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(A Shorter Workweek in the 1980s)

 

STATISTICAL COMPARISONS: AVERAGE WORKWEEK, PRODUCTIVITY, REAL EARNINGS, AND COST OF LIVING

CHAPTER 8

 

Sooner or later, the argument comes down to statistics. They will be the focus of this chapter. Critics of the shorter workweek have alleged that, if working hours were significantly reduced, the economy would be harmed in various ways. In their estimation, shorter hours might threaten workers’ real earnings, slow the advance in productivity, and increase the cost and the price of consumer goods and services. Their cost, in other words, would be a reduced standard of living. Proponents of a shorter workweek argue, to the contrary, that cuts in hours are a necessary adjustment in response to long-term increases in productivity and need not jeopardize wages, the price structure, or our standards of living. Which side of the argument is correct? To decide that, we must look at the evidence.

Before moving into a thicket of controversy, we must be aware of the dangers and limitations to be encountered. The purpose here is not to lie with statistics but to match theories against the best available evidence. The first limitation has to do with the accuracy of the information and with dissimilarities between the different series of data, especially those which were gathered over a long period of time. Statistics which report the average working hours for the entire U.S. economy must be viewed with particular caution. Many different methods, definitions, and standards have been employed in gathering such information.

Considering that the statistics on productivity relate economic output to an input of hours, its foundation, too, is not as firm as one would like. It’s difficult to find a continuous series of data which would allow the kinds of comparisons which are useful from our point of view Moreover, when a series covers many years, the compositional shifts in the weights assigned to constituent sectors of the population tend to influence the result as much as the basic elements of change. To meet these several difficulties, redundant sets of information will be presented when available. Each statistical series will be exhibited in the same form as originally published and the source will be clearly identified.

By and large, the statistical tables which form the basis of discussion for this chapter relate changes in the average workweek, on one hand, to changes in productivity, real hourly earnings (or compensation), and the consumer-price index, on the other. As a political question, the shorter-workweek proposal is most concerned with its causal impact upon the other economic variables. Do shorter workweeks cause faster or slower gains to be made in productivity? Do they cause higher or lower real earnings? Do they cause consumer prices to rise more rapidly or less rapidly than otherwise? These are some of the questions implied in arguments related to this issue. The answer, if it is available, must lie in the statistical data pertaining to hours of work, productivity, prices, and real wages.

First, it would be helpful to know more precisely what theories are to be examined in light of this evidence. What do opponents of the shorter workweek say would happen? What do the proponents say? What did actually happen in those instances where the workweek was reduced?

 

claims for and against the shorter workweek

If I may take the liberty of paraphrasing the opponents’ arguments, they might be stated:

(1) There is no evidence that shorter working hours stimulate increased productivity. Indeed, this new intrusion by government into the economy to force premature change might be expected to hamper efficient business operations.

(2) There is a trade off between shorter hours and higher real incomes. It is simply a matter of spending the productivity dividend one way or another. To improve both benefits at the same time is an economic impossibility.

(3) Shorter workweeks mean less production and more inflation. To pay more workers the same weekly wage for doing the same amount of work, businesses would be forced to raise their prices to stay in business - another blow for the beleaguered consumer.

Advocates of a shorter workweek claim to the contrary:

(1) For various reasons, cuts in the general workweek tend to stimulate the productivity of labor. If our theory is correct, there should be a fairly immediate, inverse correlation between these two variables - relatively rapid declines in the workweek accompanied by or closely followed by relatively rapid increases in the productivity index, or else the opposite of both.

(2) Although initially shorter hours and higher incomes might appear to be “traded off”, this effect would be short-lived. With higher productivity, business profits and workers’ wages might be expected to rise. If working hours were cut but the average weekly earnings per worker were maintained, more workers might become employed at a steady or rising level of pay. A full-employment economy means a broader and stronger consumer market which means higher sales and bigger profits for business. This, in turn, would create the condition for further wage increases. Quite soon cuts in working hours would be seen to stimulate, not retard, the rise in incomes.

(3) Again, there might be an immediate pressure upon labor costs and prices if the average workweek were reduced. However, this pressure would be quickly relieved by higher productivity, expanded markets and sales, and greater business profits. In the long run, substantial cuts in working hours would not be interfering with price stability.

It should be kept in mind that the case for a shorter workweek is based upon the long-term displacement of labor through higher productivity. Productivity increases occur at an uneven rate. In some years, its index might rise by 7 or 8 percent, while in other years there might be a decline. Considered separately, the annual increases in productivity are not that important. They are a compilation of quarterly changes drawn within an arbitrary time frame. In such small intervals of time, the changes in productivity are influenced more by swings in the business cycle than by substantive changes caused by technological innovation.

We advocates of shorter hours are less concerned with the yearly fluctuations in the productivity index than with the trend over a period of years. For instance, between 1950 and 1977 the productivity of workers in the private business sector increased at an average annual rate of 2.7%. At this rate, the level of productivity was more than twice as high in 1977 as in 1950. A change of this magnitude would require an adjustment in hours (or in output or employment) of similar proportion to keep the economy in balance. Cyclical “fine tuning” is not sufficient.

In our analysis of the data, therefore, we ought not become too concerned with the greater or lesser changes in hours, productivity, incomes, or prices which take place from year to year. We should avoid conclusions drawn from one or two years’ events but pay attention instead to consistent movements over a period of three, four, five, or six years, Labor displacement, if it occurs, will become apparent over the longer period of years. To detect such changes, we should try to filter out the fluctuations in the business cycle, if that is possible. Because the cyclical influences have greater immediate impact upon that data than what we are attempting to measure, it may be hard to take sensitive readings. Even defining and drawing the periods of measurement may introduce bias. That is another limitation to our investigation.

 

cyclical unemployment

Every five or so years, the U.S. economy experiences a recession. Each is characterized by a slowdown in growth or an actual decline in the real Gross National Product which brings a reduced demand for labor. Business typically reacts to declining orders by laying off workers or cutting back on hours. Typically, in the beginning stages of a recession productivity falls because a firm’s or the nation’s output produced in response to sales demand declines more rapidly than the man-hours available for production. It takes the employer a month or two to interpret the sales forecasts and adjust his work schedules accordingly.

Meanwhile, the average workweek including weekly overtime starts to drop even before workers are laid off. Employers find reduced hours to be a safer and less disruptive means of cutting back on production than layoffs while business conditions remain uncertain. If we focused simply upon the short-term fluctuations, we might reach the conclusion, therefore, that shorter hours cause a decline in productivity because the two developments are taking place at the same time. Clearly, both happened in response to another cause, namely the sudden decline in economic output and demand for labor. Both are consequences of the recession.

If shorter hours caused productivity to drop or to rise, one might expect a certain time lag to appear between cause and effect. The impact upon productivity might show up a year or two later rather than in the same year as when hours were reduced. Erratic fluctuations in hours such as those which take place in the different phases of the business cycle have a less significant impact upon productivity than the cumulative hours reductions achieved over many years. Assuming that our theory is correct that shorter hours would influence employers to invest in labor-saving machinery and develop more efficient production schedules and so cause productivity to rise, they, the employers, would be more likely to make these constructive changes in a gradual and orderly fashion rather than abruptly at the outset of a recession.

Therefore, at the risk of tailoring methodology to fit the theory, we should strive to analyze cause and effect over a broader period of years than those in which the business cycle functions. We would study those progressive or nonreversible changes in the workweek to see what happens to productivity not just simultaneously but in the period of years that follow. The same kind of analysis can be made to determine the causal impact of declining workweeks upon real wages and the consumer-price index.

 

some correlations

With this introduction, we may begin to look at the data. The statistical tables compare average workweeks with productivity, real hourly wages, and consumer prices during particular periods of years. These periods were picked largely on the basis of the available information. For certain periods, parallel sets of figures are given. One set pertains to all workers in the U.S. private business sector, and the other set to manufacturing production workers only. Manufacturing statistics tend to be more accurate and reliable than those for the private economy in general so they may be useful in cross-checking the other. The three periods which we will examine are: 1890 to 1926, 1919 to 1950, and 1947 to 1979. Later, we will seek an overview of trends that have developed over a longer period of time.

