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(A Shorter Workweek in the 1980s)
WORK SHARING: A MACROECONOMIC POSSIBILITY
The work-sharing concept proposes to substitute employment for hours in the composition of labor. If government through legislation or the trade unions through collective-bargaining agreements reduced the general hours of labor, then a certain number of jobs would be opened up by the need to maintain productive output during the reduced work period. Unless a crew of workers could produce as much as before in fewer weekly hours, production would suffer. It would then become necessary for the employer to hire new workers to make up the shortage. Those workers might come from the ranks of the unemployed thereby lowering the unemployment rate.
Various estimates have been made of the number of jobs that might be created through shorter hours. For instance, Rep. John Conyers told the subcommittee of the House Education and Labor Committee which was hearing his shorter-workweek bill: “The purpose of HR-1784 is to stop the erosion of industrial employment in the nation and to open up new jobs that will be created - it is estimated some 8 million new jobs - when we curb overtime and shorten the workweek to 35 hours.” Critics of the bill were quick to challenge the claim that reducing the standard workweek to 35 hours would create 8 million jobs - or any jobs for that matter. Some claimed even that it would destroy more jobs than might be created. Where is the evidence to support the job-creation claim, those critics asked?
Mathematically, one might offer the following line of argument: Work is expressed in terms of “man-hours” worked. If we change one of the variables - either the number of workers or their average hours - while keeping their product the same, it will have an inverse effect upon the other variable. For the same level of man-hours, shorter average hours will entail higher employment; and longer hours, lower employment.
In 1979, for instance, an average of 92,287,000 persons were at work during the year and they worked an average of 38.9 hours per week. The U.S. economy operated at a level of 3,551,064,300 man-hours of labor per week. Figure 3-1 indicates the employment gains to be expected at various levels of hours below that point. If one hour were cut from the average workweek so that workers averaged 37.9 hours per week, it would take 93,695,600 workers, or 2,408,600 more than before, to keep up the 3,551,064,300 weekly man-hours. Two hours per week below the reported average, it would take 96,234,800 workers, or 4,947,800 more than before. Three hours below, it would take 98,915,400 workers, or 7,628,400 more than before. Unemployment during 1979 averaged 5,963,000 workers. Therefore, at some point between the second and third eliminated hour of work the number of additional workers required to maintain the current level of man-hours would have, in theory, completely eliminated unemployment.
figure 3-1 Hypothetical trade off between shorter weekly hours and unemployment in 1979 Man-Hours Average Hours Employment New Jobs Unemployment 3,551,064,300 38.9 91,287,000 0 5,963,000 3,551,064,300 37.9 93,595,600 2,408,600 3,554,400 3,551,064,300 36.9 96,234,800 4,947,800 1,015,200 3,551,064,300 35.9 98,915,400 7,628,400 -1,665,400 3,551,064,300 34.9 101,749,700 10,462,700 -4,499,700
I would concede that this is rather skimpy evidence upon which to base the shorter-workweek argument. Better evidence might be to find historical instances of working hours having been shortened and to analyze the impact upon employment. Unfortunately, the workweek has not been shortened in the United States lately, at least not on a scale that would affect unemployment. The evidence of its impact does not exist because the examples themselves do not exist. What can we say?
Nearly everyone agrees that a shorter workweek is theoretically possible. Most economists argue, however, that if government forces this change upon the economy prematurely, a drastic decline in living standards would have to take place. The first question, then, is whether or not a shorter workweek would have to be obtained at the expense of material living standards. A second and related question centers around the word, “prematurely”. If a shorter workweek, induced prematurely, would cause living standards to drop but one achieved in the due course of time would not cause such a drop, then the timing of the change becomes critical. Would a shorter workweek in 1960 have been premature? How about one in 1980? How about the year 2000? At some point we must begin to relate this possibility to current economic realities.
It was more than a half century ago that Henry Ford instituted the 40-hour week in his automobile factories, and forty years ago that the 40-hour standard became effective in many goods-producing industries. Today, 30-hour or 32-hour workweeks seem futuristic. The 35-hour week remains to many “premature”. These words are beginning to acquire a peculiar odor - the musty odor of procrastination and stalling. If we are serious about achieving shorter hours at all, we must stop associating this with some time in the 21st century or even the 1980s and place it prominently upon the agenda for the current decade.
The shorter workweek is economically feasible now. It was feasible - economically, not politically - ten or twenty years ago, too. However, the powers that be in earlier administrations decided against allowing American workers more free time and, barring public outcry, they are prepared to do so again.
High-level economists would “educate” us as to the basic economic facts. Let them be educated for a change. They have their budget and their programs which call for wringing out inflation with a rise in unemployment. We will offer a program for wringing out unemployment with reduced taxes and minimal impact upon prices.
The real issue again is whether a shorter workweek might be introduced without lowering the average standard of living. Yes, it can. In the remainder of this chapter, we will see that there are sufficient labor-force reserves in the U.S. economy that the requirements of the Conyers bill could be met - today or even yesterday - without bringing a decline in output or the total man-hours worked.
AN ALTERNATIVE SCENARIO OF MANPOWER USE
The argument to support this claim is necessarily theoretical. History has not moved in the direction of shorter hours so we cannot gather and exhibit historical facts. In this chapter, however, will be offered an alternative scenario indicating how the U.S. economy might have developed if the workweek had been cut to contemplated levels. Our argument is a hybrid of fact and supposition. We are assuming that total man-hours worked, indicative of output, are set at their historical level. We are assuming that average weekly hours are adjusted to a targeted level: 35 (or 32) hours. With these two assumptions, we can calculate from BLS-supplied information how the other two variables, employment and productivity, might have changed.
Our scenario, again, is not history, not even hindsight, but a calculation of possibilities within the framework of fact. The facts which will be used in this calculation are data reported by the Bureau of Labor Statistics for the year 1979 pertaining to productivity, weekly man-hours, average work hours, employment, unemployment, and other labor-force categories. We are concerned with measurement of capacity and potential.
