America’s Issues with Time Off, the 9-5, and the Future of Work

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America has defaulted to the 40-hour workweek for nearly 90 years. But why do US employees work more than any other industrialized nation? Is it the #LoveOfTheGrind…or something else? And, could less work and more vacation allow for the same level of productivity?

We're joined by economist Daniel Hamermesh from the National Bureau of Economic Research to analyze some theories as well as possible solutions for shifting our approach to work.

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Our show is a production of Morning Brew and is produced by Henah Velez and Katie Gatti Tassin, with our audio engineering and sound design from Nick Torres. Devin Emery is our Chief Content Officer and additional fact checking comes from Kate Brandt.

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Transcript

Transcript

Katie:

A few months ago, I was feeling very creatively stuck. This is a problem because my job relies almost entirely on personal curiosity and the generative act of collecting a lot of inspiration and information and then transforming it into something interesting and it felt like the engine powering my brain kept misfiring. I was mentally foggy, like there were too many tabs open at once, and the spinning beach ball of death kept appearing to warn me that my operating system was overheating.

Here's an actual journal entry from this period when it felt like my brain was betraying me, which is particularly illustrative. "It's frustrating when I can't take my stream of consciousness thoughts and immediately turn it into a bop of a piece without really working at it. It bothers me that it's taking me so much time and struggling and effort and riding around in the sentences to figure out what the fuck I'm trying to say." Clearly, despite being a little bit confused, I had not lost my flare for the dramatic, but I knew there was something deeper at play than just needing a few days off, and I ended up doing an exercise around limiting beliefs from a framework called The Work developed by Byron Katie because I was so desperate to get unstuck and to stop spinning my wheels.

To summarize briefly, the exercise asks you to identify a limiting belief that's causing you pain and then asks four follow-up questions. Is it true? Can you absolutely know it's true? How do you react when you believe that thought and who would you be without that thought? Now, my limiting belief sent me down a rabbit hole of unpacking deeply held borderline puritanical ideas about the moral value of work ethic. Namely, in order to be successful, I had to feel like I was working hard all the time. It had to feel hard and it had to be a struggle that my life or my business would not improve unless I felt like I was suffering. I mean, right? That's heavy shit. The Catholic guilt runs very deep with me.

But I tell you this story because I think it represents a microcosm perhaps of our conversation today, how we in the industrialized West collectively think about work and why Americans take so little vacation time, especially in the post pandemic world of work in which there's been more willingness to reevaluate how, when and why we labor for income.

Welcome back to The Money with Katie Show, rich laborers. I am your host, Katie Gatti Tassin and today we're talking about the persistence of the 40-hour workweek, a brief history of the nine to five job and why Americans don't use their vacation time. Our guest today is Daniel Hamermesh, an economist, a professor emeritus at the University of Texas at Austin, a research associate at the National Bureau of Economic Research and a research fellow at the Institute for the Study of Labor. Suffice it to say this dude has spent a lot of time studying labor and how Americans spend their time.

But before we can talk about what's happening with work in the 2020s, we have to talk about what happened in the 1920s. How did we end up with a 40-hour workweek in the first place? Was it ordained from on high, not quite. Less than a hundred years ago in 1926, Henry Ford reduced his company's standard hours from a six day workweek to just five days without changing compensation, and his theories for doing so probably sound familiar to you if you've been tuned into the four-day workweek experiments gaining popularity over the last few years. He figured employees would be more productive if they were working five days instead of six, and that they'd have more time and energy to spend their money hopefully on his vehicles. Before that, there was really no such thing as a weekend at all because when you live on a farm, there's no such thing as a paid day off. You have to, I don't know, tend to crops. Yeah, I don't know. Never been a farmer. Seven days a week.

But at the time, the idea of a two day weekend instead of just one day and then paying the same for five days of labor as you did for six was radical. It seemed both logistically and economically untenable, but by 1938, FDR was signing the Fair Labor Standards Act into law, which introduced the concept of a minimum wage, outlawed certain types of child labor, not all types, just certain types and mandated overtime pay for workers who were laboring beyond 44 hours per week, which was later revised to 40 hours and the 40-hour workweek was born, but the Fair Labor Standards Act didn't materialize out of thin air. It was in some ways a response to the 1929 stock market crash and resulting poverty and unemployment, which just goes to show how events that upset the global status quo have a way of accelerating progress if we let them.

We'll get into it after a quick break.

A big concern during Ford's time was that his hypotheses would be proven wrong, that letting employees work less would lower productivity. This is a subtle but important distinction. Opponents of the shorter workweek cite lost productivity as the largest risk, but four-day workweek proponents will argue that one can work for many hours without actually accomplishing very much, as the ghost of my 23-year-old self often reminds me. The data tell an interesting story.