The statistics for the period between 1890 and 1926 are derived from Paul Douglas’ book, Real Wages in the United States, 1890-1926. Columns 2 through 5 present the figures which appear in Professor Douglas’ book. In the four columns to the right, the average annual percentage change is given. This is not the compounded annual percentage but the total change for the period divided by the number of years. The change reported for a particular year is the difference between its figure and that for the preceding year.

                figure 8-1
 
   
 
Comparison of Trends in Average Workweek, Productivity, Real Hourly Wages, and Cost of Living for all U.S. Industries, 1890 to 1926
   
                 
         
Annual Percentage Change
 
average
productivity
real
consumer
workweek
productivity
real wages
price index
year
workweek
index
wages
price index        
                 
1890
58.4
52.4
104
1891
58.2
53.2
101
-0.3
1.5
-2.9
1892
58.2
56.0
102
5.3
1.0
1893
58.2
54.1
100
-3.4
-2.0
1894
57.8
55.3
97
-0.7
2.2
-3.0
1895
58.1
57.7
97
0.5
4.3
1896
57.9
56.3
99
-0.3
-2.4
2.1
1897
57.7
60.0
100
-0.3
6.6
1.0
1898
57.6
60.9
100
-0.2
1.5
1899
57.5
61.0
102
-0.2
0.2
2.0
1900
57.3
61.7
.211
106
-0.3
1.1
3.9
1901
56.8
65.2
.213
108
-0.9
5.7
0.9
1.9
1902
56.3
61.9
.215
111
-0.9
-5.1
0.9
2.8
1903
55.9
62.9
.215
116
-0.7
1.6
-
4.5
1904
55.7
63.5
.219
115
-0.4
1.0
1.9
-0.9
1905
55.7
64.2
.224
115
-
1.1
2.3
-
1906
55.3
68.5
.226
119
-0.7
6.7
0.9
3.5
1907
55.3
68.0
.222
126
-
-0.7
-1.8
5.9
1908
54.9
65.6
.228
121
-0.7
-3.5
2.7
-4.0
1909
54.9
69.6
.230
121
-
6.1
0.9
-
1910
54.6
67.7
.222
128
-0.5
-2.7
-3.5
5.8
1911
54.4
69.0
.219
132
-0.4
1.9
-1.4
3.1
1912
54.2
69.7
.226
133
-0.4
1.0
3.2
0.8
1913
53.8
71.8
.226
137
-0.7
3.0
-
3.0
1914
53.5
67.9
.226
139
-0.6
-5.4
-
1.5
1915
53.5
70.2
.232
136
-
3.4
2.7
-2.2
1916
53.3
73.7
.232
149
-0.4
5.0
-
9.6
1917
53.0
69.5
.219
179
-0.6
-5.7
-5.6
20.1
1918
52.2
75.0
.222
218
-1.5
7.9
1.4
21.9
1919
51.3
80.4
.228
247
-1.7
7.2
2.7
13.3
1920
50.4
79.6
.236
286
-1.8
-1.0
3.5
15.8
1921
50.3
86.8
.255
246
-0.2
9.0
8.1
-14.
1922
50.5
84.9
.266
229
0.4
-2.2
4.3
-6.9
1923
50.4
88.2
.283
234
-0.2
3.9
6.4
2.2
1924
50.0
92.9
.291
234
-0.8
5.3
2.8
-
1925
49.9
92.5
.291
240
-0.2
0.4
-
2.6
1926
49.8
94.4
.295
241
-0.2
2.1
1.4
0.4
                 
Note: Productivity 1929=100, real hourly wages in 1890-99 dollars, consumer-price index 1890-99=100.

 

 

                figure 8-2
                 
 
Comparison of Trends in Average Workweek, Productivity, Real Hourly Wages, and Cost of Living for U.S. Manufacturing Industries, 1899 to 1926
 
                 
         
Annual Percentage Change
year average productivity   consumer        
  workweek index real wages price index workweek productivity real wages price index
                 
1899
59.1
100
102
1900
59.0
96
.205
106
-0.2
-4.0
3.9
1901
58.7
103
.203
108
-0.5
7.3
-1.0
1.9
1902
58.3
106
.205
111
-0.7
2.9
1.0
2.8
1903
57.9
104
.203
116
-0.7
-1.9
-1.0
4.5
1904
57.7
109
.205
115
-0.3
4.8
1.0
-0.9
1905
57.7
119
.209
115
-
9.2
1.9
-
1906
57.3
120
.209
119
-0.7
0.8
-
3.5
1907
57.3
117
.205
126
-
-2.5
-1.9
5.9
1908
56.8
111
.207
121
0.9
-5.1
1.0
-4.0
1909
56.8
119
.207
121
-
7.2
-
-
1910
56.6
118
.203
128
-0.3
0.8
-1.9
5.8
1911
54.4
113
.199
132
-3.9
-4.2
-2.0
3.1
1912
56.0
125
.207
133
2.9
10.6
4.0
0.8
1913
55.5
129
.207
137
-0.9
3.2
-
3.0
1914
55.2
122
.207
139
-0.5
-5.4
-
1.5
1915
55.0
132
.211
136
-0.4
8.2
1.9
-2.2
1916
54.9
133
.217
149
-0.2
0.8
2.8
9.6
1917
54.6
125
.205
179
-0.5
-6.0
-5.5
20.1
1918
53.6
122
.211
218
-1.8
-2.4
2.9
21.9
1919
52.3
125
.211
247
-2.4
2.5
4.7
13.3
1920
51.0
133
.229
286
-2.5
6.4
3.6
15.8
1921
50.7
132
.248
246
-0.6
-0.8
8.3
-14.0
1922
51.2
157
.252
229
1.0
18.9
1.6
-6.9
1923
51.0
160
.266
234
-0.4
1.9
5.6
2.2
1924
50.4
163
.272
234
-1.2
1.9
2.3
-
1925
50.3
177
.270
240
-0.2
8.6
-0.7
2.6
1926
50.3
.268
241
-
-0.7
0.4
         
Note: Productivity 1929=100, real hourly wages in 1890-99 dollars, consumer-price index 1890-99=100.

 

In figure 8-1, for example, the average workweek in 1899 was 57.5 hours. It was 57.3 hours in 1900. The workweek declined by 0.2 hours per week between those two years. That number divided by 57.5 hours per week gives a percentage change of 0.3% which appears in the column headed “annual percentage change” under “workweek” for the year 1900.

The percentage change each year in the figures in the columns to the left is thus shown for each of the four variables in the columns to the right. A string of consecutive large numbers, either plus or minus, suggests that rapid change is taking place in the variable during those years. Small numbers or zeroes indicate slow or nonexistent change. Alternating numbers, plus or minus, reveal an indecisive pattern.

To aid in the analysis of this table, Table 8-3 examines certain time intervals between 1890 and 1926 when the workweek was declining at a relatively rapid rate and also those when the workweek was static or increasing. Three periods are selected for each category. They are listed in descending order by their average annual percentage decline in hours. For example, between 1916 and 1920 the average workweek in all industries declined by 2.9 hours per week, which represents a decrease of 5.4% in four years or roughly 1.4% each year. In the period between 1900 and 1904, the average workweek declined by 0.7% each year or about half as fast. In the periods listed under “slower progress”, the average workweek did not decline at all or did so barely.

The changes in hours during these six period of faster or slower progress toward shorter hours are compared with the percentage annual change in each of the other three variables during the same year and in the periods one year later, two years later, and three years later. “One year later” means, for example, that the average annual percentage drop in weekly hours between 1916 and 1920 is compared with the average annual percentage change in the productivity index between 1917 and 1921. There is one year’s lag between the change in hours and the change in productivity (or in real hourly wages or in the consumer-price index) so that the causal impact of the changing workweek may be determined.

From Figures 8-1 and 8-2 (for all industries and for manufacturing industries only), it is evident that the average workweek declined most rapidly during World War I and the immediate post-war period - between 1916 and 1920. These years coincide with the period of most rapid inflation. With respect to the productivity index, the largest gains in the period took place between 1917 and 1921 and between 1902 and 1906. The fastest increases in real hourly wages took place between 1918 and 1924

By and large, the 25-year period preceding World War I was relatively uneventful. The workweek declined modestly - about 0.2% per year - and equally modest changes took place in productivity and in real hourly wages. The consumer-price index, which was stable during the 1890s, inched upwards during the first fifteen years of the 20th century, skyrocketed during World War I, and then settled back on a plateau during the 1920s.

