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(A Shorter Workweek in the 1980s)

 

Labor displacement

CHAPTER 2

 

By “shorter workweek” we mean changing the scheduled hours of work from 40 or more hours per week to less than 40 hours, while maintaining the weekly salary or wage. This definition does not encompass “compressed” workweeks - 4-day, 40-hour weeks - or flexible working hours, or permanent part-time jobs, or “job sharing”. Although such arrangements may be desirable in many cases, they are not what we mean by “shorter workweek”. Neither do we mean 3-day or 4-day workweeks scheduled on an emergency basis by which workers cut their hours and weekly pay so that layoffs may be avoided. During hard times this may be a humane way of distributing the work opportunities; however, it is essentially “the lesser of two evils”, not a forward step for working people. What we mean by “shorter workweek” is a significant , even substantial, increase in a worker’s leisure time without reducing real weekly income. That gain is accomplished over a period of time in response to advances in productivity; it permits, in the fullest sense, an “improved standard of living.”

Some people are offended by this idea. They are offended by labor unions and what the unions represent. They are offended, in particular, by workers who ask for more and more of everything while doing less work. Thomas A. Murphy, chairman of General Motors, put it in these words: For years the motto of organized labor was said to be the single word, “more”. It has not changed, but now we also hear talk of “less” - not less wages, not less benefits, but less work, shorter work days, shorter work weeks. This won’t wash. The public will see - must see - that less work, not balanced by increased productivity, really means more cost. And more cost is what America cannot afford.”

In truth, the public does see, and accept, this point of view. Most Americans are resigned to the fact that, in difficult times such as this, we cannot have a shorter work week without sacrificing part of our nation’s standard of living. The shorter-workweek idea seems unreasonable. In essence, it is “asking something for nothing.” A high-school student asked me once: “How can you have a shorter workweek for the same pay? Something doesn’t add up. If workers worked less time, they would produce less, and would have to be paid less, or there would be inflation. You can’t get paid the same amount of money for doing less work. Someone, somewhere, would have to make up the difference.”

Those of us who advocate a shorter workweek disagree with the implications of that question, while recognizing that it gets to the heart of the matter. We do not believe that a shorter workweek is asking “something for nothing.” We are not looking for miracles to happen. We are not recommending that the economy pull itself up by its own bootstraps. Or are we? Who, indeed, would make up the difference in the quantity of goods and services produced?

In the first place, there is such a thing as getting the same or more production from less work. That “miracle” is accomplished through improvements in productivity. When a new “labor-saving” machine is introduced, one worker may be able to produce as much output as two or three could previously using simpler tools. Although the rate of labor productivity fluctuates from year to year, its long-term trend is clearly upward. Since 1950, productivity in U.S.manufacturing industries has increased at a rate averaging 2.6% per year. Because the productive capabilities of workers are increased, fewer of them are needed to produce a given quantity of output. The rest are freed for the task of providing other goods and services. That is how, in theory, our standard of living keeps rising. So long as there is a demand for these other goods and services and the wherewithal to buy them, the increases in productivity should facilitated an ever-expanding and increasing prosperity.

In practice, however, not all those workers who were “freed” from their previous tasks find employment in other areas of production. Some find marginal employment in other kinds of jobs. Some do not find jobs at all; they head down to the state employment office to file a claim. Those persons who are seeking a job for the first time find a reduced market for their labor, both as regards to the quantity and the quality of the jobs available. Educated, perhaps, to do a particular kind of work, they happen not to be “in the right place at the right time” to pursue such a career. In such situations, one finds a considerable amount of unemployment and underemployment. Much is lost to the economy which might otherwise have been produced. We who advocate a shorter workweek envision shifting some of the people who are victimized by this process into productive and worthwhile jobs, and giving workers in general more time off from work. That’s where the difference in production ultimately would be made up.

Much has recently been written and said about productivity Some suggest that its increases can be only good. On the contrary, productivity is like any powerful element - good when used properly, and bad when used improperly or without regard to to the consequences Economists, though, have tended to look only at the positive side. They contend that the gains in productivity have enabled American producers to deliver more goods and services at a reasonable price, to pay higher wages to employees, and to compete successfully in the world market, while earning a profit. They speak of the “productivity dividend” being split in several ways: between higher wages for workers, more leisure time, lower prices for consumers, more business profits, and more tax revenues for the government. If there is any idea that wins universal approval, it is that U.S. productivity ought to be increasing at a faster rate than it is.

Most economists, then, regard the shorter workweek issue as involving essentially a choice between leisure and higher living standards within the limits set by advancing productivity. Workers, they say, have the option of choosing to work longer hours and thereby increasing their incomes or to work shorter hours at a reduced level of income. Some have even offered statistics that indicate the extent to which American workers have “chosen” leisure or higher living standards at various times in our history. For instance, Professor Sar Levitan told a Congressional committee: “In the past three decades, we allocated about seven-eighths of the productivity dividend to increased consumption and the balance has been allocated to increased leisure. Peter Henle, a Labor Department official, calculated that the average full-time worker in the United States gained 155 hours per year of paid leisure between 1940 and 1960, representing “only 11 percent of the hours that have been made possible by the nation’s increased productivity.” Geoffrey H. Moore and Janice N. Hedges, following Henle’s method, determined that leisure claimed 8 percent of the productivity dividend between 1960 and 1969. Higher living standards, presumably, claimed the remaining 92 percent.

It is perhaps an oversimplification to say that American workers “decided” to split their share of the productivity dividend in some proportion between leisure and living standards,or even that business leaders, union leaders, or government officials “decided” this. All we can say is that from time to time there have been proposals to shorten the workweek. Certain economic interest groups have opposed these proposals, while others, apparently in the minority, have supported them. Therefore, the workweek has remained where it was.

Productivity is not an independent factor in the process of production but is a result of ongoing efforts to increase productive efficiency. Its level is influenced by changes in hours, employment, and productive efficiency. These are the controllable variables. Individually and collectively the economic managers make their decisions what to produce, whom to employ, and for how many hours. That determined, the system itself “decides” how these various elements will be arranged, with productivity the balancing factor.

The basic equation that governs this relationship is:

Output = Productivity x Employment x Average Work Hours

“Output” means the nongovernmental portion of real Gross National Product (GNP). It represents the concrete quantity of goods and services produced in a year, measured in constant dollars. “Employment” means the average number of workers who were employed during the year in agriculture and in private nonagricultural industries, including all hourly and salaried personnel. “Average work hours” are the total man-hours of paid labor during the yer, divided by average employment.” Productivity” is calculated from the other numbers in the equation. Another term for it “output per man-hour”. Productivity is, therefore, output divided by the product of employment and average hours. The U.S. Bureau of Labor Statistics reports the productivity index in several categories of industry: the private business sector, nonfarm business sector, nonfinancial corporations, and manufacturing.

Although productivity is a derived number, it is important because it more than the other variables reflects the changing state of technology. These changes have an impact upon the other variables. Suppose that productivity doubles during a certain period of time. We can analyze this in terms of the basic equation: Output equals productivity times employment times average hours. Let us suppose that only one of the other variables is affected by the change. If productivity doubles:

Output would double, assuming no change in average hours or employment.

Employment would be cut in half, assuming no change in output or average hours.

Average hours would be cut in half, assuming no change in output or employment.

Two of these scenarios are positive: doubled output and halved working hours. One scenario is negative: halved employment. Doubled output is positive because it implies that the output which is produced will be distributed and consumed in an equitable manner, thus increasing the nation’s standard of living. Halved working hours are positive because this implies more hours of paid leisure without reduced living standards. Halved employment is negative because it implies a commensurate increase in unemployment Even though the same amount of output is produced, only half the previous number of workers derive income from the production. the other half must rely upon other sources of income such as welfare-like transfer payments.

What did, in fact, happen? Figure 2-1 presents BLS (Bureau of Labor Statistics) figures describing trends in the U.S. economy between 1947 and 1977. The numbers are presented both for the private business sector and for manufacturing based upon “establishment data”. The private business sector is the broadest category covered by productivity statistics. Manufacturing, whose statistics tend to be more reliable, offers a useful basis of comparison.

figure 2-1
Productivity, output, employment, and average hours in 1977 compared with
level in 1947 for manufacturing industries and the private business sector
manufacturing industries
private business sector
productivity
2.28
productivity
2.28
output
2.81
output
2.77
employment
1.26
employment
1.40
average hours
0.99
average hours
0.89
   
1947 = 100

In manufacturing, we note that, as productivity increased by 2.28 times during those thirty years, output increased by 2.81 times, and employment by 1.26 times, while average hours declined to 0.99 times the previous level. During the same period, the U.S. population grew by one and one-half times. Therefore, employment in manufacturing industries increased less rapidly than the general population growth. In the private business sector, as productivity increased by 2.28 times, output grew by 2.77 times, employment grew by 1.40 times, and average hours dropped to 0.89 times the level in 1967. Employment gains (excluding government) almost kept pace with population growth.

In 1977, an average of 6,855,000 workers were unemployed during the year, representing 7.0% of the cvilian labor force. In its simplest form, the shorter-workweek proposal calls for a change in average working hours which would necessitate a higher level of employment for a fixed level of output and productivity, and thus reduce the number unemployed. Given the total number of man-hours worked, it would effect a trade-off between the number of workers employed and the average hours per worker. If average work hours are set at a given level, we may roughly determine the effect upon employment by plugging numbers into the basic equation.

For example, let us assume that in manufacturing an effort had been made between 1947 and 1977 to reduce the standard workweek from 40 to 32 hours, The average paid hours might have dropped, let us say, from 40.4 hours per week in 1947 to 32.3 hours per week in 1977, allowing for some overtime. In that case, the index of employment would have stood at 1.54 in 1977, instead of at 1.26, in order for the equation to balance. Multiplying 1.54 by the 15,535,000 workers who were employed in manufacturing in 1947, we have 23,940,000 workers employed in 1977, instead of 19,647,000 workers. That is 4,293,000 more workers than were actually reported. If we subtract the 4,293,000 workers from the 6,855,000 persons who were unemployed in 1947, it leaves 2,562,000 persons unemployed, or 2.6% of the civilian labor force, assuming that unemployed persons took these jobs.

Similarly, in the private sector, we might assume that the average workweek dropped from 40.3 hours in 1947 to 32.0 hours in 1977, instead of to the 36.0 hours reported. In that case, the employment index would have stood at 1.53 instead of 1.40. Instead of 75,467,000 persons, 82,430,000 persons would have been employed in private industry. This represents a potential gain of 6,963,000 jobs in 1977, more than enough to cover the 6,855,00 unemployed workers.

How much resemblance these calculations have to the “real world” I would not care to discuss. Most economists would quarrel with their methods and assumptions. We will consider the various objections in subsequent chapters. The fact of the matter, though, is that economic policy makers in the United States did not decide to pursue a shorter workweek. That decision, or lack of it, has had indeed real consequences. In the absence of a shorter workweek, certain changes took place in output, productivity and employment. The numbers in Figure 2-1 point to the direction of the changes but they do not tell the whole story. Statistics can be deceiving. It is necessary to investigate each area in somewhat greater detail in order to form an accurate picture of trends in the postwar U.S. economy.

 

AVERAGE WORKING HOURS

Average working hours have declined slowly in recent decades. According to the Bureau of Labor Statistics, the average workweek of U.S. manufacturing production workers dropped from 40.4 hours in 1947 to 40.2 hours in 1979. The average workweek of production or nonsupervisory workers in private nonagricultural industries as a whole declined from 40.3 hours in 1947 to 35.7 hours in 1979. Finally, the average weekly hours of all U.S. civilian workers declined from 43.5 hours to 38.9 hours between 1947 and 1979. However, the statistical decline is misleading. When average hours are calculated for a highly diverse set of industries and occupations, shifts in the composition of the work force can influence this figure as much or more than actual changes in hours.