Heretofore, the focus of the discussion has been upon eliminating unemployment and reducing it to a tolerable level. That will continue to be the goal but the issue is broader than this. Unemployment is just one of several labor-force reserves that enter into the trade-off with shorter hours. Before entering into the more technical part of this discussion, we ought to review the structure of categories which the Bureau of Labor Statistics uses to report manpower trends.
figure 3-2 Employment Status of U.S. Population in 1979 category number of persons employed in agriculture 3,297,000 employed in nonagricultural industries 93,648,000 total employed 96,945,000 unemployed 5,964,000 civilian labor force 102,909,000 U.S. military personnel 2,088,000 total labor force 104,997,000 not in the labor force 58,623,000 total noninstitutional population 163,620,000 children under 6, inmates 56,310,000 total U.S. population 219,930,000
Figure 3-2 shows how the U.S. population was classified by the BLS during 1979 with respect to labor-force activity. There were two categories of productive employment - employment in agriculture and employment in nonagricultural industries - and one category of nonproductive employment - U.S. military service. There were three categories of persons who did not work - the unemployed, persons “not in the labor force”, and inmates of institutions and persons under 16 years of age. The unemployed are distinguished from those not in the labor force by their greater degree of job-seeking activity. Age or institutional status distinguish those in the third category from persons considered not to be in the labor force.
figure 3-3 Full-time and Part-time Work Force in 1979 Category Number of Average Man-hours persons workweek worked Full time Full time schedules, worked 35 hours or more 68,369 44.7 3,055,459 Part-time for other reasons, usually work full time 6755 27.0 182,385 Workers on full-time schedules, total at work 75,124 43.1 3,237,844 Workers on full-time schedules, not at work 4,500 0 0 Total employed full time 79,624 40.7 3,237,844 Part-time for economic reasons 3,478 21.5 74,777 Unemployed - want full-time work 4,639 0 0 Full-time work force 87,741 37.8 3,312,621 Part time Voluntary part-time workers 12,685 18.8 238,478 Part-time, not at work 1,158 0 0 Total employed part time 13,843 17.2 238,478 Unemployed - want part-time work 1,325 0 0 Part-time work force 15,168 15.7 238,478 Summary total labor force, at work 91,287 38.9 3,551,064 total labor force, not at work 11,622 0 0 U.S. civilian labor force 100,909 35.2 3,551,064
Figure 3-3 gives a breakdown of the U.S. civilian labor force by full-time and part-time status. A part-time worker, again, is defined as someone who regularly works fewer than 35 hours per week, and a full-time worker as one who works 35 or more hours per week. However, in both categories there were persons who did not work at all during the week which the employment survey covered.
The full-time work force includes unemployed workers who were seeking full-time jobs and also persons who had a full-time job but were not working that week because of vacation, illness, and other non-economic reasons. Likewise, the part-time work force includes persons unemployed or not at work who were seeking or holding part-time jobs. Curiously, the full-time work fore also includes two categories of workers who actually worked between 1 and 35 hours per week - that is, part-time. These are the people who worked part time “for economic reasons” - because the economy did not furnish them with enough work for a full-time job - and people who usually worked full time but happened to be working part time during the survey week because of vacation, illness, bad weather, and other non-economic reasons. Finally, there are those part-time workers who voluntarily worked part time, and the full-time workers who actually worked full time.
figure 3-4 Employment, Average Hours, and Man-Hours Worked in U.S. Economy, as Reported during 1979 (000) (000) number of average man-hours category persons workweek worked workers on full-time schedules 75,124 43.1 3,237,844 part-time for economic reasons 3,478 21.5 74,777 voluntary part-time workers 12,685 18.8 238,478 subtotal - persons at work 91,287 38.9 3,551,099 have job, not at war 5,658 0 unemployed 5,964 0 not in the labor force 58,623 0 U.S. military personnel 2,088 0 children under 16, inmates of institutions 56,310 0 U.S. residential population 219,930 16.1 3,551,099
Figure 3-4 indicates the manpower, average hours, and man-hours of labor which are associated with each group. Overall, there were an average of 91,287,000 Americans at work each week during 1979. They worked an average of 38.9 hours per week and contributed 3,551,099,400 man-hours of work to the economy. The 75,124,00 workers on full-time schedules and at work (including some 6,755,000 persons who were working part time for non-economic reasons) averaged 43.1 hours per week and contributed 3,237,844,000 weekly man-hours of labor. The 3,478,000 part-time workers “for economic reasons” averaged 21.5 hours per week and furnished 74,777,000 weekly man-hours of labor. The 12,685,000 voluntary part-time workers averaged 18.8 hours per week and furnished 238,478,000 weekly man-hours. All the remaining categories of the population did not furnish any productive labor, at least as measured by the BLS. There is a rounding difference of 35,100 man-hours between that calculated for all persons at work and the sum of the three constituent groups.
HOW HOURS MIGHT COME FROM LABOR-FORCE RESERVES TO REDUCE WORKING HOURS
Now we may begin to calculate the potential reduction in the average full-time workweek if some of the labor-force reserves were utilized. (The workweeks of part-time workers would not be directly affected by changes in the standard workweek or in the penalty rate for overtime.) The first category to consider is the unemployed workers. As defined in the monthly Current Population Survey, they include “persons who did not work during the survey week, who made specific efforts to find a job during the past 4 weeks, and who were available for work during the survey week except for temporary illness,” and also “those who did not work at all, were available for work, and (a) were waiting to be called back to a job from which they had been laid off, or (b) were waiting to report to a new wage or salary job within 30 days.” There were an average of 5,963,000 such persons during 1979, of whom 4,639,000 persons were seeking full-time work and 1,325,000 were seeking part-time work.
In Figure 3-5, a calculation is made of the average number of hours per week which full-time workers would have had to have worked in 1979 to maintain the same number of man-hours, assuming that all the unemployed workers found jobs for the number of hours per week which they were seeking - that is, full-time or part-time. First, the 75,124,000 workers on full-time schedules, averaging 43.1 hours per week, provided roughly 3,237,844,000 weekly man-hours of labor. This number of man-hours represents the work which the full-time workers need to do to sustain their present level of output.
Suppose now that the 1,325,000 unemployed workers seeking part-time jobs all found employment at the average number of hours for voluntary part-time workers, which is 18.8 hours per week. They would then be contributing 24,910,000 weekly man-hours of work to the economy which previously had not been contributed. These 24,910,000 man-hours might be used to reduce the work load of the full-time workers. Subtracting this number from the 3,237,444,000 man-hours which the workers on full-time schedules furnished leaves 3,212,934,000 man-hours which the full-time workers would yet have to assume.