What correlations, if any, may be found between changes in the workweek and changes in the other variables? With respect to productivity, it would appear that more rapid progress was made during the years of “slower progress” toward shortening the workweek than in the years of “faster progress.” According to Figure 8-3, the greatest percentage increase in productivity took place between 1920 and 1923 (3.6%) while the average workweek remained the same. In contrast, between 1916 and 1920, when the workweek was rapidly declining, productivity rose by a modest 2.0% per year.

            figure 8-3
             
Comparison of Annual Changes in Productivity, Real Weekly Earnings, and Cost of Living in Periods of Faster or Slower Progress toward a Shorter Workweek, 1890 to 1926
 
 
(Analysis of Data from Figure 8-1)
   
             
FASTER percent change  
Percentage Change per Year
PROGRESS in hours per year   same year one year two years three
        later later years later
             
    Productivity        
1916 - 1920
-1.4
 
+ 2.0
+ 6.2
+ 3.3
+ 2.4
1900 - 1904
-0.7
 
+ 0.7
- 0.4
+ 10.7
+ 2.0
1909 - 1914
-0.5
 
- 0.5
+ 0.7
+ 1.4
- 0.1
 
 
 
Real wages
1916 - 1920
-1.4
 
+ 0.4
+ 4.1
+ 5.0
+ 6.0
1900 - 1904
-0.7
 
+ 0.9
+ 1.3
+ 1.3
+ 0.8
1909 - 1914
-0.5
 
- 0.3
+ 0.9
+ 1.2
- 0.7
 
 
 
Price Index
1916 - 1920
-1.4
 
+ 23.0
+ 9.4
+ 1.3
- 1.3
1900 - 1904
-0.7
 
+ 2.1
+ 1.6
+ 1.8
+ 2.2
1909 - 1914
-0.5
 
+ 3.0
+ 1.3
+ 2.6
+ 6.9
 
 
SLOWER
percent change
 
Percentage Change per Year
PROGRESS
in hours per year
 
same year
one year
two years
three
 
 
later
later
years later
 
Productivity
1891 - 1895
0
 
+ 2.1
+ 1.3
+ 2.7
0.1
1904 - 1909
-0.3
 
+ 1.9
+ 1.1
+ 0.1
+ 0.5
1920 - 1923
0
 
+ 3.6
+ 2.3
+ 3.0
+ 2.3
 
         
 
Real wages
1904 - 1909
-0.3
 
+ 1.0
- 0.2
- 0.7
+ 0.4
1920 - 1923
0
 
+ 6.6
+ 4.7
+ 3.1
+ 1.4
 
 
 
Price Index
1891 - 1895
0
 
- 1.0
- 1.0
0
+ 0.8
1904 - 1909
-0.3
 
+ 1.0
+ 2.3
+ 2.2
+ 1.1
1920 - 1923
0
 
- 6.1
- 1.6
+ 1.6
+ 1.0

When we look at the lagged figures, though, the picture is entirely different. “One year later” than 1916 to 1920 productivity rose by 6.2% per year, compared with 2.3% per year for “one year later” than 1920 to 1923. “Two years later” than 1900 to 1904 - between 1902 and 1906 - productivity rose by 10.7% per year. For the periods when “faster progress” was made in reducing the average workweek, the annual increases in productivity tended to grow larger as the years were lagged. On the other hand, the annual percentage increases tended to become smaller with each lagged year in the periods of “slower progress” toward shorter hours.

Much the same pattern appears in the comparison with changes in real hourly earnings and in the consumer-price index. Between 1920 and 1923, when the workweek was static, real hourly earning increased at an average annual rate of 6.6%. One year later, though, the rate was down to 4.7%; two years later, to 3.1%; three years later, to 1.4%. Between 1916 and 1920, when the workweek was falling, real hourly earnings increased by only 0.4% per year. Progressively larger percentage increases took place in the periods one year, two years, and three years later.

The changes in the consumer-price index are even more spectacular. Between 1916 and 1920, consumer prices rose by a whopping 23.0% per year. Just the example which critics need to prove that shorter hours are inflationary! However, when consumer prices are lagged by one, two, or three years, the index soon moves to a negative position. On the other hand, in the period between 1920 and 1923 when hours were static the consumer-price index fell at an annual rate of 6.1%. This decline would appear to be a correction of the previous period of skyrocketing prices. In general, the lagged figures for the periods of slower progress show a creeping upward trend of accelerating inflation. The lagged figures for periods of faster progress show a generally but not uniformly downward trend.

Figures 8-4 and 8.5 apply the same comparisons and analysis to the period between 1919 and 1950 which includes the aftermath to both world wars and the Great Depression. For this period, I know of no published series for average workweeks in industry as a whole so we are limited to the BLS “establishment” series pertaining to the hours of manufacturing production workers. The productivity index likewise pertains to the manufacturing industries only. “Real hourly wages” are the wages of manufacturing production workers in current dollars divided by the consumer-price index in 1947-49 dollars. The price index itself pertains to the entire economy, though.

                figure 8-4
                 
 
Comparison of Trends in Average Workweek, Productivity, Real Hourly Wages, and Cost of Living for U.S. Manufacturing Industries, 1919 to 1950
 
 
 
         
Annual Percentage Change
                 
year
average
productivity
real
consumer workweek productivity real wages price index
 
workweek
index
wages
price index        
                 
1919
46.3
30.2
.638
74.0
       
1920
47.4
32.0
.641
85.7
2.4
6.0
0.5
15.8
1921
43.1
36.9
.666
76.4
-9.0
15.3
3.9
-10.9
1922
44.2
41.8
.673
71.6
2.6
13.3
1.1
-6.3
1923
45.6
40.2
.708
72.9
3.2
-3.8
5.2
1.8
1924
43.7
42.8
.740
73.1
-4.2
6.5
4.5
0.3
1925
44.5
45.6
.721
75.0
1.8
6.5
-2.6
2.6
1926
45.0
46.5
.717
75.6
1.1
2.0
-0.6
0.8
1927
45.0
47.6
.733
74.2
-
2.4
2.2
-1.9
1928
44.4
49.7
.759
73.3
-1.3
4.4
3.5
-1.2
1929
44.2
52.0
.764
73.3
-0.4
4.6
0.7
-
1930
42.1
52.3
.765
71.4
-4.8
0.6
0.1
-2.6
1931
40.5
54.0
.783
65.0
-3.8
3.3
2.4
-9.0
1932
38.3
50.5
.755
58.4
-5.4
-6.5
-3.6
-10.2
1933
38.1
54.9
.790
55.3
-0.5
8.7
4.6
-5.4
1934
34.6
57.4
.920
57.2
-9.2
4.6
16.5
3.4
1935
36.6
61.2
.927
58.7
5.8
6.6
0.8
2.6
1936
39.2
61.6
.927
59.3
7.1
0.7
-
1.0
1937
38.6
60.7
1.005
61.4
-1.5
-1.5
8.4
3.5
1938
35.6
59.9
1.028
60.3
-7.8
-1.3
2.3
-1.8
1939
37.7
65.4
1.056
59.4
5.9
9.2
2.7
-1.5
1940
38.1
68.7
1.093
59.9
1.1
5.0
3.5
0.8
1941
40.6
71.2
1.154
62.9
6.6
3.6
5.6
5.0
1942
43.1
72.4
1.221
69.7
6.2
1.7
5.8
10.8
1943
45.0
73.4
1.293
74.0
4.4
1.4
5.9
6.2
1944
45.2
72.5
1.344
75.2
0.4
-1.2
3.9
1.6
1945
43.5
71.5
1.321
76.9
-3.8
-1.4
-1.7
2.3
1946
40.3
65.8
1.289
83.4
-7.4
-8.0
-2.4
8.5
1947
40.4
69.6
1.274
95.5
-0.2
5.8
-1.2
14.5
1948
40.0
72.1
1.292
102.8
-1.0
3.6
1.4
7.6
1949
39.1
74.9
1.354
101.8
-2.3
3.9
4.8
-1.0
1950
40.5
81.4
1.401
102.8
3.6
8.7
3.5
1.0
                 
Note: Productivity 1929=100, real hourly wages in 1890-99 dollars, consumer-price index 1890-99=100.