For instance, the BLS statistics show that the average workweek of production or nonsupervisory employees in private nonagricultural industries fell by 4.5 hours between 1947 and 1978. Of this, the compositional shift accounts for about one hour. The computation is presented in Figure 2-2. Long-hours industries such as mining and manufacturing grew more slowly in employment than short-hours industries such as retail trade. Because increasingly more weight is given to the faster-growing, shorter-hours industries as the years go by, part of the apparent gain in leisure for the private nonfarm economy does not represent actual changes in working conditions but merely the statistical effect of their compilation.

            figure 2-2
 
Decline in AverageWorkweek of Production or Nonsupervisory Workers in Private Nonagricultural industries between 1947 and 1978, showing effect of shift in manpower between industries
             
1947 production workers
1978 production workers
       
number if
average
man-hours
industry
number (000)
percent
 
1947 percent
hours
(000)
 
       
mining
871
2.58%
 
1,499
43.3
64,907
construction
1,759
5.21%
 
3,027
36.8
111,394
durable goods mfg.
7,028
20.83%
 
12,104
41.1
497,474
nondur. goods mfg.
5,962
17.67%
 
10,268
39.4
404,559
wholesale trade
2,165
6.41%
 
3,725
38.8
144,530
retail trade
6,076
18.00%
 
10,460
31.0
324,260
finance
1,460
4.33%
 
2,516
36.4
91,582
other
8,426
24.97%
 
14,510
34.4
499,144
 
 
total
33,747
100.00%
 
58,109
36.8
2,137,850

Figure 2-2 applies the percentage breakdown by industry in 1947 to total employment in 1978 and calculates hypothetical man-hours using the 1978 average workweeks for each industry. Total man-hours divided by total employment gives the average workweek for all industries in 1978, if employment had been distributed the same as in 1947. The difference between this figure and the reported general average indicates the effect of the compositional shift. Following a similar procedure, we would find that 0.6 hours of the 3.8 hours’ decline in the average workweek of all U.S. civilian workers between 1948 and 1978 was due to the migration of workers from the farm, where hours tend to be longer, to the cities and towns. The growing proportion of part-time workers in the economy accounted for 0.8 hours of the general workweek decline during this period.

To determine the real trends, labor economists have studied groups of workers having relatively homogeneous work-time characteristics. Professor John D. Owen of Wayne State University in Detroit has picked non-student males employed in nonagricultural industries. Such workers comprise a majority of the labor force, yet they are predominantly full-time workers. In 1975, these workers averaged 42.5 hours per week compared with 34 hours per week for female workers, and 22 hours per week for male students. Professor Owen has prepared a tabulation of the nonstudent male workers’ average workweeks in selected years between 1948 and 1976, which is reproduced in Figure 2-3, along with comparative date for the labor force in general. This table shows that the average workweek for the nonstudent males was about the same in 1977 as in 1948. Adjusted for vacations and holidays, the figures showed a slight decline. The average for the total economy meanwhile dropped by 4 hours during this period.

      figure 2-3
       
Average workweek of nonstudent male workers employed in nonagricultural industries, 1948 to 1977, compared with average for all U.S. civilian workers
       
nonstudent males in nonfarm industries
year
all workers
unadjusted
adjusted
1977
38.8
42.8
41.3
1975
38.7
42.4
40.8
1972
39.4
42.9
41.4
1969
39.9
43.5
42.0
1966
40.4
43.5
42.1
1962
40.5
43.1
41.7
1959
40.5
42.0
40.7
1956
41.5
43.0
41.8
1953
41.9
42.5
41.4
1950
41.7
42.2
41.0
1948
42.8
42.7
41.6
change in hours
-4.0
0.1
-0.3
1948 to 1977      

Summarizing developments up to 1975, Professor Owen wrote in Monthly Labor Review: “Employed American adults have had no net gain in their leisure time in 30 years - since the end of World War II. That was the somewhat surprising result of analysis of data published by the Bureau of Labor Statistics from the Current Population Survey on hours of work. There was a rather modest decline in the measured average of weekly hours of nonagricultural employees .. However, this drop appears to reflect changes in the composition of the labor force rather than a reduction in the hours of work of groups that compose the labor force.” Over the long term, the professor noted “a leveling off in hours of work in the past 30 years,” which was in sharp contrast with the experience before World War II.” The U.S. workweek, he wrote, exhibited “a decline from 58.4 hours per week in 1901 to 42.0 hours in 1948, and little or no change since.”

A decade earlier, Peter Henle had observed a similar surprising trend. In a 1966 article entitled “Leisure and the Long Workweek”, Henle wrote: “Most projections of the future course of the economy assume a gradual but continuing decline in time that employees spend at work. Such projections overlook an important set of statistics that demonstrate quite a different pattern of behavior. A significant portion of the Nation’s work face consistently works more than a 48-hour week and, from all indications, this proportion has been increasing rather than declining.” As evidence of the trend, he pointed out that the proportion of full-time nonagricultural wage-and-salary workers who worked 49 or more hours per week rose from 12.9% in 1948 to 18.2% in 1965. The percentage who worked 60 or more hours per week rose from 4.9% to 7.4% during those years.

        figure 2-4
 
Hours worked by full-time wage and salary workers in nonagricultural industries, selected years, 1948 to 1978
         
 
Percent of Full-time Workers
full-time hours per week
1948
1957
1965
1978
 
35 to 39
4.8%
7.5%
8.2%
9.4%
40
51.8%
59.2%
55.3%
55.6%
41 to 48
30.5%
19.0%
18.3%
14.4%
49 to 59
8.0%
8.4%
10.8%
12.0%
60 & over
4.9%
5.9%
7.4%
8.6%
 
total
100.0%
100.0%
100.0%
100.0%
         
total full-time workers at work (thousands)
37,538
41,801
47,537
65,210

Figure 2-4 summarizes Henle’s data and adds the comparable figures for 1978. The trend which he noted has evidently continued. In 1978, 12.0% of the full-time nonagricultural wage and salary workers worked between 49 and 59 hours per week, while 86% of them worked 60 or more hours per week. In 1978, as in previous years, the workers who routinely worked overtime - 41 or more hours per week - were less likely to receive premium pay than those who occasionally worked overtime. Also, the percentage who received premium pay tended to decrease as the number of hours worked per week increased.

These facts would indicate that the Fair Labor Standards Act has had an impact upon the number of hours worked. Those industries in which a smaller percentage of workers are covered by the law, and, therefore, receive premium pay tend to schedule more overtime than the industries in which a larger percentage of workers are covered. In agriculture, for instance, 47% of the workers worked overtime in May 1978, but only 14% of the overtime workers received premium pay. In comparison, 15% of the federal employees worked overtime but 59% of those who did received premium pay. On the other hand, overtime remains comparatively high in mining and in manufacturing, two industries where most of the overtime workers receive premium pay, suggesting that overtime pay at “time and a half” may be losing its edge as a deterrent in these industries. It would appear that the Fair Labor Standards Act has caused the percentage of workers who work 41 to 48 hours per week to drop but had little effect upon those who work 49 or more hours per week.

Peter Henle has reported a study of its impact in the retail-trade industry. In this industry, he wrote, “the Fair Labor Standards Act was applied for the first time by the 1961 amendments. The law provided a gradual introduction of an hours standard beginning with a 44-hour standard in 1963 and ending with the 40-hour standard in September 1965. However, the 1961 law extended coverage only to the larger retailing firms. In June 1965, the BLS did a study of wages and hours in this industry, both for retail workers who were covered by these amendments and for those who were not. The results are shown in Figure 2-5.

Not surprisingly, the study found a significant decrease in the percentage of employees who worked overtime at various levels of hours in those firms which were covered by the law. There was an increase in the percentage of employees who worked part time, accompanying the decrease in percentage of those who worked more than 40 hours a week. What was surprising is that, in the firms which were not covered by the amendments, the percentage of overtime workers dropped just as much. Apparently, the new law “caused” hours to be reduced as much by setting industry-wide standards which influenced the marketplace offerings to retail workers as it did through direct financial incentives or disincentives applied to the workers it covered.

The increased employment of part-time workers in retail trade would seem to be one of the more significant consequences of this law. Between 1968 and 1978, its proportion of part-time workers increased from 29% to 35% - higher than any other industry except for entertainment and recreation services. Because of the high percentage of part-time workers in the wholesale and retail trade industries, the average workweek of all wage and salary worker in these industries was 36.44 hours in 1978 while the average for their full-time workers was 43.5 hours.

              figure 2-5
 
Percent distribution by level of weekly hours of retail workers in establishments covered and not covered by the 1961 amendments to the Fair Labor Standards Act while the law was being introduced, 1961 to 1965
               
 
Covered by 1961 amend-
Not covered by 1961
weekly hours of
ments to FLSA
amendments to FLSA
retail workers              
 
1961
1962
1965
1961
1962
1965
 
under 35
28.1%
30.3%
33.7%
28.3%
28.4%
31.3%
35 to 40
45.3%
46.2%
44.3%
27.0%
27.0%
29.4%
over 40, to 42
4.8%
4.8%
5.8%
3.2%
3.4%
3.2%
over 42, to 44
6.1%
4.8%
3.6%
6.0%
6.1%
5.7%
over 44, to 48
9.0%
8.0%
6.3%
16.8%
16.7%
14.5%
48 & over
6.8%
6.1%
6.4%
18.6%
18.4%
16.0%
 
total over 40
26.7%
23.7%
22.1%
44.6%
44.6%
39.4%
total over 42
21.9%
18.9%
16.3%
44.1%
41.2%
36.2%
total over 44
15.8%
14.1%
12.7%
35.4%
35.1%
30.5%

The boom in part-time employment affects other industries as well. In 1978, 14.8% of the workers in the civilian labor force were considered to be part-time workers, compared with 10.9% in 1963. Part-time work is defined by the Bureau of Labor Statistics as a position normally requiring less than 35 hours of labor per week. The percentage of workers who actually worked part time - less than 35 hours - is larger than the percentage in the part-time labor force because the BLS includes those who worked short hours for “economic” and certain other reasons in the full-time labor force if they normally worked full time or wanted full-time work. Figure 2-6 shows the percentage of nonagricultural wage and salary workers working at all levels of weekly hours in 1948, 1960, and 1976. A breakdown is also given by sex. It is clear that part-time employment has gained a substantial foothold in the U.S. economy, especially among women.

Some persons contend that part-time employment is substantially equivalent to a “shorter workweek”. After all, the Bureau of Labor Statistics has arbitrarily defined this in terms of the 35-hour cutoff. Part-time employment, they argue, is a free-market response to people’s needs for additional leisure, which has the advantage over a legislated shorter week in being offered and accepted voluntarily. Considering the increased percentage of voluntary part-time worker, it would appear that the U.S. economy is adequately meeting the need for more free time.

                  figure 2-6
 
 
 
Percent distribution of hours of work of nonagricultural wage and salary workers, selected years, May 1948 to May 1976
 
                   
 
part-time workers
full-time workers
 
1-14
15-29
30-34
35-39
40
41-48
49 +
total
 
hours
hours
hours
hours
hours
hours
hours
both sexes                  
1976
5.4
11.4
6.1
7.9
45.4
10.9
12.8
100.0
1972
5.7
10.7
5.6
7.4
44.9
11.9
13.7
100.0
1968
5.7
9.2
5.2
7.0
44.3
13.8
14.7
100.0
1964
6.9
8.1
4.0
6.7
45.3
14.8
14.3
100.0
1960
5.8
7.9
4.1
6.3
49.0
14.4
12.6
100.0
1956
5.3
7.5
4.0
6.2
46.8
17.6
12.5
100.0
1952
3.5
6.1
3.2
5.3
48.0
21.8
12.2
100.0
1948
3.2
5.8
3.7
4.2
45.2
26.2
11.3
100.0
 
men
1976
3.4
7.5
4.3
4.8
47.5
13.8
18.7
100.0
1960
3.7
5.4
3.3
3.9
50.8
16.6
16.3
100.0
1948
2.1
4.3
3.0
2.5
44.6
29.2
14.2
100.0
 
women
1976
8.2
16.9
8.6
12.3
42.6
6.8
4.6
100.0
1960
9.6
12.4
5.5
10.5
45.8
10.4
5.9
100.0
1948
5.6
8.9
5.4
7.9
46.4
21.0
4.8
100.0

That theory would be fine if part-time jobs were simply full-time jobs in smaller hours packages. There is evidence to suggest, however, that part-time jobs in this economy are usually sub-standard jobs. They are jobs for persons on the fringes of the work force; or so it would appear from what these jobs offer. The pay is low. Benefits are lacking. Opportunities for promotion are severely curtailed or nonexistent.

On a weekly basis, of course, part-time workers would be expected to earn less money than full-time workers because they work fewer hours. However, the part-timers also earn considerably less than the full-timers on an hourly basis. In May 1977, the average wage for part-time workers was $2.87 an hour compared with $5.05 an hour for full-time workers. Part of this difference may be explained by the fact of sex discrimination in pay or by the lower levels of education, work experience, or job commitment which part-time workers often have. However, Professor Owen points out: “Even when all other factors were held constant, male part-timers earned 30 percent less than male full-timers, and female part-timers received 17 percent less than female full-timers. (The unadjusted differential was 51 percent for men, 28 percent for women.)

Closing their eye to employers’ obvious biases regarding work hours, economists sometime pretend that part-time workers receive lower pay for straightforward economic reasons: Their higher turnover rate and smaller number of weekly hours make it unprofitable for employers to invest in training, or their hours complicate personnel management and may require extra expense for work equipment. Although such factors may have a bearing, it is also true that employers offer less money to part-time workers because leisure is at a premium. Unnaturally scarce in today’s economy, those workers who want or need more free time are forced to pay a price for this in the form of accepting a lower hourly wage. Like pornographers in a sex-starved society, certain employers have grown rich in exploiting the demand for part-time hours among housewives, senior citizens, students, and others unable to work a full-time 40-hour week.