Now let us assume that the 4,639,000 unemployed persons seeking full-time work all became employed full time. How many hours per week might they work? We do not know yet; it has to be calculated. We will assume that these new full-time workers would become employed at whatever number of hours per week it would take for all the full-time workers to handle their remaining work load.
At this stage, the average would be calculated as follows: If we add the 4,639,000 persons currently unemployed to the 75,124,000 persons reported to be on full-time schedules, we have a total of 79,763,000 persons willing and able to assume the 3,212,934,000 man-hours of labor which the full-time workers have left to handle. If we divide the 3,212,934,000 man-hours by the 79,763,000 workers, we find that each full-time worker has to work 40.3 hours per week, on the average, to get the work done. This new average, 40.3 hours, compares with the reported average of 43.1 hours for full-time workers. In other words, sharing the work with the unemployed has made it possible for the full-time workers to average 2.8 fewer hours per week without a decline in the total contribution of labor. By implication, if total man-hours remained the same, so would the standard of living.
figure 3-5 Work Sharing Calculation: Unemployed Workers Employed number of workers ave. weekly weekly STEP full-time part-time hours man-hours 1. Full-time work load, as reported 75,124 43.1 3,237,844 2. Subtract: Work to be done by unemployed workers seeking part-time work 1,325 18.8 24,910 3. Subtotal 3,212,934 4. Add: Unemployed workers looking for full-time work 4,639 5. Subtotal 79,763 6. Divide: full-time man-hours by workers available for full-time work 79,763 40.3 3,212,934
This is the basic procedure which we will follow in our work-sharing calculation. Unemployment is just one of the labor-force reserves; there are others. The 2.8 hours of additional leisure which, at most, the full-time workers might gain if all the unemployed people became employed does not suggest that the U.S. economy has much slack with which to accommodate a shorter workweek. If the Conyers bill became law, one would expect that the average workweek might drop by about 5 hours, assuming the same level of overtime. In that case, hours would be reduced by more than the 2.8 hours which we have calculated and there might be a decline in the total man-hours worked. This, in turn, might bring a decline in output and average living standards unless productivity increased.
Our calculation is intended to show the opposite: that in 1979 we Americans could have had a shorter workweek - John Conyers’ 35-hour workweek or even a 32-hour workweek - without any loss in man-hours, living standards, or production. But to show this, we must draw upon some of the other labor-force reserves.
According to Figure 3-2, there are five other categories besides unemployment which represent possible sources of labor if the full-time workweek were cut. These include: (1) employment in agriculture, (2) employment in nonagricultural industries, (3) U.S. military service (4) persons not in the labor force, and (5) children under 16 and inmates of institutions. Each of these categories has been an important source of labor in the past. Some appear more promising than others for the future.
Agriculture, for instance, has traditionally furnished manpower for emerging industries in the cities and towns. Yet we can hardly expect that pattern to continue. Military service provided millions of workers in the demobilization following World War II and, to a lesser degree, the Korean and Vietnamese conflicts. This source, too, seems largely spent. The category, “children under 16 and inmates of institutions”, has enough people but it would offend the standards of civilized society to seek any substantial number of workers from it. In 1978, there were 56,310,000 persons in this category of whom approximately 54,890,000 were persons under 16 and 2,500,000 were inmates of institutions. Admittedly, the 8,152,000 Americans who were 14 or 15 years old in 1978 did include some 1,750,000 persons who participated in the labor force, including 1,480,000 who were actually employed. Still, our campaign for a shorter workweek in the name of social progress ought not to contemplate a wholesale reversion to child labor. Also, it would take a social revolution on the order of storming the Bastille before we would consider emptying the prisons, nursing homes, or facilities for the mentally retarded or mentally ill in search of workers.
That leaves us with the second and fourth categories: employment in nonagricultural industries and persons “not in the labor force”. Some may wonder how employment in nonagricultural industries can be considered a labor-force reserve. A reserve for what? Have patience; we will come to that point later in the chapter. Also, the category “not in the labor force” by its name suggests that such persons do not want to become employed. How can Washington-based bureaucrats force them to work against their will? This offends our concept of a free-enterprise, free-labor economy. Again, there is no cause for alarm. Many who are considered not in the labor force do, in fact, want jobs. Many others would as well if public policies that pose obstacles to employment were changed, especially if working hours were reduced.
Let us consider first the category of persons “not in the labor force.” During 1979, they were nearly ten times as numerous as unemployed workers. Like the unemployed workers, they did not happen to be working during the survey week but many had recent work experience. Some of them - an estimated 5,293,000 persons - indicated in the survey that they “wanted a job now”. Most were physically, mentally, and emotionally able to work. Many had the financial need to do so. How is it, then, that the Bureau of Labor Statistics considers these 58,621,000 persons to be sufficiently detached from the world of work as to be “not in the labor force” and not “unemployed”? It is simply that the unemployed had engaged in a specific job-seeking activity during the previous four weeks, or were waiting to be called back to a job, or would report to a new job within 30 days, but these others had not. The distinction is real but not critical.
Figure 3-6 analyzes the category, “not in the labor force”, by the stated reason for not working as determined in the survey sample. A breakdown is given as well of those who wanted a job now and who did not want a job now. The reason which represented by far the largest number of nonparticipants, mainly women, was “household responsibilities.”. “Retirement”, concentrated among older men, was in second place. A third reason, which younger persons of both sexes gave more frequently, was “school attendance”. “Ill health or disability” came next. There were also the “discouraged workers”, consisting of persons who had not sought employment because of discouragement about the prospects of being successful. The last category, “other reasons”,, included such things as being between jobs, difficulties with transportation, having not yet gotten around to looking for a job, and simply not wanting to work.
figure 3-6 Persons not in the labor force in 1979, by reason for not seeking work and whether or not want a job now (thousands of persons) reason for not seeking work want a job now do not want a job now total school attendance 1,427 5,965 7,392 ill health, disability 743 4,531 5,274 household responsibilities 1,240 28,994 30,234 retirement 9,935 9,935 discouraged workers 750 750 other reasons 1,133 3,903 5,036 all reasons 5,293 53,328 58,621
Which of these people could reasonably be expected to seek employment in the event of a shorter workweek? It’s hard to say. One approach might be to separate those “not in the labor force” into different groups by category of volition. The first group, obviously, would be the people the survey determined “want a job now.” In 1979, there were 5,293,000 such persons. Should all of them be considered prime candidates for employment, as we have done with the unemployed workers, or perhaps only a fraction? The second category might include persons who would seek employment if public policy were changed. Adopting a full employment policy, the federal government might lower the barriers to employment which it has erected such as the FICA payroll tax or retirees’ allowable monthly earnings under Social Security. In addition, it might devote more resources to public facilities for working people in the areas of transportation and child care. Finally, some of the people who are “not in the labor force” and say they “do not want a job now” might change their minds if the workweek became shorter. A lower level of hours might attract persons with demanding family or personal responsibilities or with other competing interests.