Figure 8-4 reveals that manufacturing hours which had declined moderately during the 1920s took a plunge in the early years of the Depression, falling by 9.6 hours per week between 1929 and 1934. From its low point in 1934, the average workweek recovered sporadically during the remainder of the decade. World War II brought hours back to a level comparable to that in the 1920s but the postwar years saw the workweek decline to a level near 40 hours.

While this was happening, there was lively activity in the other three variables as well. Productivity soared between 1920 and 1922 but then showed more moderate gains during the rest of the decade and on into the 1930s. After falling by 6.5% between 1931 and 1932, it registered some sharp increases in the following three years, paused, came on strong toward the end of the 1930s, slowed down again during World War II, fell by 8.0% in 1946, and made a strong recovery in the next four years.

Real hourly wages, lagging a year or two behind productivity, rose briskly during the first half of the 1920s, even more briskly in the mid 1930s, and again during World War II. Declines in real earnings occurred in the mid 1920s, at the outset of the Depression, toward the end of World War II, and in the early postwar years. Finally, the consumer-price index fell sharply after its rise during and immediately after World War I. It remained stable through the 1920s, took a plunge during Hoover’s administration, and stabilized during the middle and later 1930s, During World War II, the price index climbed sharply and, after a pause in the late war years, hit double digits in 1947 and then subsided.

            figure 8-5
             
Comparison of Annual Changes in Productivity, Real Weekly Earnings, and Cost of Living in Periods of Faster or Slower Progress toward a Shorter Workweek, 1919 to 1950
 
 
(Analysis of Data from Figure 8-4)
   
             
FASTER percent change  
Percentage Change per Year
PROGRESS in hours per year   same year one year two years three
        later later years later
             
    Productivity
1929 - 1934
-4.3
 
+ 2.1
+ 3.4
+ 2.8
+ 4.0
1919 - 1921
-3.5
 
+ 11.1
+15.3
+ 4.5
+ 1.2
1944 - 1949
-2.7
 
+ 0.7
+ 2.8
+ 5.5
+4.7
 
 
 
Real wages
1929 - 1934
-4.3
 
+ 4.1
+ 4.2
+ 3.7
+ 6.6
1919 - 1921
-3.5
 
+ 3.0
+ 2.5
+ 3.2
+ 5.0
1944 - 1949
-2.7
 
+0.1
+ 1.2
+ 2.1
+3.3
 
 
 
Price Index
1929 - 1934
-4.3
 
-4.4
-3.6
-1.8
+ 1.0
1919 - 1921
-3.5
 
+ 1.6
-8.2
-2.3
+ 1.0
1944 - 1949
-2.7
 
+ 7.1
+ 6.7
+ 6.6
+ 3.7
 
 
SLOWER
percent change
 
Percentage Change per Year
PROGRESS
in hours per year
 
same year
one year
two years
three
 
 
later
later
years later
 
Productivity
1921 - 1927
+0.7
 
+ 4.8
+ 3.1
+ 4.9
+3.7
1934 - 1937
+3.9
 
+ 1.9
-0.7
+ 2.1
+ 4.4
1938 - 1944
+4.4
 
+ 3.5
+ 1.6
-0.7
-0.4
 
 
 
Real wages
1921 - 1927
+0.7
 
+ 1.7
+2.1
+1.3
+ 0.6
1934 - 1937
+3.9
 
+ 3.1
+ 3.6
+ 4.6
+ 2.9
1938 - 1944
+4.4
 
+5.1
+4.2
+3.0
+1.7
 
 
 
Price Index
1921 - 1927
+0.7
 
- 0.5
+0.4
+0.1
-0.4
1934 - 1937
+3.9
 
+ 2.4
+ 0.9
+ 0.1
-0.8
1938 - 1944
+4.4
 
+4.1
+4.9
+ 6.5
+ 8.6

Figure 8-5 correlates these various developments. The increases in productivity between 1929 and 1934, when the workweek was plunging, were more modest than those between 1921 and 1927 and between 1938 and 1944, when the workweek rose. However, the situation is reversed when the productivity changes are lagged by one or more years.

Two exceptions to this pattern are the periods between 1919 and 1921 and between 1934 and 1937. Here productivity rose significantly during the same years when hours were falling significantly, or else failed to rise significantly when hours failed to fall. However, because the time intervals are relatively short, and because they were periods of unusual economic turbulence, their patterns may have little long-term significance.

With respect to real hourly wages, somewhat larger annual increases took place during the years when slower progress was made in reducing hours than when faster progress was made. Again, real wages tended to rise when lagged one or more years behind the period of faster progress in reducing hours and tended to fall when lagged behind the period of slower progress.

The behavior of the consumer-price index is more confusing still. Between 1929 and 1934, both the manufacturing workweek and consumer prices fell sharply as the Depression hit. Both tended to rise once again in the following years. Likewise, prices and hours rose together in the period between 1938 and 1944 as the nation built up to a peak of war production. On the other hand, between 1944 and 1947, consumer prices continued to climb while the workweek was falling from wartime levels. The analysis of lagged years gives contradictory results. It would appear that short-term events, the Great Depression and World War II, were influencing the pattern of consumer prices more than developments related to hours and productivity.

Figures 8-6, 8-7, and 8-8 bring the analysis up to date through 1979. For this latest period, the average workweek for all industries is based upon data from the BLS “household” survey which the Census bureau conducts. The average workweek for manufacturing production workers reported in Figure 8-7 is based upon establishment data from the reports which employers file with state agencies. Similarly, the indexes of productivity are based upon household data for all industries and upon establishment data for manufacturing only.

                figure 8-6
                 
 
Comparison of Trends in Average Workweek, Productivity, Real Hourly Compensation
and Cost of Living for all U.S. Industries, 1947 to 1979
 
 
 
         
Annual Percentage Change
 
                 
year
average
productivity
real
consumer
workweek productivity real wages price index
 
workweek
index
wages
price index
       
 
       
1947
43.5
52.3
52.5
66.9
1948
42.8
54.4
52.9
72.1
-1.6
4.0
0.8
7.8
1949
42.1
55.3
54.4
71.4
-1.6
1.7
2.8
-1.0
1950
41.7
59.7
57.7
72.1
-1.0
8.0
6.1
1.0
1951
42.2
61.5
58.6
77.8
1.2
3.0
1.6
7.9
1952
42.4
63.0
61.1
79.5
0.5
2.4
4.3
2.2
1953
41.9
65.3
64.6
80.1
-1.2
3.7
5.7
0.8
1954
40.9
66.5
66.5
80.5
-2.4
1.8
2.9
0.5
1955
41.6
69.2
68.5
80.2
1.7
4.1
3.0
-0.4
1956
41.5
70.2
72.0
81.4
-0.2
1.4
5.1
1.5
1957
41.0
72.3
74.2
84.3
-1.2
3.0
3.1
3.6
1958
40.6
74.2
75.6
86.6
-1.0
2.6
1.9
2.7
1959
40.5
76.8
78.5
87.3
-0.2
3.5
3.8
0.8
1960
40.5
78.1
80.5
88.7
-
1.7
2.5
1.6
1961
40.5
80.6
82.8
89.6
-
3.2
2.9
1.0
1962
40.5
84.4
85.7
90.6
-
4.7
3.5
1.1
1963
40.4
87.7
88.0
91.7
-0.2
3.9
2.7
1.2
1964
40.0
91.3
91.6
92.9
-1.0
4.1
4.1
1.3
1965
40.5
94.7
93.6
94.5
1.3
3.7
2.2
1.7
1966
40.4
97.8
97.3
97.2
-0.2
3.3
4.0
2.9
1967
40.4
100.0
100.0
100.0
-
2.2
2.8
2.9
1968
40.1
103.3
103.3
104.2
-0.7
3.3
3.3
4.2
1969
39.9
103.7
104.8
109.8
-0.5
0.4
1.5
5.4
1970
39.1
104.5
106.0
116.3
-2.0
0.8
1.1
5.9
1971
39.3
107.8
108.4
121.3
0.5
3.2
2.3
4.3
1972
39.4
111.0
110.9
125.3
0.3
3.0
2.3
3.3
1973
39.3
113.1
112.9
133.1
-0.3
1.9
1.8
6.2
1974
39.0
109.9
111.2
147.7
-0.8
-2.8
-1.5
11.0
1975
38.7
111.8
111.8
161.2
-0.8
1.7
0.5
9.1
1976
38.7
116.5
115.3
170.5
-
4.2
3.1
5.8
1977
38.8
119.4
117.9
181.5
0.3
2.5
2.3
6.5
1978
39.0
195.3
0.5
7.6
1979
38.9
217.7
-0.3
11.5
                 
Note: Productivity 1967=100, real hourly wages in 1967 dollars, consumer-price index 1967=100.