Part-time workers have long been regarded as “casual labor”. Therefore, they have not been promoted into the better jobs and were first to be cut during layoffs. Because part-time work has appealed to persons who were typically outside the labor force, the theory was that these people did not really need the money. The part-time students were taking such jobs temporarily, until they started their regular careers. The older people who worked part time just wanted to supplement their income from Social Security. In the scheme of things, part-time employment was one step up from doing unpaid volunteer work or household chores. Any amount of pay, after all, was better than none. Part-time workers had other interests than in a career. Therefore, they could and would tolerate the substandard conditions of those jobs: lower wages, no paid vacation, no health or life insurance, no sick pay, few opportunities for advancement, uninteresting and repetitive tasks to perform.

This is not what we mean by “shorter workweek”. Rather, it is intended to be an improvement in work conditions. Part-time jobs can and should be upgraded. Ways should be found to schedule the part-time jobs and to apportion fringe benefits so that these jobs are like the full-time, full-standard positions, except in a smaller package of hours. Such efforts are compatible with those of the shorter workweek, but their aims are a bit different. Essentially, the newer schemes, such as “flex-time” and “permanent part-time jobs” and “job sharing”, seek to give the worker a greater variety of work-time options. The shorter workweek, on the other hand, aims to increase the quantity of leisure for workers in order to improve the general quality of life and reduce unemployment. The part-time job alternatives can advance social progress if the level of wages and benefits for part-time workers is improved. They will obstruct progress, though, if more sub-standard jobs are offered, which thus degrade the standard for full-time jobs and substitute the illusion of progress for labor’s historic march towards more free time.

What has happened to the shorter-workweek drive lately? In the traditional vein, one might expect this to develop in the form of collective-bargaining agreements for weekly work schedules shorter than forty hours. There are such agreements, but they are rare and mostly old. The 36-hour workweek in the rubber industry was a product of the Depression. In 1962, the electrical workers in New York City signed a ”breakthrough” contract for a 25-hour week; no one followed their lead. The automobile workers have gone to the mat for shorter hours, yet excessive overtime continues to be a problem in some of the plants. Two thirds of the major collective-bargaining agreements in the printing industry and three fifths of those in the apparel industry specified workweeks of 35 hours or less in 1975. Heart-warming as such arrangements may be, most of them were concluded long ago. There has been no recent stampede toward a shorter workweek.

Indeed, one can find as much evidence today to indicate that workweeks are growing longer as that they are growing shorter. For example, an article in Time magazine about corporations which have moved their corporate headquarters from New York City to suburban Connecticut reported that one of the companies’ chief motives was to achieve what it inaccurately termed “higher productivity” by extending the scheduled work day. “The Olin corporation,” Time reported, “cut its lunch period from one hour to half an hour. Union Carbide, which now works its employees seven hours a day in New York City, will adopt an eight-hour day next year when it moves to a site near Danbury.”

In New York City itself, a budget squeeze in 1975 prompted city officials to order an end to “summer hours” for municipal employees. Since the days of Mayor James J. Walker, New York City employees had been allowed to leave work at 4 p.m. during the summer months. Mayor Beame, however, ordered the reinstatement of 9-to-5 hours and the unions went along.

And so it has gone elsewhere. In Washington County, Minnesota, the county board voted to raise the scheduled workweek from 37 1/2 hours to 40 hours for its clerical and technical employees. In the neighboring state of Wisconsin, the Department of Industry, Labor, and Human Relations decided, over employees’ objections, to terminate its experimental 4-day workweek. Morning coffee breaks were recently abolished at a company where I used to work; employees are now allowed to sip vending-machine coffee at their desks. It is not unusual for employers to hire high-priced management consultants who will recommend such things in the name of “productivity”.

We read occasionally in the newspapers of 3-day or 4-day workweeks being given to particular workers. The fact is, such arrangements are the exception rather than the rule; newspapers like to report the exceptional. According to a BLS survey taken in May 1979, the workers who usually worked 3 days, 4 days, or 4 1/2 days a week comprised only 2.2% of all full-time nonagricultural wage and salary workers. Those who worked 5 1/2 days, 6 days, or 7 days a week comprised 14.3%. More American full-time workers worked 7 days a week (1.9%) in 1979 than worked four days a week (1.4%). The majority were on 5-day, 40-hour schedules.

Not only are 4-day workweek hard to find among our contemporary U.S. jobs, they also look suspiciously like the kind of job which we were discussing in connection with part-time employment. According to BLS figures, the median hourly wage which was paid to 4-day workers in 1976 was $4.52, compared with $4.87 for 5-day workers. The 4-day workers were somewhat younger than the 5-day workers and a higher proportion of them were women. Most of them, of course, worked longer hours per day.

In the 1930s and 1940s, organized labor spoke boldly of 30-hour or 32-hour workweeks which would come in the near future. During the Depression, a neon sign used to hang behind the podium at AFL national conventions. It read, “The 30-Hour Week: A Practical Solution to Unemployment." A 30-hour-workweek resolution was adopted by the United Automobile Workers at their 1943 convention in Chicago. The United Steel Workers of America made this a part of their agenda in the 1947 bargaining session. The AFL weekly news service announced on September 30, 1946: “The 40-hour week, once labor’s proudest boast, is doomed to be discarded within the foreseeable future. The 30-hour week is bound to come, opening up new opportunities for employment and a fuller life for the working masses.”

The talk continued into the ‘50s. In 1955, the United Automobile Workers, assembled in convention, placed the shorter workweek at the top of their agenda after the Guaranteed Annual Wage. The union reaffirmed this as a leading bargaining objective in 1957. The International Association of Machinists and the International Union of Electrical Workers likewise called for this in 1957. In 1958, the steel workers declared that the shorter workweek was their goal for the 1959 bargaining session. Labor disseminated a report by the Center for the Study of Democratic Institutions, showing that the economy would be wrecked in 20 years unless the workweek was cut. Even the youthful Richard Nixon, in the heat of the 1956 campaign, spoke enthusiastically of the day, “not too far distant”, when Americans would be working only four days a week, and “family life will be even more fully enjoyed by every American.”

But now? We do not even talk of 30-hour or 32-hour workweeks any more. The idea is too far-fetched. Rearranged hours, not shorter hours, are the most that working Americans would dare to expect.

Some would explain this by saying that workers have received leisure in other forms. People no longer want shorter workweeks; they would prefer longer vacations, sabbaticals, or earlier retirement. Sabbaticals and retirement, of course, are generally available only to the high-seniority employees. American-style vacations, too, are awarded on the basis of seniority. Even so, Americans have received increased leisure in forms other than a shorter workweek. Paid vacations and holidays have increased. In addition, workers frequently receive paid sick leave or personal leave, lunch breaks, coffee breaks, and other time off.

How much leisure has been created through such means? BLS economists have calculated the average annual gains in leisure for U.S. full-time workers in three periods: 1940 to 1960, 1960 to 21969, and 1968 to 1979. Their findings are presented in Figure 2-7. The calculations show that the average full-time workweek in the United States declined from 46.8 hours in 1940 to 43.1 hours in 1979. Average annual vacations increased from 0.3 weeks in 1940 to 2.0 weeks in 1979. The average number of paid holidays increased from 2 days in 1940 to 7 days in 1979. The gains in all three categories were larger in the period between 1940 and 1960 than in the period between 1960 and 1979; and larger during the 1960s than during the 1970s.

The other forms of leisure such as paid sick leave and coffee breaks have not been so carefully measured over the years. In 1978, absences due to injuries or illness claimed 2.3% of total working hours for full-time nonagricultural wage-and-salary workers compared with 2.4% in 1973. Absences due to other personal reasons such as jury duty or maternity leave accounted for 1.2% of total work time in 1978, compared with 1.1% in 1973.

With respect to lunch breaks and coffee breaks, the Bureau of Labor Statistics does not publish regular information. However, in the 1977 “Quality of Employment” survey conducted by researchers at the University of Michigan, 60% of the full-time workers reported taking a half hour or less for lunch breaks. Almost 40% of them had no regular coffee breaks or scheduled rest breaks. Of the part-time workers, one third reported having no lunch breaks, and half took no coffee or rest breaks.

          figure 2-7
           
Estimates of additional hours per year of paid leisure gained by US full-time workers between 1940 and 1979
           
   
Additional hours of paid leisure per year
           
source
period
shorter workweek
longer vacation
more holidays
total
   
Henle 1940 - 1960
75
48
32
155
Moore & Hedges 1960 - 1969
30
15
4
49
Hedges & Taylor 1968 - 1979
25
4
10
39
   
total 1940 - 1979
130
67
46
243

It might be argued that workers do not report all the leisure that they take. Some arrive late to work and leave work early, yet are paid for an 8-hour day. It is thought that the slow rate of productivity increases indicates that more than a few workers may be loafing on the job, extending their lunch breaks, or passing the time in idle conversation. It does point up the fact that some leisure is taken in forms considered undesirable.

One might regard strikes and unemployment as undesirable forms of leisure. Strikes accounted for 0.17% of total estimated work time in 1978. Although strikes center around grievances or contract disagreements, it is sometimes charged that “all the strikers really want is an extra vacation.” Unemployment, too, has its leisure aspect. Reportedly during the 1974-75 recession certain high-seniority workers in the auto industry resented the fact thst the low-seniority workers were laid off first and were able to collect unemployment benefits. Manifesting a phenomenon known as “inverse seniority”, these workers, in effect, requested the right priority in layoffs, having priority of recall when business improved. Sick leave is, of course, another “undesirable” form of leisure, which workers have been known to abuse. The point is that, if leisure is denied to workers in an open and honest fashion, some of them will take it anyhow.

    figure 2-8
     
Leisure provisions in several industrial nations, 1977
 
 
number of non-working
percent of population
nation
days in 1977
that took a vacation
 
Belgium
140
90%
Denmark
140
50%
West Germany
136
54%
Spain
125
70%
France
133
54%
Italy
120
45%
Netherlands
145
54%
Norway
132
74%
Austria
137
38%
Portugal
131
22%
Switzerland
130
76%
Finland
130
73%
Sweden
144
86%
United Kingdom
127
80%
Japan
111
75%
United States
116
50%

The European business magazine, Vision, featured what is called a “Quality of Life Olympics” in the issue for July and August 1978. Sixteen industrial nations, including the United States, were compared with respect to benefits or provisions for living which their citizens enjoyed. The criteria pertaining to leisure were the total number of nonworking days which workers had in 1977 and the percentage of the population which took vacations away from home. From Figure 2-8, it is apparent that the United States ranks near the bottom of both lists. An article in Time in September 1971 called Americans “deprived” with respect to leisure, and the situation has shown little improvement in the decade since.

Americans typically receive two weeks of paid vacation per year, while in western Europe four-week minimum vacations for all employees regardless of seniority are common. Swedish workers are guaranteed by law at least five week of annual vacation. In 1970, the International Labor Organization adopted the “Holidays with Pay” convention , prescribing, as a minimum labor standard, at least three weeks of paid vacation per year for a worker with one or more years of seniority.

In summary, one might make the following points about the post-war trend in leisure:

1. Progress has been slow compared with that in the prewar years, and, if anything, it is becoming slower.

2. The statistical decline in the average workweek to a level below 40 hours is due to the changing mix in employment by industry, a reduction of weekly hours from the 41-to-48 hours range down to 40, and the booming part-time employment, rather than to the introduction of many new schedules calling for less than 40 hours of work in a week.

3. Reductions in the workweek have historically produced more additional free time than alternative forms of leisure, and give every indication of continuing to do so.

 

EMPLOYMENT

Two pieces of the puzzle are in place: productivity and average hours. That leaves the other two: employment and output. If productivity has more than doubled since 1947 while average hours dropped only slightly, then employment must have dropped or output risen, or some combination of these two things taken place.

The standard work-sharing argument assumes that technological progress puts a squeeze on employment which must be relieved through shorter hours. Most economists do not accept that view. They believe it is based upon an outmoded “lump of labor” theory which assumes that jobs are fixed and the economy has only so much work to do. In reality, say these economists, work and jobs are changing all the time. The economy is continually expanding to create new varieties of goods and services, and developing new techniques of production. Some workers may be displaced from some jobs, but other jobs are emerging from the newer industries. For example, installing a computerized accounting system may eliminate the jobs of certain clerks and bookkeepers, but it will create jobs for computer programmers and systems analysts - jobs which are more professional and highly paid than the ones they replaced. A modern industrial economy is constantly undergoing changes in the kinds of occupations required. Therefore, say the mainstream economists, productivity advances do not destroy jobs. Rather, they change jobs. They improve jobs, and they improve living standards.