GROUPS THAT MIGHT CONTRIBUTE WORKERS
It is difficult in an objective and rational way to put numbers on the people who might seek jobs under these various conditions. About the most we can do here is to identify some of the particular types of people who would seem particularly eligible or eager for employment.
(a) The 750,000 discouraged workers in 1979 so closely resemble the unemployed that the latest federal commission to revise the unemployment statistics seriously considered including them in that category. Insofar as the unemployment rate is thought to indicate economic hardship from being without a job, how appropriate it is to reclassify the “discouraged” worker in a way that makes this clear? “Not in the labor force” implies a certain comfort or complacency about not having a job. In reality, the discouraged worker may be worse off than his or her unemployed counterpart who, at least, has expectations. Therefore, the 750,000 persons who are “discouraged” should definitely be included in our employable labor-force reserve.
(b) The government might make a major commitment to providing free or inexpensive day-care facilities for the children of working women in much the same way as it supports libraries and public schools. How many additional women might enter the labor force as a result of such a decision? In 1978, there were 1,226,000 women not in the labor force because of household responsibilities who indicated that they were immediately wanting a job. A BLS survey conducted in the 1960s found that approximately one third of the women in this category were not employed because they had been unable to arrange for child care. Applying this ratio to the 1978 figure, we might estimate that 408,000 more women might have sought jobs if such a commitment to public or subsidized day-care facilities had been made.
Government might commit itself to providing cheap mass transit facilities in the nation’s major urban areas. Some prospective workers do not own automobiles and live in areas where public transportation is inadequate. If bus, van, or rail service were brought to these areas at a reasonable price, many of them might consider looking for a job. How many? Roughly it is estimated that of those persons outside the labor force who “wanted a job now” but were not working for “other reasons”, 15 percent had “difficulties with transportation”. Applying this percentage to the 1,133,000 persons in the above category during 1979, we would estimate 170,000 additional workers.
(d) Government might change or eliminate the age of mandatory retirement; indeed, this step has already been taken. The 1978 amendment to the Age Discrimination in Employment Act raised the permissible age of mandatory retirement from 65 to 70 in private industry and eliminated it for federal employees. An estimate reported in Monthly Labor Review was that “of the 24 percent of working men who were retired at mandatory retirement age, about 30 percent were unwilling to retire, were still able to work, but were unable to find another job. This group represented about 7 percent of all retired male workers.” Seven percent of the 7,479,000 men who were retired in 1979 is 523,500 persons.
(e) Some young people have remained in school for a longer period than they might otherwise have because of the fear of not finding a job. In the past, intense competition for jobs has tended to raise the level of education which a given entry-level job requires. However, word has filtered back to the young that extended schooling no longer guarantees a good job upon graduation. Many, therefore, are deciding not to go to college. Declining rates of school enrollment may be expected to increase young people’s labor-force participation rates. In 1977, 45.1% of men and women between 20 and 24 who were full-time college students participated in the labor force. Persons in the same age group who were not students had a participation rate of 82.4% It would appear from these figures that, for each 10% of the college-age population which decides not to go to college, an increase of between 50,000 and 60,000 persons in the labor force may be expected.
These are some of the groups of nonparticipants most likely to join the work force if a “full employment” policy is pursued. However, the categories are not mutually exclusive nor are they complete. In order to estimate the total number of persons not in the labor force who might seek and find employment with shorter hours, we must take another approach. The basis of this approach will be a BLS study of likely job seekers conducted in 1977. Its results were published in an article in Monthly Labor Review by Barbara Cottman Job entitled “How likely are individuals to enter the labor force?”
The U.S. Bureau of Labor Statistics takes several measurements of the group, ”not in the labor force”, in its Current Population Survey. One measurement already discussed has to do with the nonparticipant’s reason for not working as well as with the desire or lack of desire to have a job now. Another measurement is concerned with how recently the nonparticipant has worked. Its categories include: “worked less than 12 months ago”, “last worked 1 to 5 years ago”, and “never worked”. Still another measurement probes job-seeking intention. Does or does not the nonparticipant “intend to seek work during the next 12 months”?
In 1977, the Bureau of Labor Statistics did a follow-up study of the people included in these various categories in its 1976 survey. Overall, of the 19,780 nonparticipants surveyed in 1976, the follow-up study in 1977 found that 19.4% had subsequently participated in the work force which included 17.0% with employment experience. The remaining 2.5% had participated to the extent of unsuccessfully seeking a job and being counted as unemployed. There were 10.5% actually employed at some time between the 1976 and 1977 surveys but they were currently, once again, “not in the labor force”. These percentages varied by category of response within each major classification. The detailed breakdowns are shown in Figure 3-7.