 

                figure 8-7
                 
 
Comparison of Trends in Average Workweek, Productivity, Real Hourly Compensation and Cost of Living for U.S. Manufacturing Industries, 1947 to 1979
 
 
 
         
Annual Percentage Change
 
                 
year
average
productivity
real
consumer
workweek productivity real wages price index
 
workweek
index
wages
price index
       
 
       
1947
40.4
55.6
1.819
66.9
1948
40.0
59.2
1.842
72.1
-1.0
6.5
1.3
7.8
1949
39.1
61.4
1.930
71.4
-2.3
3.7
4.8
-1.0
1950
40.5
64.9
200.0
72.1
3.6
5.7
3.6
1.0
1951
40.6
67.0
2.01
77.8
0.2
3.2
0.5
7.9
1952
40.7
68.2
2.06
79.5
0.2
1.8
2.5
2.2
1953
40.5
69.4
2.17
80.1
-0.5
1.8
5.3
0.8
1954
39.6
70.5
2.21
80.5
-2.2
1.6
1.8
0.5
1955
40.7
74.0
2.31
80.2
2.8
5.0
4.5
-0.4
1956
40.4
73.5
2.40
81.4
-0.7
-0.7
3.9
1.5
1957
39.8
75.0
2.42
84.3
-1.5
2.0
0.8
3.6
1958
39.2
74.6
2.42
86.6
-1.5
-0.5
-
2.7
1959
40.3
78.1
2.51
87.3
2.8
4.7
3.7
0.8
1960
39.7
78.8
2.55
88.7
-1.5
0.9
1.6
1.6
1961
39.8
80.7
2.59
89.6
0.3
2.4
1.6
1.0
1962
40.4
84.5
2.64
90.6
1.5
4.7
1.9
1.1
1963
40.5
90.4
2.67
91.7
0.2
7.0
1.1
1.2
1964
40.7
95.2
2.72
92.9
0.5
5.3
1.9
1.3
1965
41.2
98.2
2.76
94.5
1.2
3.2
1.5
1.7
1966
41.3
99.7
2.79
97.2
0.2
1.5
1.1
2.9
1967
40.6
100.0
2.82
100.0
-1.7
0.3
1.1
2.9
1968
40.7
103.6
2.89
104.2
0.2
3.6
2.5
4.2
1969
40.6
104.9
2.91
109.8
-0.2
1.3
0.7
5.4
1970
39.8
104.5
2.88
116.3
-2.0
-0.4
-1.0
5.9
1971
39.9
110.4
2.94
121.3
0.3
5.6
2.1
4.3
1972
40.6
116.0
3.05
125.3
1.8
5.1
3.7
3.3
1973
40.7
119.4
3.07
133.1
0.2
5.1
3.7
6.2
1974
40.0
112.8
2.99
147.7
-1.7
-5.5
-2.6
11.0
1975
39.4
116.3
3.00
161.2
-1.5
3.1
0.3
9.1
1976
40.0
124.2
3.06
170.5
1.5
6.8
2.0
5.8
1977
40.3
126.0
3.13
181.5
0.8
2.2
2.3
6.5
1978
40.4
3.16
195.3
0.2
1.0
7.6
1979
40.2
3.07
217.7
-0.5
-2.8
11.5
                 
Note: Productivity 1967=100, real hourly wages in 1967 dollars, consumer-price index 1967=100.

 

            figure 8-8
             
Comparison of Annual Changes in Productivity, Real Hourly Compensation, and Cost of Living in Periods of Faster or Slower Progress toward a Shorter Workweek, 1947 to 1979
             
 
(Analysis of Data from Figure 8-6)
   
             
FASTER percent change  
Percentage Change per Year
PROGRESS in hours per year  
same year
one year
two years
three
     
later
later
years later
             
    Productivity        
1947 - 1950
-1.4
 
+ 4.7
+ 4.4
+ 4.6
+ 3.1
1967 - 1970
-1.1
 
+ 1.5
+1.5
+ 2.3
+ 2.7
1955 - 1958
-0.8
 
+ 2.4
+ 3.1
+ 2.7
+2.9
 
Real wages
1947 - 1950
-1.4
 
+ 3.3
+ 5.2
+ 6.2
+ 5.1
1967 - 1970
-1.1
 
+ 2.0
+ 1.6
+ 1.9
+ 2.2
1955 - 1958
-0.8
 
+3.5
+ 3.0
+ 2.8
+3.2
 
Price Index
1947 - 1950
-1.4
 
+ 2.6
+ 2.6
+ 3.8
+ 3.7
1967 - 1970
-1.1
 
+ 5.4
+ 5.5
+ 4.7
+ 4.8
1955 - 1958
-0.8
 
+ 2.7
+ 2.4
+ 1.7
+ 1.2
         
SLOWER
percent change
 
Percentage Change per Year
PROGRESS
in hours per year
 
same year
one year
two years
three
 
later
later
years later
Productivity        
1960 - 1967
+0.7
 
+ 4.0
+ 4.0
+ 3.2
+2.7
1950 - 1953
+3.9
 
+ 3.1
+ 2.7
+ 3.3
+ 2.5
1970 - 1973
+4.4
 
+ 2.7
+ 0.6
+ 0.2
+ 1.0
 
Real wages
1960 - 1967
+0.7
 
+ 3.5
+ 3.5
+ 3.2
+ 2.9
1950 - 1953
+3.9
 
+ 4.0
+ 4.5
+ 4.0
+ 3.8
1970 - 1973
+4.4
 
+ 2.2
+ 0.9
+ 0.3
+ 0.7
 
Price Index
1960 - 1967
+0.7
 
+ 1.8
+ 2.3
+ 3.0
+ 3.8
1950 - 1953
+3.9
 
+ 3.7
+ 1.2
+ 0.3
+ 0.5
1970 - 1973
+4.4
 
+ 4.8
+ 7.3
+ 9.6
+ 9.4

 

To represent real income we have used two different kinds of measurement. The figures for all industries represent “real hourly compensation”. This is the wages and salaries of private-sector employees plus employers’ contributions for Social Security and other benefits divided by the consumer-price index. “Real hourly wages”, used for the manufacturing production workers, are the hourly earnings from employers’ payroll records divided by the consumer-price index for 1967. The same price index is used for both sets of workers.

Since World War II, there has been no significant decline in the average workweek. The greatest decline occurred during the 1940s, mainly between 1943 and 1948. In the nearly thirty years since 1950, the average workweek of all workers has declined by only 2.8 hours; and even this decline, small as it is, represents compositional shifts in the labor force more than it does additional free time. The statistics for manufacturing production workers show how static the workweek has been since the 1940s.

Not so the other three variables. The gains in productivity in the years following World War II were comparatively large. Throughout the 1950s up until the late 1960s, they compare well with productivity gains achieved in other periods. After 1968, the progress slowed. Real hourly compensation scored equally strong advances in the period between 1948 and 1956 and through most of the 1960s. Again, since 1968, its performance has been anemic. One reason for this undoubtedly was that the consumer-price index which remained stable during the 1950s and until the late 1960s began to climb in 1968 and then, with the oil-price hikes, became unstable in the 1970s. The years 1973 and 1979 featured double-digit inflation. A similar inflationary outbreak had developed during 1945 to 1948 but it was brought under control.