Has the U.S. economy soared onward and upward towards more and better-paying jobs, or has there been a displacement of labor tending to increase unemployment? Perhaps some of both has taken place. Dogmatic economists, however, will not admit that there is such a thing as labor displacement. How can this be? If increased productivity unaccompanied by shorter hours causes labor to be displaced, should not we see a sharp increase in the unemployment rate? Has such an event, in fact, occurred?

A pamphlet published by the National Association of Manufacturers in 1965 stated the issue: “If productivity advances put people out of work, we should be able to compute how many people were idled by each technological advance. For example, since 1910 the nation’s overall productivity has increased over three times. As a result of this productivity increase, it takes only one-third as much labor, on the average, to do a given job as it did in 1910. If it were true that increases in productivity or technological advances threw men out of work, we should conclude that two thirds of the work force should be unemployed.”

The point is an important one, and it deserves to be answered. What, indeed, has been the effect of changes in productivity upon the unemployment rate? Figure 2-9 compares the annual average rate of unemployment with the productivity index, based upon the level in 1910, for selected years between 1910 and 1978. There is little, if any, correlation between the two variables. Productivity has been rising more or less steadily since 1910. Unemployment has been held to a certain range, fluctuating in response to changes in the business cycle. Depending upon its phase, unemployment will be up or down, or somewhere in between. The unemployment rate has not risen in proportion to advances in productivity, or to the influx of women into the work force, or to the trek from the farm to the city. How can we reconcile this fact with the work-sharing theory?

    figure 2-9
     
Unemployment and productivity levels in years 1910 to 1978
(1910 = 100)
     
year
unemployment
productivity
 
1978
6.0%
462.6
1975
8.5%
436.1
1972
5.6%
432.9
1970
4.9%
407.6
1967
3.8%
390.0
1965
4.5%
369.4
1962
5.5%
330.0
1960
5.5%
304.6
1957
4.3%
281.2
1955
4.4%
269.9
1952
3.0%
240.1
1950
5.3%
232.5
1947
3.9%
199.7
1945
1.9%
210.7
1942
4.7%
188.8
1940
14.6%
179.0
1937
14.3%
161.4
1935
20.1%
152.3
1932
23.6%
133.0
1930
8.7%
135.6
1925
4.0%
135.5
1920
4.0%
113.3
1915
9.7%
104.9
1910
5.9%
100.0

First, it is not quite true that unemployment has remained constant in the post-war American economy. There has been a tendency for the unemployment rate to rachet up to a higher level with each recession. Since World War II we have had six recessions, not counting the present one: 1949-1950, 1953-1954, 1957-1958, 1960-1961, 1969-1971, and 1973-1975. Unemployment during these recessions hit the following annual peaks: 5.9% in 1949, 5.5% in 1954, 6.8% in 1958, 6.7% in 1961, 5.9% in 1971, and 8.5% in 1979. From these figures it is evident that unemployment has been drifting upwards by 2 or 3 percentage points during the past three decades exclusive of changes in the business cycle. Each percentage point now represents approximately one million persons.

Second, the definition of unemployment has been changed several times. The official rate is determined by a monthly survey which the Bureau of the Census conducts for the Bureau of Labor Statistics. The way people are counted in this survey helps to determine the result. Unemployment, of course, is a highly sensitive political fact, and certain politicians will try to get it reduced by whatever means are available, imaginary as well as real. And so, during the Kennedy and Johnson years, the same politically attuned technocrats who gave us inflated body counts in the Vietnam war produced deflated rates of unemployment at home.

Professor Charles Killingsworth explains: “The two sets of changes in the definitions of unemployment took place in 1965 and 1967. The 1965 change was to count as ‘employed’ the enrollees in certain manpower and government-subsidized employment programs (such as College Work-Study and Neighborhood Youth Corps) although historically the enrollees in comparable programs (such as WPA in the 1930s) had been counted as ‘unemployed’. This change, plus expansion of the relevant programs, contributed 0.5% percent to the lowering of the unemployment rate by 1969. The 1967 definition changes were estimated by the Bureau of Labor Statistics to reduce the reported unemployment rate by 0.2 percent by 1969.”

The 1967 changes were made as a result of recommendations by the Gordon committee which president Kennedy had appointed to revise the unemployment statistics. This committee recommended, among other things, that the lower age limit of the “total noninstitutional population” be raised from 14 to 16 on the theory that most 14- and 15-year olds were, or ought to be, in school. When they were not in school, however, such persons were far more likely than their elders to be unemployed. Therefore, by redefining the survey population to exclude them, the reported rate of unemployment could be instantly improved.

Some have questioned whether the current definition of unemployment is broad enough to include all the people involuntarily out of work. Currently, to be counted as unemployed, one must not be working or hold a job, and one must have engaged in a specific job-seeking activity during the previous four weeks. Some have asked this question: What if the jobless person is so demoralized by economic conditions or by the perceived lack of personal qualifications that he does not even try to look for a job? Having not engaged in any job-seeking activities during the previous four weeks, that person would be considered “not in the labor force”, even though the degree of economic hardship in this case might exceed that of the unemployed worker. The Bureau of Labor Statistics has begun to measure this category of jobless person, known as the “discouraged worker.“. In 1979, they numbered 750,000 persons. If the discouraged workers had been counted as unemployed, the unemployment rate in 1979 would have been 6.5% rather than 5.8%.

This leads us to examine more closely the second major category of labor-force status, “not in the labor force”. Perhaps the effects of labor displacement might show up here rather than as unemployment? This category, which comprised 58,623,000 persons in 1979, is obviously a much larger one than the category of unemployed workers. The distinction between the two groups is not always that clear-cut. Within the category of persons who were “not in the labor force”, the BLS monthly population survey determined that 5,293,000 persons in 1979 “wanted a job now”, while the remaining 53,328,000 persons did “not want a job now.” The distinction then is based, not upon the desire to hold a job or the probability of becoming employed, but upon demonstrated effort to seek employment within a prescribed period of time. Considering that such a fine line separates the 5,293,000 “nonparticipants” who immediately wanted work from the 5,963,000 “unemployed”, it is possible that the unemployment rate has remained reasonably steady because persons “not in the labor force” have increased.

If this hypothesis is correct, we ought to find evidence of people having been driven or lured out of the work force in numbers large enough to offset the destruction of jobs through advancing technology. There must be an institutional mechanism to accomplish that shift. Indeed, there is such a mechanism. The progressive and systematic increases in productivity do have a counterpart in the systematic and progressive expansion of income-maintenance programs for retired workers and their dependents, survivors, disabled persons, and the poor. With perhaps some double counting, there were a total of 35,125,000 persons receiving Social Security benefits in 1979, compared with 14,845,000 persons in 1960. There were 15,213,000 recipients of public assistance and supplemental security income in 1979, compared with 7,098,000 in 1960. It was reported that in June 1979, 41% of all American families were receiving some cash payments from the government, including Social Security, welfare, and V.A. benefits but not federal salaries.

Of course, not all those who received transfer payments in 1979 belonged to the category, “not in the labor force”. Some were employed and some were unemployed. However, because government aid programs usually disqualify active wage earners from participation or deduct all or part of their earnings from the benefits which are paid, the great majority of the recipients may be assumed to be “not in the labor force”.

Two pieces of information tend to confirm that view. In 1978, almost 70% of the persons 65 to 70 who were covered by Social Security did not participate in the labor force; the remaining 30% did. In March 1976, 37.0% of all persons 16 years and older who had received AFDC benefits in the previous year participated in the labor force compared with 62.0% of persons the same ages who had not received AFDC benefits. Although the federal government does not publish statistics on how many people do not participate in the work force because of transfer payments, there must be quite a few. Therefore, the remarkable stability in the unemployment rate since the end of World War II must be due, in part, to this fast-expanding post-war institution.

Such an explanation has not gained wide acceptance, though, because the category, “not in the labor force”, has itself been remarkably stable. In 1950, persons in this category comprised 40.1% of the total noninstitutional population 16 years and older, and 28.2% of the entire U.S. resident population. In 1978, they comprised 37.3% of the noninstitutional adult population, and 26.8% of the total U.S. population. In other words, as a percentage of the whole, this category has shrunk. The “employment to-population ratio”, currently around 59%, stands at or near an all-time high.

Marvin H. Kosters of the American Enterprise Institute told a Congressional subcommittee: “The ratio of employment to population has also risen in recent years ... And these increases in jobs were obtained without inducing unwanted idleness and the lower real incomes that would be entailed by a mandatory reduction in the work week.”

The reason that the employment-to-population ratio stands so high and that the number of persons “not in the labor force” has not proportionately increased is, of course, that record numbers of women are entering the labor force. Between 1947 and 1978, the number of employed women increased from 16,045,000 persons, or 30.6% of the women 16 years and older, to 38,882,000 persons, or 46.4% of the adult women. During this period, female employment has risen by an average of 736,000 persons per year. This is, perhaps, the single most important trend in the post-war U.S. economy. At the same time, the fact that so many women have abandoned the role of full-time homemaker to seek paid employment has masked the more moderate tend of declining labor-force participation by older men. Therefore, the theory that government income-maintenance programs have worked to hold down the unemployment rate is not completely invalid.

Even so, we cannot ignore the fact that employment has risen, and at a brisk rate. The remarkable increase in the number of employed persons and jobs has persuaded many observers that the U.S. economy is basically strong. A column in the Wall Street Journal declared: “Unemployment gets 99% of the attention. But ... a look at the other side of the coin - the employment - is most interesting. To some, it may be startling. The past decade has seen total employment in the U.S. grow about twice as fast as the population ... The last ten years have seen more new jobs of all kinds generated by the U.S. economy than there are men, women, and children in the cities of New York, Chicago, and Los Angeles combined. There has never been anything like it. The country has grown a lot, but nothing like as fast as the job supply.” If the U.S. economy has achieved such an outstanding record in creating jobs for all the women, teenagers, and others who want them, then proposals to reduce unemployment by changing the economic structure, as through a shorter workweek, may be counterproductive.

Incumbent public officials, business executives, and others with a stake in the status quo are naturally convinced that the American economy has performed just fine in the job-question area. (The Japanese, with a 2% unemployment rate, are worried about their economy’s performance.) This facile response to an obviously festering problem has allowed the job situation to grow worse. Employment levels in themselves do not define economic strength. We need to consider, as well, the quality of those new jobs. Numbers alone are too easily manipulated.

To consider a far-fetched example, let us suppose that the government decided to replace the Unemployment Insurance system with a new “jobs” program which would pay participants $2.00 an hour. There would be no supervision, no administrative red tape. Each participant would simply pledge to work 40 hours a week to “serve the community” as he or she saw fit, and the government would mail out weekly checks for $80.00. Assuming a two-week annual unpaid “vacation”, such a program might cost the government $4,000 a year per participant. In 1978, the Unemployment Insurance system paid out a total of $9.3 billion in benefits. If this money had been used instead to fund the above-mentioned “jobs” program, an additional 2,330,000 persons might have been counted as employed. The reported rate of unemployment in 1978 would have been 3.7% rather than 6.0%.

The point is, the number of jobs by itself may not accurately reflect the level of economic activity. We need to ask, therefore, not only how many jobs there are, but what kind of jobs. We need to determine whether those plentiful new jobs are paying enough to support a worker and family at an adequate standard of living. We need also to examine the kind of “work” which is done. Is this necessary and productive work, or is it “make work”or nonproductive? Does the job add to the nation’s output of goods and services which people really want, or does it involve “busiwork” which might well be left undone? If too many jobs are of the latter variety, it might then be possible for employment to rise but not living standards. That, in my opinion, is largely what has happened.