Let us base our estimate of the number of prospective workers from the reserve, “not in the labor force”, upon these survey percentages applied to the manpower figures for 1979. Which percentage should be used? A conservative estimate might be to take the 10.5% who were employed one year later. A moderate estimate would be the 13.0% who were employed or unemployed - participating in the work force - one year later. A liberal estimate might be to include all 19.4% who had subsequent participation experience. The middle figure - 13% - seems reasonable. If we multiply .13 by the 56,623,000 persons “not in the labor force” during 1979, we have 7,621,000 persons representing the capacity of this particular labor-force reserve to furnish additional workers under full employment conditions.
figure 3-7 Subsequent Labor-Force Participation Found in BLS Surveyof Persons "Not in the Labor Force" in 1976 Percent of nonparticipants surveyed in 1976 who totals had subsequently participated and were in 1977 employed unem-ployed not in labor force employed & unemployed all with work experience Not in labor force, by reason for not working: School attendance 31.3 8.5 26.4 39.8 66.2 Home responsibilities 7.6 1.2 3.6 8.8 12.4 Retirement 1.9 0.3 1.6 2.2 3.8 Other 20.6 7.1 9.4 27.7 37.1 Total 10.5 2.5 6.5 13.0 19.4 Not in labor force, by recency of prior work experience: Less than 12 months ago 29.3 5.9 23.4 35.2 58.6 1 to 5 years ago 11.0 2.8 5.1 13.8 18.9 More than 5 years ago 4.0 0.6 1.6 4.6 6.2 Never worked 14.8 4.9 8.3 19.7 28.0 Total 10.5 2.5 6.5 13.0 19.4 Not in labor force by present job interest: Want a job now 27.5 10.5 13.4 38.0 51.4 Do not want a job now 8.9 1.8 5.9 10.7 16.6 Total 10.5 2.5 6.5 13.0 19.5 Not in labor force, by job-seeking intention: Intends to seek work within one year 30.1 9.2 19.4 39.3 58.7 Will not seek work 7.4 1.4 4.5 8.4 13.3 Total 10.5 2.5 6.5 13.0 19.5
We should recognize, however, that not all of these people would choose to become employed full time. Some would want to work part time and their hours would not be directly affected by changes in the standard workweek. Let us assume arbitrarily that these additional workers would seek full-time or part-time employment in the same ratio as full-time and part-time workers appear in the Civilian Labor Force. According to Figure 3-3, the full-time labor force in 1979 included 87,741,000 persons, or 85.25% of the Civilian Labor Force, while the part-time labor force numbered 15,168,000 persons or 14.74% of the whole. Applying these percentages to the 7,621,000 persons whom we regard as prospective recruits to the labor force, we have an additional 1,123,000 persons who might work part time and 6,498,000 persons who might work full time. Their entrance into the work force would facilitate a certain reduction in the average full-time workweek. How much of a reduction will be calculated later after another type of labor-force reserve has been considered.
The other reserve consists mainly of persons “employed in nonagricultural industries.” Again the question will be raised: Are not the employed workers already employed? If so, how can they be considered a labor-force reserve? There is a difference, though, between “productive” employment and employment per se - jobs for the sake of jobs. Productive employment adds to the nation’s output of useful goods and services; mere job occupancy does not. Another reserve-like feature has to do with insufficiency of paid hours. Let us examine this type first.
In that regard, the Bureau of Labor Statistics measures and reports a category of worker who is employed “part time for economic reasons.” There were an average of 3,478,000 such workers in 1979. The BLS includes them in the full-time labor force even though they actually worked fewer than 35 hours per week because of their desire to work a full-time schedule. The “economic” reasons for their working fewer hours include the following: slack work, material shortages, repairs to plant and equipment, start or termination of a job during the week, and inability to find full-time work. Although some of these conditions represent “frictional” situations, economists generally regard persons who work part time for economic reasons as victims of an inadequate economy, like the unemployed workers. They have a job but are not able to work as many hours as they would like or might need. In contrast to the voluntary part-time workers, their short hours reflect economic limitations rather than personal choice.
Therefore, it is appropriate to include these persons in our pool of workers who might work full time under full-employment conditions. The additional hours which they might work would be the difference between 21.5 hours per week, their average in 1979, and x, the new full-time average, representing the point of equilibrium between hours and employment in our work-sharing calculation. Within the category ”employed in nonagricultural industries”, there were 3,281,000 workers employed part time for economic reasons during 1979. An additional 197,000 such persons were employed in agriculture, bringing the total for all industries up to 3,478,000.
The second and more controversial reason why workers employed in nonagricultural industries might be considered to be a labor-force reserve is that some employed workers are not productively employed. They work but do not produce recognizably useful kinds of output. Their work might therefore be eliminated without lowering the nation’s real standard of living. What sort of work is that? The subject has been discussed at some length in Chapter 2. Such jobs obviously exist but to measure them objectively presents a problem.
In terms of productive contribution, the “bad” jobs seem to be driving out the “good” ones. There is a kind of “Gresham’s Law operating within the job market today. In the absence of shorter hours, the U.S. economy has developed excess productive capacity. It does not open up jobs in the normal way but instead forces people to “scratch to earn a buck” in various devious and ingenious ways. Reversing the situation, one might anticipate that with shorter work hours employment might flow back into the areas of greatest productive need. A shorter workweek would allow the economy to revert to a leaner mix of industries and occupations without sacrificing real living standards. That is another reason why we may regard “employment in nonagricultural industries” as a labor-force reserve.
Two kinds of occupations, in particular, we may regard as exhibiting increased bureaucratic tendencies: government employment and employment of nonproduction or supervisory workers in private industry. In Figure 3-8, we see that the number of such positions grew in proportion to total employment in the period between 1947 and 1979. Government workers comprised 9.6% of total employment in 1947, and 16.1% in 1979. Nonproduction workers in private industry comprised 8.2% of total employment in 1947 and 13.9% in 1979. Together, these two categories claimed 30.0% of total employment in 1979 compared with 17.8% in 1947. Are such jobs somehow more necessary in today’s economy than thirty years ago? I can see no good reason why that should be. At the risk of being arbitrary, I will assume it would be possible to prune the bureaucratic overhang in the U.S. economy back to a normal shape and proportion without sustaining any loss of productive output.