Because the average workweek has not changed much since the end of World War II, our effort to correlate hours with the other variables may be less meaningful than for previous periods. The largest drop in hours occurred between 1947 and 1950. Accompanying this drop were comparatively large increases in the other categories including prices. The analysis of changes in the periods lagging one, two, or three years behind the change in workweek shows that the productivity increases tended to fade, real compensation tended to rise, while consumer prices both rose and fell.

Although inflation was a problem in the years of faster progress toward shorter hours, it was also a problem in the years of slower progress, particularly since 1968. The period between 1970 and 1973, when hours were on the upswing, was a period of unimpressive gains in productivity and in real compensation. Declines in all these categories except for prices occurred between 1973 and 1975. So far as the workweek, productivity, and real earnings were concerned, the decade of the 1970s was unexciting. Most of the excitement took place in the realm of consumer prices as inflation accelerated.

 

hours statistics

Now, perhaps, we may begin to fit together the different pieces of the puzzle, showing the larger picture. In some periods there was movement in the average workweek. In other periods the activity took of form of changing price levels, real wages, or productivity. It would be nice if we could assemble statistics indicating all these changes on a consistent basis for the entire period of time. In Figure 8-9, there is an attempt to piece the information together. The problem is that the series of statistical data covering this broader span of time may be less accurate, complete, and self-consistent than the data for shorter periods.

For that reason, the statistics which we will use for the average workweek in Figure 8-9 are taken from three different sources. The figures for the period between 1850 and 1960 were furnished by Ewan Clague, then Commissioner of the Bureau of Labor Statistics, in testimony before the House Select Subcommittee on Labor in November 1963. The second series, developed by the National Bureau of Economic Research, was published in an article by Geoffrey H. Moore and Janice N. Hedges, in the February 1971 issue of Monthly Labor Review. The third series of figures gives average workweeks in the years of peak employment relative to the business cycle during the 20th century. These figures were presented by Professor John D. Owen in testimony before the House subcommittee hearing HR-1784. They were originally published in Professor Owen’s book, Working Hours: An Economic Analysis.

                figure 8-9
                 
Long-term Trends in Average Workweek, Productivity, Per-capita Real GNP, and Cost of Living for U.S. Economy, 1850 to 1977 - three sources
          Percent Change in Period
  work-week produc-tivity ave. per-capita GNP consumer price index work-week produc-tivity PC real GNP price index
Clague                
 
1850
69.8
25
1860
68.0
27
-2.6
8.0
1870
65.4
38
-3.8
40.7
1880
64.0
29
-2.1
-31.0
1890
61.9
52.4
836
27
-3.3
-6.9
1900
60.2
61.7
1,011
25
-2.7
17.9
20.9
-7.4
1910
55.1
67.7
1,299
28
-8.5
9.7
28.5
12.0
1920
49.7
79.6
1,315
60
-9.8
17.6
1.2
114.3
1930
45.9
98.8
1,490
50
-7.6
24.1
13.3
-16.7
1940
44.0
124.4
1,720
42
-4.1
25.9
15.4
-16.0
1950
42.5
162.8
2,342
72
-3.4
30.9
36.2
71.7
1960
40.8
208.1*
2,699
89
-4.0
27.8
15.2
23.0
 
NBER
 
1869-78
53.2
531
35*
1879-88
53.4
774
28*
0.4
45.8
-20.0
1890
53.7
52.4
836
27
0.6
8.0
-3.6
1900
53.2
61.7
1,011
25
-0.9
17.7
20.9
-7.4
1910
52.1
67.7
1,299
28
-2.1
9.7
28.5
12.0
1920
49.8
79.6
1,315
60
-4.4
17.6
1.2
114.3
1930
47.7
98.8
1,490
50
-4.2
24.1
13.3
-16.7
1940
43.9
124.4
1,720
42
-8.0
25.9
15.4
-16.0
1950
41.2
162.8
2,342
72
-6.2
30.9
36.2
71.7
 
Owen
 
1901
58.4
65.2
1,105
25.0
1906
57.0
68.5
1,258
27.0
-2.4
5.1
13.8
8.0
1913
55.0
71.8
1,351
29.7
-3.5
4.8
7.4
10.0
1919
50.0
80.4
1,401
51.8
-9.1
12.0
3.7
74.4
1923
49.6
88.2
1,482
51.1
-0.8
9.7
5.8
-1.4
1926
49.3
94.4
1,619
53.0
-0.6
7.0
9.2
3.7
1929
48.7
100.0
1,671
51.3
-1.2
5.9
3.2
-3.2
1948
41.6
146.4
2,208
72.1
-14.6
46.4
32.1
40.5
1953
41.4
173.1
2,587
80.1
-4.8
18.2
17.2
11.1
1956
41.8
188.0
2,652
81.4
1.0
8.6
2.5
1.6
1966
42.1
260.5*
3,348
97.2
0.7
38.6
26.2
19.4
1969
42.0
276.2*
3,580
109.8
-0.2
6.1
6.9
13.0
1977
41.3
318.1*
4,164*
181.5
-1.7
15.2
16.3
65.3
        * calculated      

It would appear that the information in Figure 8-9 that the workweek has followed a gradual but steady course of decline since the middle of the 19th century. The declines which occurred during the 19th century were less abrupt than those in the first three or four decades of the 20th century. Although the three series of figures differ somewhat, it would appear that the steepest decline in hours took place in the 1930s during the Great Depression. Second was the decline at the time of World War I. However, working hours did drop steadily at other times in the earlier part of this century. Since the 1940, the progress has slowed considerably, if not stopped altogether.

The variations in productivity increases and gains in average per-capital real GNP are less distinct. Gains in both areas were relatively low from the 1890s until the 1920s. Apparently world wars and severe depressions have stimulated new energies and resources for growth. The 1940s and 1950s saw relatively rapid improvement in productivity and per-capita GNP which continued through the early 1960s. In the past ten or twelve years, the pattern has been closer to that in the 1890s.

With respect to inflation, however, these two periods could not have been more different. The period between 1870 and 1900 was marked by deflation rather than inflation. Consumer prices fell by about one third during this time. The four wars in which the United States has been involved during the 20th century have been the principal stimulus to inflation excepting that which has occurred during the past twelve years. We have had to coin a new word, “stagflation”, to describe our malady.

          figure 8-10
           
Comparison of Annual Changes in Average Workweek, Productivity, Per-Capita Real GNP, and Cost of Living for U.S. Economy, 1850 to 1977 - three sources
 
 
Decline in
  Percentage Change per Year
 
Average Workweek during Period
work-week
produc-tivity
PC real GNP
price index
Clague          
 
1850 - 1860
-1.8 hours
-0.3
+0.8
1860 - 1870
-2.6 hours
-0.4
+4.1
1870 - 1880
-1.4 hours
-0.2
-3.1
1880 - 1890
- 2.1 hours
-0.3
-0.7
1890 - 1900
-1.7 hours
-0.3
+1.8
+2.1
-0.7
1900 - 1910
-5.1 hours
-0.8
+1.0
+2.8
+1.2
1910 - 1920
-5.4 hours
-1.0
+1.8
+0.1
+11.4
1920 - 1930
-3.8 hours
-0.8
+2.4
+1.3
-1.7
1930 - 1940
-1.9 hours
-0.4
+2.6
+1.5
-1.6
1940 - 1950
-1.5 hours
-0.3
+3.1
+3.6
+7.2
1950 - 1960
-1.7 hours
-0.4
+2.8
+1.5
+2.3
 
NBER
 
1870s - 1880s
+0.2 hours
+4.6
-2.0
1880s - 1890s
+0.3 hours
+0.1
+1.3
-0.6
1890 - 1900
-0.5 hours
-0.1
+1.8
+2.1
-0.7
1900 - 1910
-1.1 hours
-0.2
+1.0
+2.8
+1.2
1910 - 1920
-2.3 hours
-0.4
+1.8
+0.1
+11.4
1920 - 1930
-2.1 hours
-0.4
+2.4
+1.3
-1.7
1930 - 1940
-3.8 hours
-0.8
+2.6
+1.5
-1.6
1940 - 1950
-2.7 hours
-0.6
+3.1
+3.6
+7.2
 