The first test of a job is its level of salary or wage. The Bureau of Labor Statistics classifies employment in two ways: by industry and by occupation. We are interested in learning whether the sorts of jobs which the U.S. economy has recently been generating tend to be higher-paying or lower-paying jobs. To answer that question, we may compare average wages in those industries and occupations where employment is growing most rapidly with wages in areas where employment growth is slower. Figure 2-10 makes such a comparison between the major categories of industry, and Figure 2-11 does the same for occupations.

              figure 2-10
Comparison by industry: Gain in employment 1950 to 1979 with 1979 average hourly wage
               
 

number of workers (000)

  employment gain    
1950
1979
number
percent
hourly wage
mining
901
957
56
6.2%
$8.48
construction
2,364
4,644
2,280
96.4%
$9.26
manufacturing
15,241
20,972
5,731
37.6%
$6.69
transportation & public utilities
4,034
5,154
1,120
27.8%
$8.18
wholesale trade
2,635
5,170
2,535
96.2%
$6.39
retail trade
6,751
14,966
8,215
121.7%
$4.53
finance
1,888
4,963
3,075
162.9%
$5.28
other services
5,357
17,043
11,686
218.1%
$5.36
total private nonagricultural
39,171
73,869
34,698
88.6%
$6.16

In Figure 2-10 we are comparing changes in total employment between 1950 and 1979 with the average hourly wage in 1979 for production or nonsupervisory workers in each group of industries. The four categories which have created the most new jobs - other services, retail trade, manufacturing, and financial services - offered the lowest, second lowest, third lowest, and fifth lowest average hourly wage in 1979. Mining, which offered the second-highest hourly wage, experienced the lowest absolute and percentage gain in employment during this period. Contract construction, the highest-paying industry, was third from the bottom with respect to creating jobs. It would appear that, by industry, the better-paying jobs are not opening up as quickly as those which offer less pay.

              figure 2-11
   
Comparison by occupation: Gain in employment 1950 to 1978 with 1978 median weekly earnings
   
               
 
number of workers (000)
employment gain
   
              1978 median
occupation
1950
1978
number
percent
  weekly wage
 
   
professional
5,070
14,245
9,175
181.0%
 
$294
managerial
5,130
10,105
4,975
97.0%
 
$323
sales
4,130
5,951
1,821
44.1%
 
$232
clerical
7,260
16,904
9,644
132.8%
 
$175
operatives
12,036
14,416
2,380
19.8%
 
$205
craft workers
8,320
12,386
4,066
48.9%
 
$279
service
6,190
12,839
6,649
107.4%
 
$144
farmers
6,960
2,798
-4,162
-59.8%
 
$139
nonfarm laborers
3,890
4,729
839
21.6%
 
$193
 
 
total occupations
58,986
94,373
35,387
60.0%
 
$227

In Figure 2-11, we are comparing employment changes in the major occupational categories with the median usual weekly earnings for each category in May 1978. In this case, there is a dichotomy of patterns. On one hand, the two highest-paying occupations - professional and technical workers and managers and administrators - added 14,150,000 positions between them while two of the lower-paying occupations - farming and nonfarm laborers - together registered a decline. On the other hand, two relatively low-paying occupations - clerical and service workers - added 16,293,000 positions, which accounted for 46% of the total growth in employment. The mainstay blue-collar occupations operatives and craft workers added jobs at a slower pace than the average.

Looking at these figures, one might conclude that Americans are shunning the “menial” kinds of jobs, such as laborers, and are seeking instead the higher-paying, higher-status, managerial and professional positions. That would be understandable for a well-educated, strongly career-oriented work force. At the same time, common sense tells us that the economy cannot furnish an unlimited number of these “better” jobs. The menial ones must still be around, perhaps under a different description.

Hazel Reinhardt, formerly Minnesota state demographer commented about this at a Citizens League meeting: “We have become a nation of paper pushers. The clerical occupations grew faster than any others. There was also some growth in the professional, technical, and managerial occupations. However, I am a little cynical about this growth. Some of it may simply be due to changes in employees’ titles ... jobs that were once considered clerical are now, by title, managerial.”

One labor-force trend, which has not yet received its due recognition, is that the managerial and professional occupations have spawned a variety of support jobs at the clerical or service level. The latter kind of jobs, or sub-jobs, constitutes one of the fastest-growing types of employment. Everyone is familiar with the capable secretary who stands behind the successful businessman or manager. She knows the operation in and out, but he has the title and the salary. The major professions have each spun off new “para-professional” occupations, which are expected to grow more rapidly in employment than the profession itself.

For instance, the Bureau of Labor Statistics has projected that between 1974 and 1985 the number of teachers will increase by 6%, but teachers’ aides by 88%. Other such comparisons would include: a 43% gain for social and welfare workers vs. a 73% gain for welfare-service aides; 25% gain for scientists and engineers vs. 40% for engineering and science technicians; 20% for librarians vs. 31% for library attendants and assistants; 38% for dentists vs. 158% for dental hygenists; 49% for physicians and 51% for professional nurses vs. 64% for nurses aides and orderlies, and 97% for practical nurses.

A study once was made of the distribution of jobs between high-paying, medium-paying, and low-paying positions in 1960, and again in 1970. Comparisons were also made of the breakdown by age, sex, and race. High-paying jobs were considered to be the occupations in the upper one-third with respect to annual earnings; medium-paying jobs, in the middle third; and low-paying jobs, in the bottom third Overall, the study found that the proportion of low-paying jobs increased from 36.0% of total employment in 1960 to 46.0% in 1970. High-paying jobs stayed about the same: 22.0% in 1960 and 21.0% in 1970. The medium-paying jobs decreased from 42.0% of the total in 1960 to 33.0% in 1970.

Some groups of people suffered more than others from this deteriorating job market. Mature men (25 and older) suffered hardly at ll. In 1960, 32.0% of them held high-paying jobs, and in 1970, 32.8% did. There was also a slight increase in the percentage holding low-paying jobs at the expense of medium-paying jobs. By comparison, young men and mature women sustained a shift of about ten percentage points from the medium-paying jobs to the low-paying ones. Young women suffered the most. In 1960, 58.4% of women under 25 were employed in the low-paying occupations, and, in 1970, 77.0% of them were. Racial minorities, both young and old, remained in approximately the same position in 1970 as in 1960, which was lower than their white counterparts.

  figure 2-12
   
Jobs expected to have the most openings, 1978 to 1990
   
occupation
annual openings
 
secretaries and stenographers
305,000
retail sales workers
226,000
building custodians
180,000
cashiers
119,000
bookkeeping workers
96,000
nursing aides, orderlies & attendants
94,000
cooks and chefs
86,000
kindergarten & elementary teachers
86,000
registered nurses
85,000
assemblers
77,000
waiters and waitresses
70,000
guards
70,000
blue-collar worker supervisors
69,000
local truck drivers
64,000
accountants
61,000
licensed practical nurses
60,000
typists
59,000
carpenters
58,000
industrial machine repairers
58,000
real estate agents and brokers
50,000
construction laborers
49,000
engineers
46,000
bank clerks
45,000
private household workers
45,000

Figure 2-12 lists the twenty-four job categories which the Bureau of Labor Statistics expect to have the most openings each year between 1978 and 1990. The majority of these openings appear to be in relatively low-paying, dead-end areas. Secretaries top the list. An article in Management Review in March 1980 reported a shortage of 80,000 secretaries, which may rise to 250,000 in five years. It notes, however, that “despite the shortages, salaries for secretaries remain low. The national average last year was $185 a week for low-responsibility jobs, $208 a week for higher-level jobs, and $240 for executive secretaries ... A prime reason for the shortages is that the job itself has a negative image, associated with low-level responsibility and lack of opportunity for advancement.

The category with the second most openings is retail sales. A BLS survey found that “in May 1978, the median usual weekly earnings of workers in the (retail trade) industry were only 59% of those for all wage and salary workers. This ratio has changed very little since 1967... About three-fifths of the retail workers reported usual weekly earnings of less than $10 while only 30 percent of workers in other industries reported earnings that low ... About 65 percent of retail trade employees were in relatively low-skilled, low-paying occupations, such as service, sales, unskilled labor, and clerical work. Only 37 percent of workers in other industries were in these occupations.” Retail workers are more likely to be female and young, and less likely to belong to a union. The trend in this industry has been to standardize and simplify procedures so that the jobs can be handled by unskilled workers who can be paid less. Employee turnover is substantially higher than in other industries.

For the sake of brevity, we will not discuss the jobs of building custodians, cashiers, bookkeepers, nursing aides and orderlies, etc. which are farther down the line. Needless to say, these do not appear to be among the more lucrative kinds of positions. Yet, such jobs primarily are behind the boom in employment of which government officials and business leaders from time to time boast.

The other important question is: How productive are these jobs? To what extent do they provide useful goods and services? On might suppose that, by and large, the jobs of farmers are more productive than the jobs of government employees. If that is so, the American economy has suffered a real decline in productive capacity through the substitution of government employees for farmers. Between 1947 and 1979, employment in agriculture declined from 7,890,000 workers to 3,297,000 workers, or by 56.7%. Meanwhile, government employment increased by 182.7% - from 5,474,000 workers in 1947 to 15,613,000 workers in 1979.

I would take this as an indication that the economy is not delivering as solid a product as it once did. While, admittedly, in individual cases a government service, such as successfully treating a drug addict, may be more valuable per dollar spent than food on the table, it is fair to say, perhaps, that a society which devotes a significant part of its resources to treating drug dependency in proportion to that devoted to food production betrays a certain weakness.

Likewise, it would seem that blue-collar workers generally produce a more useful product than white-collar workers. The same may be said of workers in the goods-producing industries compared with those in the services-providing industries. Yet, the proportion of blue-collar workers (including farmers) declined from 52.9% of total employment in 1950 to 35.% of the total in 1979, while the white-collar workers increased from 47.1% in 1950 to 64.1% in 1979. The workers employed in the goods-producing industries declined from 40.9% of total nonagricultural employment in 1950 to 29.7% in 1979, while those employed in the services-providing industries increased from 59.2% to 70.3%.

 

OUTPUT

And so we come to the fourth variable in the equation: output. What has been its trend in the post-war years? Statistically, the trend is up. The U.S. standard of living keeps improving with the years. Is that not true? In 1947, the average manufacturing production worker earned $1.22 an hour. In 1979, the same worker earned $6.69 an hour. Granted that each dollar today is worth 31 cents relative to a dollar in 1947, real hourly wages have still increased by 69% during this time.

Of course, payroll taxes have also risen, and weekly hours have declined slightly. Taking these factors into consideration, average spendable weekly real earnings for a worker with no dependents in the private economy rose from $58.54 (in 1967 dollars) in 1947 to $81.56 in 1979, a 39% increase. For a worker with three dependents, the spendable real earnings rose from $66.73 per week in 1947 to $89.27 per week in 1979, a 34% increase. “Spendable” earnings reflect the withholding of federal income taxes and Social Security taxes, but not state- and local-government taxes.

The statistics for national income, average wages, and productive output each seem to give a different measurement of living standards. Real per-capita disposable personal income increased by 85% between 1950 and 1978. This is in line with the figures given at the beginning of the chapter. We saw that the nation’s economic output (real GNP) rose to a level in 1977 which was 2.77 time the level in 1947. Since the U.S. population grew by 50% during this period, average per-capita real GNP in 1977 was 1.85 times the level thirty years earlier. In the manufacturing sector, output grew to 2.81 times the 1947 level, and, on a per-capita basis, it was 1.87 times as high

These figures, then, would suggest that average living standards rose by 85% to 90% in the period between 1947 and 1977. Now we find, however, that the average production worker received only 30% to 40% more weekly real take-home pay than in 1947. More than half the statistical gain in output has slipped away so far as he or she is concerned.

There are several reasons for this slippage. First, the share of national income which is derived from other than wages and salaries has been increasing. Total personal income grew at an annual rate of 9.9% between 1970 and 1978. Wages and salaries grew by only 9.1% per year during this time. In comparison, dividend payments grew by 10.1% per year, personal interest by 11.9% per year, and transfer payments by 13.9% per year. The Wall Street Journal reported that U.S. corporations paid out almost $50 billion in dividends during 1978, which was twice the 1972 figure (while inflation was 60% higher) and six times what shareholders were receiving each year in the early 1950s. Social Security and related payments tripled during the 1970s.

Another reason for the difference between “disposable personal income” and “spendable real income” is that the first set of figures includes not just the wages of “production or nonsupervisory workers” in private nonagricultural industries, but also the earnings of salaried workers, farmers, and government employees whose incomes have been rising faster. Also, the number of workers has been increasing relative to the total population. It was recently reported that 41% of all husband-wife families in the United States had two wage earners. With more two-paycheck families, family income rose more rapidly than the earnings of a single worker although to earn that income the families had to put in more combined hours at work.