figure 3-8 Growth of Government and Private-Industry Nonproduction Jobs in U.S. Economy, 1947 to 1979 employees on private nonagricultural payrolls year agricultural government production nonproduction employment employment workers workers 1979 3,297 15,613 60,370 13,514 1974 3,492 14,285 52,888 11,161 1969 3,606 12,202 48,243 9,997 1964 4,523 9,596 40,589 8,146 1959 5,565 8,083 38,080 7,150 1954 6,205 6,751 36,276 5,995 1949 7,658 5,856 33,159 4,763 1947 7,890 5,474 33,747 4,660 year gov't & nonprod. Government & nonproduction workers total employment workers as % of total 1979 29,127 96,945 30.0% 1974 25,446 85,935 29.6% 1969 22,199 77,902 28.5% 1964 17,742 69,305 25.6% 1959 15,233 64,630 23.6% 1954 12,746 60,109 21.2% 1949 10,619 57,651 18.4% 1947 10,134 57,038 17.8%
What is “normal”? I notice that in Figure 3-3 there is a fairly steady increase in the percentage of government and private-industry nonproduction workers and that the percentage in 1959 falls roughly in the middle. It would not be too stringent, surely, to cut bureaucracy back to its degree of advancement prior to the New Frontier and the Vietnam war. Therefore, rather arbitrarily, I will assume in this calculation that the 1959 percentage of government employees and private nonproduction employees - 23.57% - represents a reasonable estimate of what the US. economy might show with a “normal” degree of bureaucratization. We may apply this percentage to total employment in 1979 to determine what the number of bureaucrats and other nonproductive careerists ought to have been during that year. In Figure 3-9, a calculation is made of their number. If that number is subtracted from the actual number of government workers and nonproduction workers in private industry in 1979, it indicates an excess of 6,7278,000 workers who were doing bureaucratic work compared with the proportion twenty years earlier.
Since from the workers employed in nonagricultural industries we have already added to our pool the 3,281,000 persons working part time for economic reasons, we must now exclude them in the same proportion as their percentage of total employment in order to avoid duplication. That leaves 6,053,000 bureaucratic workers scheduled for job removal and retraining. An additional 5,1616,000 persons (85.26% of 6,053,000) from this group might assume full-time productive jobs while 892,000 persons assumed part-time productive jobs. We are assuming here that the former positions might simply be abolished and the work eliminated without loss of useful goods and services. After a period of retraining, the workers discharged here would be transferred into productive jobs. The nation’s output of useful production would increase by the amount of their additional labor.
figure 3-9 Calculation of the Excess Number of Government and Private-Industry Nonproduction Workers who might go into Productive Jobs if the Workweek were Cut Category 1959 1979 Total employment 64,630,000 96,945,000 Government and nonproduction workers 15,233,000 29,127,000 government & nonproduction workers as percent of total employment 23.57% 30.04% *************************************** 1979 government and nonproduction workers 29,127,000 1959 percentage applied to 1979 total employment 22,849,000 Excess number of government and private nonproduction workers, based upon 1959 level 6,278,000 1979 part-time workers for economic reasons 3,478,000 total employment in 1979 96,945,000 percent aplied to excess number in 1979 3.59% 225,000 Net number of workers who might be added to the productive work force 6,053,000
This completes our calculation of the number of workers who might be transferred into productive full-time or part-time positions from the various labor-force reserves, based upon manpower statistics for 1979. In summary, there are 5,963,000 unemployed workers, 7,621,000 persons not in the labor force, and 9,531,000 workers employed in nonagricultural industries who are affected by the proposed change. Within each category, of course, the workers are affected in different ways. Some become employed in part-time positions. Some become employed in full-time positions. The 3,478,000 workers who worked part time for economic reasons (including a few in agriculture) switch from a part-time to a full-time level of hours. All these moves contribute toward a lower average full-time workweek.
The level of hours to which the average full-time workweek might be reduced without reducing the total contribution of labor may be calculated from the above information. That calculation, similar to the one in Figure 3-5 involving the unemployed workers is presented in Figure 3-10. Let us briefly review the calculation.
figure 3-10 Work-Sharing Calculation: Workers to be added from the Labor-Force Reserves Number of workers ave. weekly weekly Step: full time part time hours man-hours 1. Full-time work load, as reported 75,124 43.1 3,237,844 2. Subtract: Work to be done by unemployed workers seeking part-time work 1,325 18.8 24,910 3. Remaining full-time work 3,212,934 4. Add: Unemployed workers seeking full-time work 4,639 5. Full-time workers on hand 79,763 6. Divide: Full-time man-hours by workers available for full-time work 79,763 40.3 3,212,934 7. Subtract: "Not in labor force" seeking part-time work 1,123 18.8 21,112 8. Remaining full-time work 3,191,822 9. Add: "Not in labor force" seeking full-time work 6,498 10. Total full-time workers 86,261 11. Divide: Full-time man-hours by workers available for full-time work 86,261 37.0 3,191,822 12. Add: "Part-time for economic reasons" to full-time workers 3,478 13. Add back: Part-time hours no longer worked 3,478 21.5 74,777 14. "Part-time for economic reasons" becomes full-time 89,739 3,266,599 15. Subtract: Excess bureaucratic workers seeking part-time jobs 892 18.8 16,770 16. Remaining full-time work 89,739 3,249,829 17. Add: Excess bureaucratic workers seeking part-time jobs 5,161 18. Total full-time workers 94,900 19. Divide: full-time man-hours by workers available for full-time work 94,900 34.2 3,249,000
Potentially, a total of 19,776,000 persons including the part-time workers for economic reasons might be added to the full-time work force under the proposed work-sharing scheme. A total of 3,340,000 persons from the three labor-force reserves might become voluntary part-time workers who work an average of 18.8 hours per week. Their 62,792,000 man-hours of labor would reduce the 3,237,844 weekly man-hours which the full-time workers initially had to bear to 3,175,052,000 man-hours. The 74,777,000 weekly man-hours of part-time labor vacated by the part-time workers “for economic reasons” who became full-time workers would bring the total up to 3,249,829,000 man-hours per week. This figure divided by the 94,900,000 workers in total who are available to work full time gives an average full-time workweek of 34.245 hours.
We started the calculation with a full-time average of 43.1 hours per week and ended with an average workweek of 34.2 hours. Through the various shifts in personnel, the average full-time workweek might be cut by 8.9 hours without reducing the total man-hours worked, which also happens to be more than the length of a standard-sized working day. On paper, then, the U.S. economy might have accommodated a 4-day, 32-hour workweek for its full-time workers in 1979 (allowing for some overtime) while maintaining the same level of productive output. The more modest goal of a 35-hour week contemplated by the Conyers bill comes more comfortably into range.
The above calculation is based upon the following assumptions:
(1) The nation’s weekly output of goods and services is directly related to the number of weekly man-hours of labor furnished to the economy.