Owen
 
1901 - 1906
-1.4 hours
-0.5
+1.0
+2.3
+1.6
1906 - 1913
-2.0 hours
-0.5
+0.7
+1.1
+1.4
1913 - 1919
-5.0 hours
-1.5
+2.0
+0.6
+12.4
1919 - 1923
-0.4 hours
-0.2
+2.4
+1.4
-0.3
1923 - 1926
-0.3 hours
-0.2
+2.3
+3.1
+1.2
1926 - 1929
-0.6 hours
-0.4
+2.0
+1.1
-1.1
1929 - 1948
-7.1 hours
-0.8
+2.4
+1.7
+2.1
1948 - 1953
-0.2 hours
-0.1
+3.6
+3.4
+2.2
1953 - 1956
+0.4 hours
+0.3
+2.9
+0.8
+0.5
1956 - 1966
+0.3 hours
+0.1
+3.9
+2.6
+1.9
1966 - 1969
-0.1 hours
-0.1
+2.0
+2.3
+4.3
1969 - 1977
-0.7 hours
-0.2
+1.9
+2.0
+8.2

 

the effect of shorter hours

Do shorter workweeks cause productivity and real wages to decline and prices to rise? Or do they stimulate increase in wages and productivity and have minimal impact on prices? Perhaps the following might be said:

(1) In the long run, shorter hours do not lead to higher consumer prices. The most convincing evidence that the two might be related comes from our experience during World War I. In that case, however, the wartime inflation was soon followed by postwar deflation, a period of stable prices, and then more deflation as the Depression struck. In contrast, the second period since 1968 has begrudged cuts in the workweek but sustained high rates of inflation.

(2) Cuts in the workweek appear to stimulate increased productivity - if not immediately, within several years. There were gradual declines in working hours up until world War I and the increases in productivity were also gradual. The rapid decline in hours between 1917 and 1920 was followed by a jump in productivity during 1921 and 1922. The plunge in hours after 1929 led to greater-than-average gains in productivity between 1932 and 1935. After hours declined from their peak in World War II, there were sizable productivity gains in the late 1940s and in the 1950s. The virtual absence of a trend in the workweek since the 1940s may have taken its toll in an economy grown sluggish.

(3) Real wages tend to follow the gains in productivity but are limited, on the other hand, by increases in the consumer-price index. The evidence does not support the theory that shorter hours are “traded off” against higher real pay. Even during the Depression, when economic circumstances forced many workers to accept short hours, real hourly wages scored some sharp gains. Those lucky enough to keep their jobs did not fare badly. On the other hand, the longer hours which were required to win World War II brought big pay increases although most of this money was eaten up by inflation. Towards the end of the war, average real wages dropped. A prolonged slump in the advance of real incomes began in the late 1960s as the progress toward a shorter workweek slowed to a trickle. Instead of diminishing the size of the “pie”, as many economists suggest, it is possible that a substantial cut in the workweek comparable to that which occurred between 1917 and 1920 might kick off another era of Roaring 20s-like prosperity.

Admittedly, this analysis and interpretation of year-to-year changes is not without its problems. Critics of the shorter workweek will interpret the same data in a different way. For instance, regarding the link between shorter hours and higher real pay, I have heard reference to a “melon effect”. As I understand it, this means that the productivity dividend, like a ripe melon, can be sliced in different ways. If the melon is larger, then there can, of course, be larger slices of both income and leisure. However, increases in the one would come at the expense of the other. This argument assumes that productivity changes are the cause of cuts in hours and increases in real pay. We are trying to determine whether the cuts in hours have a causal influence upon productivity and the other variables. That is why we have looked at the lagged figures.

One objection to this approach might be that the technique of correlating hours and another lagged variable merely compares developments at different phases of the business cycle. For instance, when a recession begins, average work hours usually drop and so do real wages and productivity. If we insist upon observing productivity changes two or three years later when the business cycle has entered its phase of growth and recovery, it may erroneously appear that the reductions in hours have caused the increases in productivity, Many other factors may have been involved.

Much of this objection is valid. However, the information in Figures 8-9 and 8-10 should give an indication of trends over a longer period of time than just the business cycle. The declines in the workweek during World War I and the Depression were followed by currents of rising productivity and real wages, not just in the next two or three years but for the subsequent decade. The “Stagnant ‘70s”, which have included several rounds of the business cycle, have featured a sustained slowdown in the reduction of workweeks, advances in productivity, and increased real income.

Nevertheless, because of the above-mentioned difficulties, we should do other kinds of analysis which do not involve short-term, cyclical fluctuations. We might analyze, for instance, the relationship between changes in working hours and changes in earnings in different industries during the same period of time. Do those industries in which hours are cut more rapidly show larger or smaller increases in the wages paid to workers than the industries in which hours are cut more slowly or not at all?

              figure 8-11
               
Comparison of Changes in Average Workweeks and in Average Hourly Earnings for Production Workers in 24 Manufacturing Industries, July 1914 to June 1936
 
 
Average Actual
Percent
Average Hourly Earnings
Percent
 
Hours per Week
change
change
Industry
July 1914
ave. 1925
June 1936
1914 to 1936
July 1914
June 1936
1914 to 1936
 
silk mfg.
50.8
46.9
31.3
- 38.4%
.196
.494
152.0%
boot & shoe mfg.
53.6
45.8
33.3
- 37.9%
.212
.564
166.0%
wool mfg.
53.1
44.1
34.4
- 35.2%
.182
.528
190.1%
chemical mfg.
57.2
52.8
39.6
- 30.8%
.225
.620
175.5%
hosiery & knit goods
46.6
45.1
32.6
- 30.0%
.178
.502
182.0%
iron & steel
57.0
53.6
40.8
- 28.4%
.263
.669
154.4%
cotton mfg. - north
51.9
47.0
37.3
- 28.1%
.176
.448
154.5%
meat packing
55.8
49.6
42.0
- 24.7%
.215
.559
160.0%
rubber mfg.
49.1
44.5
37.3
- 24.0%
.250
.774
209.6%
leather
50.1
47.5
38.2
- 23.8%
.217
.566
160.8%
agricultural implements
52.0
49.9
39.7
- 23.7%
.265
.662
149.8%
heavy equipment
54.1
47.8
41.6
- 23.1%
.308
.648
110.4%
printing - newspapers, etc.
46.2
45.2
35.7
- 22.7%
.378
.883
133.6%
lumber & millwork
53.0
49.1
41.0
- 22.6%
.224
.605
170.1%
paper & pulp
53.9
51.3
41.8
- 22.4%
.233
.543
133.0%
electrical mfg.
49.8
46.5
39.3
- 21.1%
.272
.667
145.2%
paper products
51.6
47.4
41.0
- 20.5%
.187
.523
179.7%
foundries
50.1
49.2
40.1
- 20.0%
.258
.607
135.3%
hardware & small parts
49.5
48.5
40.5
- 18.2%
.238
.552
131.9%
furniture mfg.
49.9
47.5
41.2
- 17.4%
.232
.548
136.2%
printing, books
46.8
46.4
39.0
- 16.7%
.302
.729
141.4%
automobile mfg.
51.4
47.3
44.3
- 13.8%
.293
.778
165.5%
machines & machine tools
48.9
49.0
43.2
- 11.7%
.287
.642
123.7%
paint & varnish
52.5
52.7
47.2
- 10.1%
.289
.607
110.0%
 
all industries
51.5
48.2
39.4
- 23.5%
.247
.617
149.8%

In Figure 8-11, we have such a comparison. The statistics on wages and hours are taken from surveys which were conducted by the National Industrial Conference Board between 1914 and 1936. This period, of course, includes the times when the biggest cuts in the workweek were made. The average workweeks of workers in 24 manufacturing industries are given for July 1914, for the year of 1925, and for June 1936. Workers’ average hourly earnings in current dollars are also shown for these industries at the same times. The percentage change in the workweek and in hourly pay has been calculated for each industry over this 22-year period. The industries are listed in descending order by their percentage decline in the average workweek.

In general, the table shows that those industries in which average weekly hours fell by a larger percentage tended to be the same ones in which average hourly earnings increased by larger percentages. On the other hand, hourly pay tended to be static in industries where the average workweek was static. The silk-manufacturing industry in which hours fell by the largest percentage ranks Number 13 on the list with respect to increased pay; so it is, perhaps, a bad example. However, the next four highest-ranked industries with respect to shortened workweeks rank in the top ten industries as regards increased pay. At the bottom of both lists are paint-and-varnish manufacturing and machines and machine tools. In June 1936, average hours in both industries remained well above 40 while average wages increased at a slower rate since July 1914 than in most other industries. On the other hand, in automobile manufacturing the pay increases were relatively large while average working hours remained relatively high.