The statistics which relate most directly to productivity, average hours, and employment are those of output expressed in constatnt-dollar GNP. GNP has two sides: input and output. Input tells how the goods and services were produced; and output, how they were utilized. The two sides of GNP are shown in Figures 2-13 and 2-14. On the input side, we find the various elements that enter into the calculation of productivity. National output (GNP) equals the average annual working hours times productivity times average non-governmental employment. On the output side, we find the nation’s “product” is divided between government purchases, net exports, capital investment, housing, services, and durable or nondurable goods. Usually we associate living standards with the last three items, the personal consumption expenditures, which together claim 70% of GNP. Their share f output has remained quite steady.

            figure 2-13
 
Gross National Product, 1947 to 1977, input in billions of 1958 dollars
             
 
annual hours
private
output per man-hour
annual output

conversion factor

GNP in 1958 dollars
year
per worker
employment
             
1977
1,867
75,356
1.218
171,360
5.29
$907.3
1975
1,891
70,063
1.140
151,038
5.30
$800.1
1972
1,936
68,362
1.132
149,819
5.29
$792.5
1970
1,965
65,792
1.051
135,874
5.31
$722.5
1967
2,006
62,974
1.000
126,302
5.34
$675.2
1965
2,035
61,014
.936
116,194
5.32
$617.8
1962
2,034
57,812
.845
99,373
5.33
$529.8
1960
2,043
57,425
.782
91,762
5.31
$487.7
1957
2,062
56,455
.728
84,747
5.34
$452.5
1955
2,108
55,256
.709
82,572
5.30
$438.0
1952
2,141
53,641
.632
72,569
5.44
$395.1
1950
2,140
52,892
.587
66,429
5.35
$355.3
1947
2,205
51,564
.508
57,751
5.37
$309.9
             
  (1) thousands of workers (2) millions of man-hours

Figure 2-15 breaks down the Personal Consumption Expenditures into their major subcategories, showing the reported expenditures for 1959 and 1977 and BLS projections for 1990. Although food remains the single largest item of expenditure, its share of total consumption expenditures dropped from 25.9% in 1959 to 19.2% in 1977; the Bureau projects a further drop to 16.0% by 1990. Significantly, food consumed at home is projected to grow in real terms by 1.9% annually between 1977 and 1990, while food consumed away from home is expected to grow by 2.3% annually.

              figure 2-14
               
 

Gross National Product, 1947 to 1977, output in billions of 1958 dollars

 
               
 
total
govern-
net
capital
consumer
year
GNP
ment
exports
investment
housing
services
goods
 
1977
907.3
183.0
6.8
94.5
39.4
265.3
318.3
1975
800.1
174.8
15.3
69.1
25.9
235.9
279.1
1972
792.5
143.1
-3.0
90.7
34.3
202.2
325.1
1970
722.5
139.3
2.2
81.1
22.2
187.2
290.3
1967
675.2
140.2
3.6
80.9
20.4
167.0
263.1
1965
617.8
114.7
6.2
75.3
23.8
152.5
245.2
1962
529.8
107.5
4.5
55.7
23.8
131.1
207.4
1960
487.7
94.9
4.3
50.6
21.9
121.6
194.5
1957
452.5
89.3
6.2
48.6
20.2
108.0
180.2
1955
438.0
85.2
3.2
50.3
25.1
99.3
174.9
1952
395.1
92.1
3.0
41.6
18.9
87.8
151.6
1950
355.3
52.8
2.7
45.8
24.8
81.8
148.7
1947
309.9
39.9
12.3
36.0
15.4
73.4
133.0

Housing, which includes the imputed rental value of owner-occupied dwellings and rent paid by tenants has claimed a steadily larger share of the total expenditures. By 1990, housing costs will claim one dollar in every six spent for consumer goods and services. Expenditures for durable goods have increased from 11.7% of the total in 1959 to 16.0% in 1977 and are projected to be 18.4% by 1990. In this category, motor vehicles and furniture and household equipment account for the greatest growth. “Other services” have also increased, with health-care expenditures leading the way.

Do these statistics add up to “an increased standard of living”? It is hard to make the connection. For one thing, some of the faster-growing items such as expenditures for motor vehicles or for food consumed away from home are often required in the process of earning a living and may therefore not be considered entirely to be “consumer” expenditures. Housing costs reflect partly the rising cost of land and climbing interest rates whose underlying value has not changed. Better health, presumably, would be the “output” of increased health-care expenditures, but the causal connection is hard to establish.

              figure 2-15
   
 
Personal Consumption Expenditures in U.S. Economy for 1959 and 1977and BLS Projections for 1977
               
 
Amount (in billions of
 
Percent distribution
 
1972 dollars)
       
expenditure              
 
1959
1977
1990
1959
1977
1990
 
motor vehicles
24.4
61.0
108.2
5.7
7.1
7.6
furniture & household equipment
20.0
56.6
115.4
4.5
6.6
8.1
other durables
7.4
20.2
39.0
1.7
2.4
2.7
total - durable goods
51.8
137.8
262.7
11.7
16.0
18.4
 
foods
114.4
165.1
229.3
25.9
19.2
16.0
clothing
36.3
66.6
110.5
8.2
7.8
7.7
gas & oil
13.7
26.6
38.5
3.1
3.1
2.7
other nondurables
40.7
72.0
127.3
9.2
8.4
8.9
total - nondurable goods
205.0
330.4
505.5
46.4
38.5
35.4
 
housing
60.9
140.3
237.6
13.8
16.4
16.6
household operation
26.4
55.4
97.0
6.0
6.5
6.8
transportation
16.3
30.8
54.9
3.7
3.6
3.8
other services
81.0
158.9
271.0
18.3
18.5
19.0
services - total
184.7
389.5
660.5
41.8
45.4
46.2
 
total personal consump-tion expenditures
441.5
857.7
1428.7
100.0
100.0
100.0

 

          figure 2-16
           
U.S. Per-capita Production of certain Commodities, 1935-1970
           
 
Per-Capita Production (1935 = 100)
  wheat canned corn beer cigarettes sugar
           
1970 75.4 111.5 184.9 249.1 118.9
1965 78.7 97.8 156.4 262.8 110.8
1960 86.3 94.9 147.2 254.4 108.1
1955 83.3 86.0 152.2 225.6 103.9
1950 90.6 71.0 164.1 233.7 112.5
1945 120.1 119.1 173.5 214.8 93.2
1940 91.0 69.4 116.5 129.7 106.6
1935 100.0 100.0 100.0 100.0 100.0
           
  Per-Capita Production (1935 = 100)  
  men's suits women's suits fuel oil raw steel  
           
1970 111.6 90.7 199.3 213.9  
1965 118.7 107.2 188.1 225.5  
1960 117.8 103.7 195.4 183.1  
1955 107.6 115.9 217.9 235.1  
1950 123.9 123.2 191.3 208.6  
1945 77.3 107.8 180.9 189.1  
1940 108.1 108.3 133.3 168.4  
1935 100.0 100.0 100.0 100.0  

 

When we think of higher living standards, we tend to think of possessing and consuming physical goods. Ultimately, this increased bounty should show up in higher per-capita production of some of the more basic goods or commodities. Is that happening? In Figure 2-16, several of these commodities are listed together with figures showing their per-capita production in the years between 1935 and 1970. The per-capita production of wheat has dropped significantly. The production of men’s and women’s suits and of canned corn has remained much the same. Per-capita production of beer and cigarettes, however, has risen. The composition of our “standard of living” has changed, shifting from the staples of life towards fabricated products including some which may not be good for our health.

“Higher living standards” do not necessarily mean more good, or better housing or clothes. Some economists would have us believe that there has been a qualitative shift from “meat and potatoes” to steaks every night, or that Americans are buying a variety of new gadgets, such as video games, electronic calculators, color televisions, motor homes, and fancy ski equipment. Some of this is happening, of course, but it does not account for the bulk of consumer expenditures.

I doubt that U.S. living standards have increased all that much in the past thirty years. If American families are averaging 80% more real income than 30 years ago, why are Americans today able to save so little from their paychecks? Why is consumer debt so high? Is it because we belong to the “now generation” which cannot postpone immediate pleasures? Or is it because American workers are increasingly hard-pressed to pay their bills, not just for luxuries but for ordinary things as well?

If Americans today are that much better off than in previous generations, why do so many young women with children find it necessary to seek a paying job to provide or supplement the family’s income, when their mothers and grandmothers could afford to stay at home? A generation ago, most young couples bought their own homes. Today’s newly weds feel they must postpone having children until they can accumulate enough money for a down payment on a house; even then, many will be priced out of the market. The median sales price of new single-family home in the United States rose from $23,400 in 1970 to $63,200 in the second quarter of 1979.

Each American should ask himself or herself: “Am I better off than I was five years ago, or ten or twenty years ago? Am I better off than my parents were at this stage in life?” For many it may be that living standards have improved, though perhaps not so rapidly as the government statistics indicate. For some, such as single-parent heads of household, the times have been little short of disastrous. People are working more and having less - not what you would call “an economic miracle”.

There is softness in the numbers. The “output” figures seem a bit flaky. Why should this be? A panel was commissioned by the National Academy of Sciences to study the concepts underlying GNP. This panel issued a report in November 1979. Its chairman, Albert Rees, wrote: “ In recent years, the concept of economic output used in the National Income and Product Account has been criticized because it is not a consistent measure of welfare. It excludes some activities that contribute to welfare, such as the work of parents in caring for their children, although the work of paid baby-sitters is included. However, the output measure also includes the cost of necessary evils, such as expenditures on crime prevention, although society would presumably be better off if such activities were not necessary.”

Mr. Rees also noted: “There are no independent measurements of final output for government (except for government enterprises whose output is sold) or for nonprofit institutions. These sectors must therefore be excluded from the broadest productivity measures. The exclusions are most unfortunate because these activities now account for a significant portion of the economy.” A related difficulty was that, in some cases, “output cannot be measured independently, and changes in inputs must be used instead as proxies for changes in output.”

Economic output as such is hard to visualize, especially when much of it takes the form of “information processing” and other services. In many respects, the figures on employment give a more comprehensible picture of how the economy has developed. Who is being paid how much to do what? Where are the flourishing careers?

An advertisement on the back cover of my college-alumni magazine caught my eye: “An individual with a $500,000 estate can save more than $70,000 in taxes if the estate is planned properly,” the ad declared in bold print. Another eye-catching feature was the picture of a woman who was senior vice president of the sponsoring bank, a large Wall Street concern. She explained in the text what services might be rendered to the person with a $500,000 estate: “Taxes on your estate would be dramatically reduced by combining the maximum marital deduction and a ‘tax sheltered’ trust for the balance of the estate ... This benefit is typical of what we can achieve by working with you, your attorney, accountant, and insurance agent to create a tightly knit, coordinated plan that meets your goals. Most of our trust officers have law degrees, which enable them to work effectively with your attorney. Should complicated tax problems arise, your trust account is brought immediately to the attention of our Fiduciary Tax Department with its special expertise in estate and trust tax laws.”

From this advertisement, I have the image of a group of well-dressed and well-educated bankers, attorneys, accountants, insurance agents, and other professionals, each earning perhaps $50,000 or $60,000 a year, pooling their individual expertise and experience to perform a highly sophisticated “service”. And what might that service be? The ad itself states that it is to save the client $70,000 in taxes on a $500,000 estate.

To the person who has accumulated $500,000, that service might well be worth the money paid. From the standpoint of the economy as a whole, it accomplishes nothing. The $70,000 which this well-heeled individual saves in taxes would tend either to reduce government revenue and expenditures or the burden would be shifted to other taxpayers, less able to bear the cost. In the aggregate, nothing really is gained or produced by this service, though its cost is reflected in GNP. To the extent that the nation’s economic output increasingly consists of services such as this, one may readily understand how GNP in itself is misleading.

I do not claim that the activities of the tax-avoiders and money-changers account for most of the “growth” in the post-war U.S. economy. Their numbers may be relatively small. Nevertheless, these well-regarded and highly lucrative occupations do illustrate how economic output can grow statistically, but not in fact. The majority of working people would be better off if such functions did not exist or were at least sharply curtailed and the economic resources committed to them were channeled instead into providing a shorter workweek.

These four kinds of jobs may be considered nonproductive for the following reasons:

1. They represent excessive competition in the advertising and marketing of products rather than an improvement of the produce or a lowering of its price.

2. They exist solely to serve bureaucracy.

3. Their function is to repair social, economic, or physical breakdowns which might have been avoided if working hours were shorter.

4. They are services which married women have traditionally performed without charge in the household but have given up under the pressure of holding an outside job.

Let us review each type of job.


EXCESSIVE COMPETITION IN MARKETING

To illustrate this situation, let us suppose that Ford and General Motors are locked in a struggle to dominate the U.S. automobile industry. To improve its competitive position, each needs to hire more workers. How should these workers be employed? Initially, when the industry was growing, more factory workers would have been needed to build more cars. The company which could deliver the volume at a fair price would capture the largest market share. As the market became saturated, however, the emphasis would change to marketing and sales promotion. It would become more profitable to hire an additional salesman to “move the product” than a production worker to build more units which might sit unsold on the dealers’ lots. With their beefed-up sales force, then, the GM dealers would try to win customers at the expense of Ford dealers, and vice versa.

As this marketing effort intensified, the result would be not that so many more cars were produced and sold but that one or the other company would have a larger share of the market. From the standpoint of the economy as a whole, the labors of the Ford and GM salesmen would largely cancel each other out. So, in general, it might be supposed that, to the extent new jobs reflect the intensifying competition between business firms to market or promote products rather than to design and build them, the additional output from such employment is of marginal use to society.

Selling cars may be a bad example. Actually, the employment of sales personnel has not increased that much in recent years. Much of the selling today is done through media advertising, product displays, and mass mailings, rather than by people who personally approach customers. Still, one can find evidence of certain overly intense or excessive marketing efforts such as in the above illustration. Today, customer service and convenience are the focus of the competition in retailing.

