other at work, and perhaps at play too. Couples want to go on holiday together; parents want time off when schools are out. As a result, the economists say, people do not make solipsistic decisions about how much labour to offer in the marketplace. Their choice depends on everyone else's. Knocking off early carries less of a stigma if others do the same. Jobless youth find unemployment more tolerable if their friends are also out of work. Conversely, an ambitious underling will want to put in at least as many hours as his boss, whatever time she clocks off.
Messrs Alesina, Glaeser and Sacerdote think this principle might help to explain why Europeans work so much less than Americans. The gap is quite striking. According to the Luxembourg Income Study, the typical American worker puts in 1,820 hours over the course of a year. Meanwhile, according to the OECD, his German and French counterparts clock up a mere 1,480 and 1,467 hours respectively. They put in five or six fewer weeks per year, and three fewer hours per working week.
Edward Prescott, a winner of the Nobel prize for economics, blames these transatlantic differences on tax. Europeans would like to work more, but are deterred by the high percentage of their extra earnings the state would confiscate. Olivier Blanchard, an economist at the Massachusetts Institute of Technology, puts it down to transatlantic differences in taste. Europeans, he says, put a higher implicit price on their leisure. “There is plenty of anecdotal evidence that Europeans enjoy their leisure more than their American counterparts,” he writes.
But why? Some speculate that Americans, being the cultural heirs of the industrious Puritan settlers, are still gripped by a Protestant work ethic. However, as recently as 1970, Europeans worked more each year than Americans. Why should their work ethic have lapsed since then?
Rather than blaming culture or taxes, Messrs Alesina, Glaeser and Sacerdote instead credit trade unions. The strength of organised labour peaked in Europe in the 1970s, about the time that work hours started falling. After the first oil shock of 1973, the authors write, Germany's unions marched to the slogan “work less, work all”, and the same mantra, in different languages, was recited across the continent. In France, the unions eventually won an agreement in 1981 to cut the working week to 39 hours. The government then took up their battle, culminating in the national 35-hour week implemented in 2000. Indeed, their cause has gone continent-wide. The European Union's working-time directive, first issued in 1993 and subject to fierce debate again this month in the European Parliament, insists that workers toil no more than 48 hours each week on average (see article).
Let's all go home
There is an obvious liberal objection to any regulation of work hours: workers should be free to sell as much or as little of their labour as they wish, and employers free to buy as much as is profitable. Union demands and working-time directives are unnecessary encumbrances, stopping workers and employers striking deals to their mutual advantage.
But Messrs Alesina, Glaeser and Sacerdote float an alternative possibility. Such regulations might solve a co-ordination problem, they suggest. If Europeans complement each other at work and rest, they may prefer to work shorter hours and fewer weeks provided others do the same. If so, the authors write, “national policies that enforce higher levels of relaxation can, at least in theory, increase welfare.” Perhaps Americans would also like to work less, if their family, friends, or bosses worked less also. But in a competitive economy there is no way to co-ordinate their decisions. The individual American can act with others, but not too far ahead of them.
By recent evidence, however, Europe's unions got ahead of themselves. By demanding shorter working weeks with no loss of pay, they raised the cost of labour and undermined employment. In the past year or so, the French government has backed away from the 35-hour week, and German unions, most prominently at Siemens and DaimlerChrysler, have agreed to work longer for no more pay. The unions that once marched to the slogan “work less, work all”, have now conceded the need to work more, if they are to work at all.
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