It might be useful to do a similar comparison of changes in workweeks and in prices. If shorter hours increase labor costs and force employers to raise prices, then surely this fact would be reflected in the wholesale or producer prices of the products in industries where the larger hours reductions were made. Since 1947, the Bureau of Labor Statistics has tracked average weekly hours and average wholesale prices by the major categories of manufacturing industries. Figure 8-12 compares the percentage change in the workweek between 1947 and 1978 with the percentage change in the wholesale or producer-price index during this time. If we rank these industrial sectors by their degree of price increase, the low numbers appearing in the column to the right will indicate a less desirable situation than the high numbers. In this table the categories of industry are listed in descending order by the shortness of their workweek in 1978.

              figure 8-12
               
Comparison of Changes in Average Workweeks of Production Workers and Average Wholesale or Producer Prices for Several Manufacturing Industries, 1947 to 1978
 
 
Average
Percent
Wholesale or
Percent
Rank
 
Weekly hours
Change
Producer Price Index
Change 1947-78
price gain
Industry
1947
1978
1947-78
1947
1948
 
apparel & other textiles
36.0
35.6
-1.1%
103.6
159.8
54.2%
14
leather
38.6
37.1
-3.9%
83.3
200.0
140.1%
11
tobacco mfg.
38.9
38.1
-2.1%
66.1
198.5
200.3%
5
furniture & fixtures
41.5
39.3
-5.3%
77.0
160.4
108.3%
13
food & kindred product
43.2
39.7
-8.1%
82.9
202.6
144.4%
10
lumber & wood products
40.3
39.8
-1.2%
73.4
276.0
276.0%
3
electric & electronic equipment
40.3
40.3
0
62.2
164.9
165.1%
8
rubber & misc. plastics
39.9
40.9
2.5%
70.5
174.8
147.9%
9
stone, clay & glass
41.0
41.6
1.5%
66.3
222.8
236.0%
4
primary metals
39.9
41.8
4.8%
54.9
227.1
31.7%
2
chemicals & allied products
41.2
41.9
1.7%
93.7
198.8
112.2%
12
transportation equipment *
39.7
42.2
6.3%
66.3
176.0
165.5%
7
paper & allied products
43.1
42.9
-0.5%
72.5
195.6
169.8%
6
petroleum & coal products
40.6
43.6
7.4%
76.9
322.5
319.4%
1
* Producer price index is for motor vehicles only.

The industrial category which had the shortest hours in 1978, apparel and other textiles, showed the least inflation of wholesale prices between 1947 and 1978. On the other hand, petroleum and coal products, featuring the longest average workweek in 1978, sustained the most rapid inflation of prices. Happily, some of the other categories such as leather manufacturing and processed-food manufacturing also featured relatively short workweeks combined with relatively low rates of inflation. Primary metals and stone, clay & glass had moderately long workweeks and comparatively hefty percentage increases in wholesale prices during this 31-year period. There were, of course, industries such as tobacco manufacturing and chemicals which do not fit our theory so well. But, on the whole, prices increased more rapidly (by 241.8%) in the durable-goods manufacturing industries where workweeks increased between 1947 and 1978 than in the nundurable-goods manufacturing industries (127.6%) where workweeks declined.

I would not pretend that these comparisons prove that shorter workweeks are less inflationary than longer workweeks or deliver larger increases in real wages to workers. Obviously, the rising cost of obtaining crude oil, for instance, has something to do with the increased price of petroleum products. Also, in comparing industries, the consumer demand for the different products will help to explain why one industry is growing and can afford to pay higher wages or charge lower prices than another industry. Such comparisons are useful, though, in disproving or casting doubt upon the simplistic arguments that are often raised against the shorter workweek. If shorter hours are inflationary or cause workers to suffer cuts in real pay, then let the critics cite some recent, comprehensive examples.

 

international comparisons

A final comparison which may be of interest to the American public concerns the performance of the U.S. economy measured against that of other industrial nations in recent years. Comparative statistics in all areas are available for manufacturing production workers only.

Figure 8-13 indicates the average workweek of manufacturing production workers for ten industrialized nations including the United States in 1955, 1960, 1970, and 1976. It lists each nation in order of its percentage decrease in average workweek between 1950 and 1976. Italy, Belgium, and Sweden had the biggest declines in hours. The United States, Canada, and Great Britain had the smallest ones. Figures 8-13 also shows the percentage change in productivity, real hourly earnings, and consumer-price index for each nation between 1960 and 1976. The nations are ranked by the percentage change in each of the three categories.

            figure 8-13
             
Changes in Average Workweek, Productivity, Real Hourly Earnings, and Cost of Living
in Manufacturing for Ten Industrial Nations, 1960 to 1976
 
 
percent
 
1960
1976
change
Nation
1955 hours
hours
1970 hours
hours
1960-1976
rank
 
Italy
39.1
39.6
34.5
30.4
- 23.2%
1
Belgium
n.a.
41.6
38.4
33.4
- 19.7%
2
Sweden
40.6
38.5
35.0
31.7
- 17.7%
3
Japan
45.9
48.1
43.1
40.2
- 16.4%
4
France
46.1
46.8
45.0
41.7
- 10.9%
5
Netherlands
49.6
46.0
44.4
41.1
- 10.6%
6
West Germany
48.8
45.6
43.8
41.4
- 9.2%
7
United Kingdom
45.1
43.9
41.3
40.5
- 7.7%
8
Canada
41.0
40.4
39.7
38.7
- 4.2%
9
United States
40.7
39.7
39.8
40.0
+ 0.8%
10
 
 
Real Hourly
 
Productivity
Earnings
Consumer Price Index
 
Nation
% change 1960-1976
rank
% change 1960-1976
rank
% change 1960-1976
rank
 
Italy
148.1%
4
177.5%
2
193.0%
3
Belgium
191.8%
3
138.5%
4
119.6%
7
Sweden
142.3%
5
88.8%
7
140.2%
6
Japan
270.3%
1
202.4%
1
230.4%
1
France
137.0%
7
103.0%
5
148.9%
4
Netherlands
194.7%
2
140.0%
3
145.7%
5
West Germany
138.2%
6
117.9%
6
81.9%
10
United Kingdom
67.6%
9
52.2%
9
219.9%
2
Canada
83.5%
8
60.7%
8
98.5%
8
United States
57.6%
10
19.4%
10
92.2%
9
             
Note: Hours indicate average weekly hours paid for the United States, Canada, and West Germany; average weekly hours worked for Belgium, Italy, Japan, United Kingdom, and Sweden; average weekly scheduled hours for France and the Netherlands.
 

The results are as follows: Japan, fourth on the list with respect to reduced workweek, achieved by far the largest gains in productivity and in real hourly earnings. However, it also had the worst record with respect to inflation during this time. The Netherlands, with the sixth most reduced workweek, scored the second biggest increase in productivity. Italy and Belgium, which ranked first and second respectively in reducing their manufacturing workweeks, ranked fourth and third as regards productivity gains. The nation with the second largest increase in real hourly earnings was Italy, which had the fastest declining workweek. The Netherlands and Belgium ranked third and fourth in the real-earnings category.

At the bottom of the list from the standpoint of a reduced workweek, we find the United States, Canada, and the United Kingdom, which also happen to share the bottom positions with respect to increased productivity and real hourly earnings. The United States owns clear title to the cellar in both categories. The United Kingdom had the second worst record in both, and Canada the third worst record.

Since the record is so sharply divided between success in raising productivity and real wages, on one hand, and controlling inflation, on the other, we might wonder which of the two goals ought to be preferred. It would seem from the standpoint of working people that productivity and real wages ought to be cultivated more vigorously so as to increase their purchasing power. If, on the other hand, the economy is run from the standpoint of bankers and professional investors, then controlling the rise in the consumer-price index might seem to be a more worthwhile objective. It is evident where our nation’s priorities have been.

 

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