The retailer today with the largest number of stores is not Sears or K-Mart, Wards or J.C. Penney, but the Dallas-based Southland Corporation, which operates 7-Eleven. The 7-Eleven chain has 7,600 outlets, which is 50% more than the number of McDonald’s restaurants, and more stores than the four largest supermarket chains combined. Four out of five 7-Eleven stores are open 24 hours a day. (The hours used to be 7 a.m. to 11 p.m. Hence, the name “7-Eleven”.) Their customers spend an average of $1.54 per visit to pick up odd items such as milk or bread, bagged ice, sandwiches, disposable diapers, cigarettes, cold beer, and Playboy magazines. They are willing to pay a higher price per item to purchase “convenience”.

The supermarkets themselves are starting to catch on to the “convenience” market. The local Red Owl store, where I sometimes shop, recently posted its new hours: 8 a.m. to 12 midnight Monday through Friday, 8 a.m. to 9 p.m. on Saturday, and 10 a.m. to 6 p.m. on Sunday. Its chief competitor in the area, Applebaum’s, is forced to extend its hours. While the stores are open, each requires at least a skeleton crew to man the check-out counters and help customers. Here is where “the middle man” takes a big chunk of the consumer food dollar.

I certainly would not object if Red Owl and Applebaum’s conspired to split the convenience market between them in a mutually profitable way. If, for instance, Red Owl closed at 6 p.m. on Monday, Wednesday, and Friday, and Applebaum’s did the same on Tuesday, Thursday, and Saturday, my shopping habits could adjust. To keep both stores open until late at night and on weekends is of marginal benefit to me.

A reasonable amount of competition is beneficial to all concerned, but excessive competition like this is just plain wasteful. Some of our more respected institutions have developed to that degree. In higher education, for instance, the students are basically competing with each other to obtain more impressive credentials with which to land one of a limited number of the more desirable jobs. The American system of legal justice, too is enormously expensive. Courtroom standards of procedure have been impressively “upgraded”. High-priced attorneys contrived sophisticated offensive or defensive strategies in the pursuit of justice. There are appeals to the higher courts on every imaginable technicality - all involving expense.

One horrible example, in the recent anti-trust suit against IBM, the trial alone lasted three years. The transcript of the trial ran 75,000 pages. How much did all of this cost? Asked about IBM’s legal fees, its chief in-house counsel, Nicholas deB. Katzenbach remarked wittily that they amounted to “more than a subway fare.” Of course he was right. At any given point during the trial approximately 20 attorneys from the New York City law firm, Crawath, Swann & Moore, who averaged 55 to 70 hours per week, were working to defend IBM. Meanwhile, the U.S. Department of Justice, where Katzenbach used to work, was running up huge expenditures to prosecute the case. All this expense, ranging from the partners’ fees to the proofreaders’ wages to the cost of pencils and erasers, gets larded into IBM’s cost of doing business. From there, it is laundered through the different customers in the form of higher prices for computer equipment, showing up eventually in the consumer-price index for various goods and services.

Is this a necessary part of doing business in a modern industrial economy? Not at all. A workable alternative exists in Japan. In that entire country, there are only 15,000 lawyers, fewer than in the state of Ohio, and on a per-capita basis about 4% as many as in the United States. Japanese businessmen place less emphasis upon writing contracts, and more emphasis upon cultivating long-standing business relationships. Government governs more by administrative discretion than by issuing detailed laws and regulations and bringing lawsuits in the courts.

BUREAUCRATIC JOBS

John W. Fisher, chairman of the National Association of Manufacturers, complained of excessive government regulation at an NAM-Rotary Club meeting in Cleveland. Mr. Fisher, who is chief executive officers at the Bell Corporation in Muncie, Indiana, told the audience that he “went back to my office last night to sign 27 different forms of an SEC regulation, some of them with seven copies. “ According to a newspaper account of the speech, “he called the multitude of forms, ‘busy-work to keep idiots busy who can’t get a job anywhere else,’ and added, ‘Until we get these kinds of shackles removed, we’re not going to be able to compete.’”

Mr. Fisher may have intended his remark about keeping “idiots busy who can’t get a job anywhere else” to be derogatory, but his point is well taken. In our society there are indeed people - Ph.D.s as well as idiots - who “can’t get a job anywhere else” and must turn to government for employment. Government must have something for these people to do, which, hopefully, is relevant to the rest of society. Regulating business would seem to be one way of keeping in touch. The questions, then, need to be asked: To what extent does bureaucratic enterprise follow the supply of bureaucrats as opposed to authentic regulatory needs? To what extent would bureaucracy disappear if bureaucrats found jobs in other areas?

There can be little doubt that government bureaucracy represents a clear threat to our economic well-being. Between 1947 and 1978, civilian employment in the federal government increased by 45.5%. Employment by state and local governments rose by 255.2%.

The federal employment figures are understated by the fact that a growing share of government work is subcontracted to private firms. The National Journal estimates that over ten million Americans, rather than the 2.7 million reported on the payroll, are actually working on federal projects, mainly under contracts and grants; and that does not include the U.S. Postal Service or the military. Murray Wiedenbaum, director of the Center for the Study of American Business, estimates that for each $1 which the federal government spends for regulation, business and industry spend $20. The U.S. government plans to spend $6 billion to regulate business in fiscal year 1979-80. That puts industry’s tab at $120 billion.

Various estimates have been made of the paperwork which government requires of its citizens. In September 1979, the Office of Management and Budget revealed that Americans were spending a total of 786 million man-hours to meet 5,000 separate reporting requirement of the federal government, which was 15% fewer man-hours than in the previous year. Assuming an average of 2,000 hours worked per year, this is the equivalent of 393,000 full-time jobs devoted to processing federal forms. An official of the National League of Cities complained that city governments were spending $5 billion a year to handle paperwork required by Washington, “or about as much as we get out of general revenue sharing.”

The federal government has a reputation for providing “start-up funds” for various programs, and then expecting the recipient institutions to keep the programs going from their own resources. For that reason, more and more businesses, universities, and state and local governments are deciding to forego applying for federal funds, though such funds are available.

Although it is difficult to measure the number of jobs created through government regulation and bureaucracy - certainly the BLS would not compile statistics on the subject - there is evidence to suggest that the impact is considerable and increasing. Let us consider two examples. In recent years, the continuing high levels of unemployment an sluggish job market have worked to the particular disadvantage of young people racial minorities, and women. To address the problem, the nation’s policymakers chose not to reduce the workweek, which would have created jobs for all, but to force employers to hire more women and minorities through affirmative-action programs.

The Justice Department beefed up its staff of attorneys to prosecute such cases. Business responded to the threat by adding to its legal and personnel departments. Personnel Journal, a trade publication, reported that personnel departments at U.S. companies grew from an average of 6.2 employees in 1976 to 8.5 employees in 1978. The average personnel-department budget increased from $133,000 to $178,000 during this two-year period. A national survey conducted in 1979, found that 75% of the corporate vice presidents at Fortune 500 companies who were responsible for dealing with government regulations had had their positions upgraded to vice president within the past five years, and 82% reported having increased their staffs.

In another example, corporate executives have become involved in scandals, including bribery of government officials, and other corrupt practices. Again, the response has been to throw more dollars - and more employment - after the problem. This time, accountants were the beneficiaries.

The Wall Street Journal reported: “The critics who used to refer jokingly to the Foreign Corrupt Practices Act as “‘The Internal-Auditor Full-Employment Act of 1977’ are turning out to be more prophetic than funny ... Many U.S. companies, worried about the first federal law to make it a crime not to have a ‘reasonable’ internal control system, have jumped to increase the staff budget and influence of their internal audit departments. Smaller companies, without internal audit departments, are hastily setting them up ... Not surprisingly, costs are increasing, too. A survey by the Financial Executives Institute ... indicates that complying with the SEC’s proposed rules alone will increase companies’ auditing costs by 20% in 1980 ... ‘Many of the middle-sized and smaller companies are scared to death that they don’t have the resources to respond,’ says John Fletcher, executive director of professional development at the Institute of Internal Auditors.”

Lest we associate bureaucracy just with government, it should be said that big business, big labor, big universities, or any large organization can have, and usually do have, bureaucratic tendencies. Beyond a certain point, large organizations are inherently inefficient. In a decade marked by corporate take-overs, conglomerates, and multi-national corporations, big-business bureaucracy is very much in evidence.

Business has its own particular style of being wasteful. For one thing, it likes to waste the lives of employees and their families. In the Wall Street Journal it was reported that almost 40% of the corporate employees who are transferred have been transferred at least four times previously during their careers. Presumably, no jobs representing a promotion were available at their present locations. Despoliation of the natural environment is another specialty of big business.

It is easy, really, to create jobs. Just budget the money to hire someone to do anything, useful or not. The U.S. Department of Labor reported in May 1979 that it was funding 1,681,000 summer jobs for youth. This is one way to fight unemployment. Another way is to mandate the spread of bureaucracy. Impose regulations upon business and other organizations which will require them to take on hundreds or thousands of additional employees - yes, and highly educated and professional employees - just to cope with the situation.

Jobs can be created with the stroke of a pen. The more complexity, the more jobs. The more breakdowns, shortages, illnesses, disasters, or crime, the more we need specialists to untangle the mess. Where will it end? Does it have to end? We can go on creating this kind of job forever.

Ours is an economy which ultimately is governed by Parkinson’s law: Work expands to fill the time available for its completion.” And, thanks to the decision not to cut the workweek, there is plenty of room for work to meet its expansive potential.

Lawrence J. Peter, author of “The Peter Principle”, believes that the U.S economy as a whole may be approaching its “level of incompetence”. Our concept of progress, he writes, “is concerned only with quantity: Every plane that crashes raises the GNP and thereby statistically raises the standard of living.” There are too many commercial products. Too many separate systems are functioning together in an uncoordinated way. As a result, he observes, “the precious few inches of top soil - upon which life depends - is polluted, so that the vicious cycles of environmental degradation proliferate.”

 

BREAKDOWN AND REPAIRS

There is another kind of activity which is closely associated with bureaucracy but is not quite the same thing. This becomes a two-sided enterprise: One dollar is spent in a way which brings injury, illness, or breakdown. Another dollar is required to repair the damage. The economy really starts to cook with this two-dollar injection.

Peter’s example of the airplane crash illustrates how the process works. There is the initial expenditure of money for transportation purposes. There is the follow-up expenditure for the compensation of victims, investigation and clean-up, ordering a replacement craft, etc. In the case of commercial airlines, of course, every effort is made to ensure passenger safety. The same cannot be said for certain other kinds of activities or commercial products. Some products pose a specific danger to our health. In other cases, it is our entire lifestyle, including its economic component which is prone to weakening and eventual breakdown.

The problem of chemical dependency, I believe, can be linked with a subsequent need to visit the doctor. Cigarette consumption remains high, despite its well-publicized health hazard. The per-capita consumption of alcohol is on the rise. Numerous school children have learned how to use narcotics at or after school, having perhaps been exposed to other drugs at home. A federal study found that new prescriptions and refills for anti-anxiety drugs more than doubled between 1964 and 1973. Almost 15% of Americans use tranquilizers at some time in a given year.

The drug industry panders shamelessly to the medical profession. The message of a typical TV drug commercial seems to be that Brand A is better than Brand B because it contains a stronger dose of a particular doctor-recommended pain-killing ingredient - Use it, even if you have only a mild headache. Such a message is a prescription for poor health and the subsequent need to visit a doctor.

Good health starts with a balanced diet. For a nation with the agricultural capacity to feed the world, it is appalling that America’s own children are being raised on junk food. In 1976, per-capita consumption of soft drinks overtook that of milk. By 1990, Americans are expected to consume more gallons of soft drinks than water. Within the $13 billion-a-year soft-drink industry, the five largest companies together spent $200 million for advertising, up 80% in two years. They were disappointed with the 4% growth in sales volume recorded in 1978 compared with the previous year.

In 1979, Americans spent a total of $185 billion for health-care services, or 8.3% of GP. This compares with $27 billion, or 5.3% of GNP, in 1960; and $12 billion, or 4.2% of GNP, in 1950. Although in part these increased expenditures for health care reflect the aging of the population and the use of more expensive medical equipment, there is little doubt that the American lifestyle has contributed to our worsening physical health. “The emotional strains of American life, in the work place and in the family, are apparent from surveys in which people say their lives are deeply troubled, that they are less happy than they once were and that they suffer more from insomnia, headaches, and stomach problems,” the Wall Street Journal recently reported.

Many doctors believe that job-related tension and stress contribute heavily to health problems. A dramatic illustration of this link comes from a study of the workers at Cape Kennedy during the manned lunar expeditions. According to a Wall Street Journal article, “Dr. Robert S. Eliot, a cardiologist now at the University of Nebraska, and several colleagues found a high rate of divorce and alcohol consumption as the workers raced to complete their mission, knowing that once a successful moon landing had been made, the space budget would be reduced and they would lose their jobs ... At the same time, the researchers also noticed an unusual number of sudden deaths, apparently from heart attacks, among the relatively young space-center workers. Since then it has been found that the sudden deaths were 50% higher than would be expected for that age group. They peaked at the time of the heaviest layoffs as the space program was winding down.”