(2) Some (bureaucratic) jobs contribute nothing to useful output and may therefore be eliminated without impact upon production levels.
(3) Any person may be transferred freely into any job and the output will be affected only to the the extent that the number of man-hours changes.
(4) As working hours are cut and workers from several sources become productively employed, labor productivity will stay the same.
(5) A normal proportion of the newly employed workers would become employed part time. They would work the same average number of hours per week as the voluntary part-time workers averaged in 1979.
(6) The average number of hours per week which the full-time workers might work given a shorter workweek can be determined by dividing their net man-hours (after the man-hours of the part-time workers have been subtracted) by the total number of workers available for full-time work.
Admittedly, several of these assumptions are questionable. For instance, the assumption that jobs and workers are freely interchangeable would not stand the test of reality. The assumption that enough workers would voluntarily emerge from the “labor-force reserves” to fill whatever vacuum in man-hours the shorter workweek might create remains an idle theory. Such matters cannot be determined in the abstract.
Nevertheless, two of the assumptions merit a brief discussion. In the above calculation, we have substituted increased employment for a reduction in average hours assuming that the other two variables, output and productivity, stay the same. One type of challenge that economists might make disputes that output would remain the same. The other challenge questions whether productivity would remain the same. The critics might argue in both cases that the level would be lower.
The assumption of fixed output is not easily proved or disproved. Granted, in a real-life economy output would not be fixed. Both the quantity and quality of the products would be constantly changing. Some economists argue that total output would drop if the average workweek became shorter. We will take a look at their arguments in the next chapter. Others contend that total output might rise as the workers who were previously unemployed pumped additional work and money into the economy. Who knows what the ultimate impact of shorter hours upon the level of production might be? The most reasonable estimate might be to assume no change.
With respect to productivity, however, I will not let the critics off so lightly. There is convincing evidence gathered from many times and places that labor productivity reliably increases as working hours are reduced. Evidence of this claim will be presented in a later chapter. At this point, we are interested in quantifying the change. But first a brief explanation of the concepts might be in order.
Many labor economists who have studied the effect of shorter working hours upon productivity express this effect in terms of recovering the lost output from the shorter hours. For example, if the average workweek were cut from 40 hours to 32 hours, which represents a 20% decline in hours, one would expect, all else being equal, that production might drop by 20% as well. If one finds that production instead has dropped by only 10% without a change in employment, it means that half of the prospective loss in output has been made up by higher productivity. As working hours have been reduced from one level to another, economists have observed various rates of increase in the productivity index. Productivity increases more rapidly as average hours decline from extremely high levels to moderate levels than from moderate levels to low levels. Workers overcome with fatigue are obviously less productive than well-rested ones.
What rate of increase might we reasonably expect to find in productivity if the U.S. full-time workweek were reduced from 43 hours down to 35 or 34 hours? Recent European experiences which involve reductions from a range of 45 to 48 hours down to a range of 40 to 43 hours have produced recoveries in output ranging between 20% and 70%. A typical result was that productivity gains recovered 0.3% to 0.4% of the prospective loss in output for each 1% that weekly hours were reduced. In the U.S. economy, the recoveries of output might not be so large. A reasonable estimate might be that the increases in productivity would recover 0.25% of the production loss for each 1% reduction in working hours.
The 8.9 hours’ decline in the full-time workweek was calculated on the assumption that labor productivity would not change. Now we are saying that productivity would change; there would be a “productivity kick” from those shorter hours which would increase our margin of safety. This productivity increase, however, would apply only to the full-time workers who are presently employed, averaging 43.1 hours per week, and not to the newcomers from the labor-force reserves. Also, this would be an increase on top of the normal year-to-year increases in productivity which would not have taken place if working hours had not been reduced.
To illustrate these relationships, we start with the basic equation: Output equals Productivity times Employment times Average hours. For example, let us suppose that before the workweek was reduced the following numbers fit the equation:
2,400 units = 10 units built per man-hour x 6 workers x 40 hours per week.
Now assume that working hours are cut to 32 hours per week. Output falls by 0.75% for each 1% reduction in hours while productivity increases recover the remaining 0.25%. Hours are reduced by 20%. Therefore, output is reduced by 15% or by 360 units. The equation now reads:
2,040 units = 10.625 units built per man-hour x 6 workers x 32 hours per week
Productivity has increased by 6.25%.
With respect to our particular situation, we need to calculate the level of workweek at which the loss of output from the shorter hours worked by the current group of full-time workers would be exactly offset by the additional inputs of labor from the labor-force reserves. Then, once the workweek is known, we can compute the gain in productivity. This calculation is made on the assumption of dynamic changes which would affect productivity rather than of a static substitution of workers for hours.
How would output change with the changes in hours? We are assuming again that for each 1% drop in the workweek, the level of output would drop by 0.75%. The remaining 0.25% would be recovered by higher productivity.
Let x represent the hours per week by which the average full-time workweek might drop from 43.1 hours per week. The new full-time workweek would be: (43.1 - x)
The percentage drop in hours would be: x
43.1 times 100
The percentage drop in output would be 3 / 4th of this:
0.75 x x times 100
Output is that which the 75,124,000 workers currently on full-time schedules are producing. Their workweeks alone are being cut causing the lost output. Consequently, the loss in productive output pertains only to the 3,237,844 man-hours of work which they were furnishing to the economy.
The algebraic expression which represents the decline in output is:
0.75 x x x 3,237,844,000 man-hours
On the other side of the equation, we have the additional inputs of labor which will offset the decline in output due to the shorter hours. There are three components of this input:
We must express the man-hours contributed by the persons who are added to the full-time work force: 4,639,000 unemployed workers, 6,498,000 who were not in the labor force, 3,478,000 part-time workers for economic reasons, and 5,161,000 transferred government workers and nonproduction workers from private industry. They total 19,776,000 persons. The man-hours of work which they might contribute are:
19,776,000 x (43.1-x) man-hours
We must express the man-hours contributed by those who become voluntary part-time workers: 1,325,000 unemployed workers, 1,123,000 persons not in the labor force, and 892,000 excess government workers and nonproduction workers in private industry. They total 3,340,000 persons. Their man-hours total 62,792,000 man-hours, which is 3,340,000 workers times 18.8 hours.