In a well-publicized study, Dr. Harvey Brenner of Johns Hopkins University concluded that the 1.4% increase in unemployment which took place in 1970 had the effect of increasing suicides by 5.7%, admissions to mental hospitals by 4.7%, and deaths due to alcoholism and to heart-related diseases by 2.7%. If his figures are correct, the increased unemployment in 1970 caused 51,000 additional persons either to die or to enter institutions.

The cost of poor health to the economy can be staggering. That point was brought home several years ago when General Motors disclosed that it was spending more for health-insurance premiums each year than for the steel in its cars. Still, in an effort to become “more productive”, our economic managers insist upon pushing people to work harder and faster and for longer hours. This intensified “rat race” causes stress and anxiety, leading to increased drug use, alcoholism, illness, and breakdown.

If, on the other hand, the economic policymakers opted for a shorter workweek, the tensions from work would be eased. People would have more time to recover from work-induced fatigue and, perhaps, to engage in health-restoring activities such as physical exercise. In Japan, the current physical-fitness boom is attributed, in part, to the introduction of the 5-day workweek at many firms in the early 1970s.

Besides the problems with physical health, Americans have been suffering breakdowns in moral and social health. The U.S. crime rate increased at a 7.8% annual rate between 1960 and 1970, and at a 5.8% annual rate between 1970 and 1975. The Law Enforcement Assistance Administration (LEAA) reported that there were 292,325 inmates of federal and state prisons at the end of 1977, an all-time high. Meanwhile, the divorce rate has increased from 2.2 per thousand in 1960 to 3.5 per thousand in 1970, and to 5.1 per thousand in 1978. With this, the number of single-parent families has increased, particularly those headed by women. In the ensuing economic distress, more mothers of young children have been driven to seek a job. That has caused problems with parental supervision, which, in turn, may lead to more juvenile crime and drug abuse.

It should come as no surprise, then, that the occupations most closely involved with these various forms of social breakdown are expected to show better-than-average employment gains. In the period between 1974 and 1985, the Bureau of Labor Statistics projects that the employment of psychologists will increase by 45%, of attorneys by 42%, of social workers by 43%, of welfare-service aides by 73%, of police and detectives by 46%, compared with a 20% average increase in general.

In the “human services” sector, a variety of programs have been developed to treat people’s special problems. There are programs to rehabilitate alcoholics, drug addicts, illiterates, the mentally retarded, physically or emotionally handicapped persons, wife beaters, child abusers, sex offenders, ex-convicts, high-school dropouts, welfare recipients, or whatever. Of course, it is good for people who have these kinds of problems to find professional help available, if they wish to use it. I wonder, though, if in many instances the effect of such programs, often aimed at helping the “disadvantaged”, is not to foster a negative self-image rather than bring a solution. The economic part is suspect. Funds are appropriated for counseling, therapy, and other “services”. The social-service professionals, fully trained, must have a clientelle. The new computer technology allows a person’s record to be stored permanently on tape and to become instantaneously and completely available to authorized investigators and administrators. Where is an ex-sinner to hide?

An economy which insists upon turning a large percentage of the population into derelicts is certainly not improving their standards of living. Tom Dewar, a manpower researcher with the Minnesota Project, argues that the so-called “disadvantaged” are themselves a much-neglected resource for community improvement. “It is interesting,” he said, “that the work that most needs doing is in the neighborhoods that most need employment.” Dewar told of a meeting with a group of “severely disadvantaged” parents in south Minneapolis to discuss day-care facilities for their children. The parents’ attitude towards the proposed project changed dramatically as soon as it was suggested that they themselves might work at the day-care center. “Almost immediately, they began to see themselves as a resource rather than a problem. Also, you could see changes in the way they were viewed by others,” Dewar said. “The important thing is to start with the capacity of people rather than looking at their problems.”

 

SUBSTITUTES FOR HOUSEWIVES’ WORK

Taking exception to the purposes of the Conyers bill, Professor John Owens told a Congressional subcommittee: “There are a number of areas in which the demand for labor is likely to expand in the years ahead. Many of these are in the service industries in which mechanization is difficult and which tend to receive a larger share of income as we become more affluent. Examples include: health care and care for the aged; protection (including security forces, the criminal-justice system and the penal system); child care (spawned by the declining proportion of full-time housewives); recreation and restaurant and fast food facilities ... Despite the mechanization of many routinized jobs, there remain enormous needs for labor as we endeavor to provide an affluent lifestyle for every citizen. It seems most unlikely that this need will be reduced in the years ahead.”

Looking at Professor Owen’s list of growth industries, I am struck by how nearly all of them represent to some degree commercial substitutes for services which used to be provided without charge within the household. The wife and mother, in her role as “housewife”, cooked the meals, cared for children, provided basic nursing services, tended the needs of an aging relative, and saw to it that her offspring were raised to be law-abiding citizens. Lately, for numerous reasons, more and more married women have taken paying jobs outside the household. Many have attempted to keep up their housewife’s work, or to have their husbands assume more of these responsibilities Often, however, the combination of a paying job and household chores left too little time to maintain the latter adequately. Increasingly, government agencies or capitalistic enterprises have moved in to furnish services which the working woman was no longer able to handle by herself.

To the extent that such services account for a major share of the new jobs in the economy, it is clear that the “growth” in output and employment is really no growth at all. The new jobs represent merely the substitution of commercial or institutional work for work once done within the family. The same kinds of services are performed in both cases. The difference is that, in the case of work which a housewife does, the services are not included in GNP because no money is exchanged; whereas, in the case of meals consumed in restaurants or custodial care of children in day-care facilities, such services are included.

Conceivably, one might argue that the services performed outside the home are of higher quality because they are handled by professionals. Ordinarily, such an argument might make sense. In this case, however, the professional is generally no match for mother, with her personal touch. What fast-food restaurant can equal mother’s home cooked meals? What day-care center can give children the loving attention which their own mothers would give? What nursing home would show the same care and concern for an elderly patient which a daughter or close relative would show? No, there has been no net gain in the standard of living.

Figure 2-17 shows the rising employment of women in several categories. Single and divorced women have always had a higher rate of labor-force participation than married women living with their husbands. Women without children or with grown children have had a higher rate than women with children who were young. In recent years, however, the most rapid growth in female employment has occurred among married women with children under 6 years of age. In 1950, 11.9% of such women participated in the work force. In 1978, 41.6% did. A Department of Labor study conducted in the early 1970 determined that most women work for financial reasons, not “self-fulfillment.”

The phenomenon of the working women as had an enormous impact upon the American economy. “Helping working women spend their wages is a profitable undertaking for many businesses,” comments an article in the Wall Street Journal. “Mr. Linden, the Conference Board economist who specializes in consumer-spending patterns, gives clothing makers, cosmetics firms, convenience-food producers and restaurants as examples of businesses that prosper because so many women have jobs. 'Women who work tend to spend considerably more on their appearance than those who remain at home,’ he explains. He also notes that a recent Conference Board study found that families in which both spouses work spend 25% more in restaurants each year than those in which only the husband is employed ... Working wives also keep the American dream - the single-family home - a reality for many families.”

Employed women have obviously influenced the boom in fast-food franchises, cleaning services, and similar enterprises. They have also had an impact upon such mainstay business areas as the automobile industry. Reportedly, female customers prefer smaller cars because of their greater handling ease but they order high-profit accessories such as automatic transmissions, power locks and windows, expensive upholstery, and two-tone paint jobs. The microwave-oven industry is expected to triple in sales volume by 1985, thanks to working women.

            figure 2-17
 
 
 
Labor-force participation of American women in several
categories of family status, 1950 to 1978
 
             
  (in thousands of workers) (percent of women in labor force)
  NUMBER IN LABOR FORCE PARTICIPATION RATES
  women 16 married with have children women 16 married have children
  & over husbands under 6 & over women under 6
             
1978
42,002
22,789
4,640
50.1
47.6
41.6
1976
37,817
21,554
4,424
46.8
45.0
37.4
1974
35,892
20,367
4,210
45.7
43.0
34.4
1972
33,320
19,249
3,746
43.9
41.5
30.1
1970
31,560
18,377
3,914
43.4
40.8
30.3
1968
29,242
16,821
3,564
41.6
38.3
27.6
1966
27,333
15,178
3,186
40.3
35.4
24.2
1964
25,443
14,461
3,050
38.7
34.4
22.7
1962
24,047
13,485
2,884
38.0
32.7
21.3
1960
23,272
12,253
2,474
37.8
30.5
18.6
1958
22,149
11,826
2,399
37.1
30.2
18.2
1956
21,495
11,126
2,048
36.9
29.0
15.9
1954
19,718
9,923
1,808
34.6
26.6
14.9
1952
19,314
9,222
1,688
34.8
25.3
13.9
1950
18,412
8,550
1,399
33.9
23.8
11.9

Managerial and professional women spend $4.6 billion a year on work clothes. New styles of clothing have therefore been developed which combine “femininity” with business propriety. “This market is a very hot prospect, and I want a piece of it,” declared Robert F. Young, publisher of Family Circle, whose firm has recently brought out a new magazine entitled “Women Who Work”.

A bonanza though it may be to trend-conscious businessmen, the emergence of the working woman does not necessarily indicate higher living standards. In the first place, the new kinds of services merely replace old ones handled another way. In the second place, many of the expenditures which employed women make as in the case of work clothes, are not “consumer” expenditures as such, but more like a business expense. In the third place, we should keep in mind that the two-wageearner family has considerably less free time than before. Also, the increased number of single-parent families headed by women may be related to the growing labor-force activity of women.

In 1977, the average income of families maintained by the mother alone was 41% as much as that which two-parent families enjoyed. Higher average family incomes do not represent true prosperity if a significant percentage of these families become trapped in poverty.

Finally, there are the intangibles. The auto and appliance dealers, supermarkets, and shopping centers may draw bigger crowds on the weekends, but residential neighborhoods have lost their sense of community identity. A Wall Street Journal article noted this tendency in a Chicago suburb called “Morton Grove” which had a predominance of working wives. One resident who had lived in this neighborhood for six years confessed: “I really don’t know the people who live down the street.”

She was not the only one. “The lament is echoed again and again throughout the town,” the article observed. “The day-time absence of employed wives, the few young children, and the wide age gap between old timers and newcomers hampers socializing. ‘The phantom neighborhood’ is how some residents refer to their block. ‘I have no time to socialize,’ asserts Rene Seyter, an officer at Second Federal Savings & Loan and a mother of two. “I work and I’m very busy.”

This is the reality of our post-war “prosperity”. If nothing is done to change the economic equation, it can continue indefinitely. We can continue to labor under the theory that the U.S. economy is the strongest and freest one on earth and resist all proposals for change. Another reaction, equally wrong, would be to have certain reservations about the course of our economic development at this time, but to decide that the problems are too complex or ingrained in the system to be corrected. The foregoing discussion is not mean to be a pundit-like analysis of trends or provide “food for thought”, but to suggest the need for change in a very specific way.

The shorter-workweek proposal offers an alternative course of development which we are free to choose at any time. Essentially, it calls for government to increase the financial disincentives for scheduling overtime and to lower the number of hours in a week at which overtime begins. This change would exert downward pressure on the man-hours worked in the economy. It would thereby give employed workers more free time and create new job opportunities for the unemployed and others not now working who want jobs.

What would be the effect upon output and employment? Many economists claim that shortening the hours of work would mean less production and lower average living standards. That explanation might be plausible if the economy in its recent “expansion” were producing greater volume of authentically useful goods and services. Such has not been the case. The “expansion” of output, created by denying shorter hours, has taken the form of activities which, in many cases, were not useful, wanted, or necessary. This layer of “fat” would be the first to go with a shorter workweek. Essential goods and services need not be cut at all.

In the next chapter, we will speculate in some detail how such things are possible. Americans might have had in 1979 a 35-hour standard workweek, or even a 32-hour workweek, without any loss of productive output. This is not wishful thinking but a mathematical possibility, projected into the future. With a shorter workweek, labor productivity might be expected to improve, and manpower would naturally flow back from bureaucratic enterprise to productive jobs in agriculture, manufacturing, mining, and other basic industries. Alternatively if there is no constraint put on bureaucracy, it will expand indefinitely.

There are, indeed, certain natural limits to the goods and services which people can comfortably consume. If we try to force more output through the system than is natural in order to create more taxable wealth, the result is economic constipation rather than higher living standards. Leisure may seem empty to some economists, but working people know better. Sometimes, when we are on the wrong track, it is better to “do nothing” than to operate full blast.

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