We must include a negative input for the hours no longer worked by the part-time workers for economic reasons who have become full-time workers: 74,777,000 (3,478,000 x 21.5)
The equation as a whole reads:
0.75 x x x 32,237,000 = 19,776,000 x (43.1 - x) + 62,792,000 - 74,770,000
Solving for x, we have: x = 11.040 hours
In other words, the average full-time workweek might be cut from 43.1 hours per week to 32.06 hours per week without causing a decline in productive output due to a combination of better utilized manpower and increased productivity. An additional 2.185 hours per week of leisure for the full-time workers is made possible by expected improvements in productivity.
How much did productivity improve? To find out, we plug the numbers into our basic equation: Output = Productivity x Employment x Average hours. Let y equal the rate of productivity. This would be an index based upon the level of output per man-hour before the workweek was reduced. Output represents the man-hours that are left after the loss from the shorter hours. Again, in this equation we are including only the man-hours contributed by the 75,124,000 full-time workers who are currently employed in productive jobs; they are the ones whose workweek has been cut, stimulating the gain in productivity.
The loss in output is: 0.75 x 11.04 x 3,237,844,000
This equals 622,027,000 man-hours.
The remaining output is: 3,37,844,000 - 622,027,000, or 2,615,817,000 man-hours.
The equation reads: 2,615,817,000 = y x 75,124,000 x 32.06
Solving for y, we have: y = 1.086088
The increase in productivity due to the introduction of shorter working hours is 8.6%.
figure 3-11 Employment, Average Hours, and Man-Hours Worked in the U.S. Economy if Work Sharing had been Implemented in 1979 Category number of persons average workweek man-hours worked workers on full-time schedules 89,739 32.06 2,877,032 workers on part-time schedules 15,133 18.8 284,500 transfer "excess" workers 182,232 productivity kick 207,341 All persons at work 104,872 33.86 3,551,105 have job, not at work 5,658 not in labor force 51,002 U.S. military personnel 2,088 children under 16, inmates of institutions 56,310 U.S. resident population 219,930 16.15 3,551,105 Note: There is a discrepancy between man-hours worked and man-hours produced due to improvement in productivity and transfer of "excess" workers.
figure 3-12 Summary of Shifts in Manpower full-time part-time unemployed not in labor workers workers workers force Category Situation "before" 78,602 12,685 5,964 58,623 unemployed workers 4,639 1,325 -5,964 not in the labor force 6,498 1,123 -7,621 part-time for economic reasons
excess government & nonproduction workers 5,161 -5,161 892 -892 Situation "after" 89,739 15,133 0 51,002
Figures 3-11, 3-12, and 3-13 summarize the changes that have taken place through work sharing. Figure 3-11 shows the distribution of employment, average hours, and man-hours after the proposed changes. (Figure 3-4 showed the situation before.) Figure 3-12 summarizes the shifts in man-power between the the various labor-force categories. Figure 3-13 summarizes the changes in man-hours as the man-hours lost from the reduced workweeks are offset by the additional inputs of labor and by improved productivity.
figure 3-13 Summary of Changes in Man-Hours Category employ-ment average hours change in man-hours percent of total change Losses: cut in full-time hours 75,124 -11.04 -829,369 100.0% rounding difference 6 Total Losses -829,375 Gains: unemployed - full time 4,639 32.06 148,726 17.9% unemployed - part time 1,325 18.8 24,910 3.0% not in labor force - full time 6,498 32.06 208,326 25.1% not in labor force - part time 1,123 18.8 21,112 2.6% part-time workers for economic reasons 3,478 10.56 36,728 4.4% excess gov't & nonproduction workers - full time 5,161 32.06 165,462 20.0% excess gov't & nonproduction workers - part time 892 18.8 16,770 2.0% productivity kick 207,341 25.0% Total Gains 829,375 100.0%
Is this a realistic scenario of changes which might take place with a shorter workweek? It is not so much a scenario as a measurement of capacities. We have stretched the labor-force reserves to a reasonable limit and found that the shorter-workweek proposals in their most common forms could be accommodated without any loss of output. The 5-day, 35-hour workweek could be easily accommodated. The 4-day, 32-hour week might require some growing pains. However, the pains would be eased by that two-hour-per-week “productivity kick” that would meanwhile be taking place.
Please keep in mind that the above calculation measures economic possibilities at a particular point in time. We have based the computation on the 1979 annual averages. However, the year 1979 marked a low point in cyclical unemployment as well as in the proportion of discouraged workers and part-time workers for economic reasons. If the labor-force reserves in 1979 were adequate to afford a shorter workweek, how much more adequate might they be in years when business conditions were worse?
Remember, too, that we have imposed upon this calculation the iron-clad requirement that total output (other than the “excess” work eliminated from government and private-industry bureaucracies) should not drop. We had to demonstrate that not a single man-hour of useful work would be lost to the economy as a result of lowering the full-time workweek.
Not a single good or service (excepting those bureaucratic superfluities) had to be sacrificed to give working people more free time. We could eat as much food, wear as many articles of clothing, consume as many automobiles or appliances as before. Too, we could keep all the loan-sharking, junk food, alcoholic beverages, prostitution, “get rich quick” frauds, good-for-nothing gadgetry, or an anything else which was bought and sold during 1979. None of this “standard of living” need be taken from us with a shorter workweek.
But should the change not go according to plan and some reduction in output take place, then it is possible to imagine that working people’s time, which is their lives, might appear more precious to them than some of the consumer products no longer produced. Even that can of cold beer in having ten minutes to consume it rather than five would pack more enjoyment per dollar spent. We could skimp, if we must, on aspirin, sleeping pills, antiperspirants, and radio alarm clocks which greet us early in the day.
Remember, finally, that time does not stand still as it did in our calculation. Those 1% to 2% annual increases in productivity which the economy is achieving nowadays could finance at least a portion of what we are proposing. The labor-force reserves may also be shedding people at a faster rate than what was assumed in the calculation. Older people are demanding the right to remain employed for a longer period if they should choose. Younger people are expecting to be promoted every once in a while as their elders have been. Married women will not be deterred from entering the labor force in large numbers. How will all these new jobs open up for people if not through a shorter workweek?
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