In 1931, 7 years before FDR passed laws limiting the normal week to 44 and then later 40 hours, the average man worked 2,500 hours per year and produced about $10,000 in GDP in today's dollars. He also consumed about $10,000 of goods and services. Now, we only have data about the men because it wouldn't be a 20th century study if we weren't totally ignoring women. Okay, so 2,500 hours of work, $10,000 in GDP, you got that? Compare that with 2011's numbers. According to Economica, the average person worked 1,840 hours per year, so that's 26% less and produced $51,500 in GDP in today's dollars, or five times as much. How is this possible?

Speaker 2:

Technology.

Katie:

Technology. And in 2011, the average consumption per person was about four and a half times as high as in 1931 at around 46,800 per year. So we're working less, we're producing more and we're consuming more. It would appear that Henry Ford, at least initially, was right. In 2023, by the way, average GDP per capita is around 66K if you were curious because I know I was.

Now, the core idea that enabled this prosperity was technology. It makes us more productive in less time and the relationship between time productivity and as a result, income becomes less and less Linear. Economist John Maynard Keynes, maybe you've heard of him, he made the now notorious prediction in 1930 that a hundred years, hence I love old timey speech patterns. We should start talking like that. People would only work 15 hours per week, but despite all of the advancements in technology and the seemingly successful progressive move to go from a six day workweek to five in the 1930s, we've been relatively stuck at 40 hours a week ever since. In fact, depending on which dataset you're perusing, it appears as though hours worked per year have actually ticked up since 2011. One estimate I found put working hours in 2022 at around 1,892 per year or up more than an additional week from 2011's numbers. And as I learned from chatting with Daniel, what constitutes full-time isn't even a straightforward answer.

You wouldn't happen to have the average for workers who work full-time, would you?

Daniel:

Well, how do you define full-time? I've gotten into trouble with this. Is it a 30 hours that guarantees your coverage by the Obamacare, the ACA? Is it the 35 hours per week that economists typically think of as full-time? Or is it the 40 hours a week that's considered full-time in the overtime and minimum wage loss? So it's tough to answer that.

Katie:

That's a really good call out. I always just think of full-time as 40 hours. To me, I guess I am thinking about you see the minimum wage laws is what sets that forth.

Daniel:

That is correct. That's why we think about 40 hours.

Katie:

Okay, so I would think a full-time worker is someone who is salaried to work 40 hours per week, and I know that that's not always explicit in an employment contract, but I feel like that's the expectation is that it's a 40-hour workweek.

Daniel:

That's a reasonable expectation. I'm happy to go with that. That is what we have in the FLSA, which is a law which has regulated this since 1938. It's one of the oldest laws we have on the books that we still think about all the time.

Katie:

And, of course, all work is not created equal. Unlike the knowledge worker class for whom a global pandemic meant Zoom calls in our jammies, there is an even larger contingent of workers for whom remote work is not an option. Though I sometimes lovingly refer to knowledge work as fake email jobs on this show, on a serious note, knowledge workers are defined by doing work that focuses on problem solving and handling information. It's like you're being paid to think, so to speak. And while knowledge workers want more flexibility and how and when they work, part-time and low wage workers often face the opposite problem. A lack of stability and predictability.

"Just in time scheduling is characterized by workers often of the low wage variety receiving their work schedules on very short notice subject to change at the last minute. This type of shift work is fundamentally different from knowledge work in the sense that it attempts to match real-time demand with supply." There are also fields where people already work, abbreviated, compressed or otherwise, non-traditional schedules and hours, so think flight crews or medical professionals. This type of labor is also done in fairly inflexible shifts. Pilots present an especially interesting example in this context as laws around how often pilots can work are especially stringent given the potentially catastrophic consequences of an overworked commercial pilot with delayed response times.

And the rules are surprisingly complex. I even texted a friend who works in the airline industry to ask him for the TLDR and he was like, honestly, it's really complicated, but pilot mall reports schedules like seven days on, seven days off and hourly flight time limits for certain windows of time. So on average it appears as though most pilots are capped at around 1200 hours per year.

Compare this with a lack of regulation around other high risk specialties. I texted my sister-in-law, Stephanie, she is an emergency room doctor who is married to a surgeon and I asked them if they had any such limitations on their time thinking absolutely these medical professionals who are operating on people are going to have the same type of limits. But no, she told me that surgeons typically have to work while sleep-deprived and that once you are an attending, in other words, you're considered an expert, there are no restrictions. This is obviously quite dangerous and it actually had me trying to estimate like the best time of day to go in for an emergency surgery.

But you also have jobs that intersect with other firmly entrenched schedules and norms. Think about teaching. A teacher cannot have a four-day workweek unless schoolchildren are given a four-day school week, right? And we probably don't want a four-day school week unless professionals also have a four-day workweek.

The point is a lot of this is interconnected and work is varied and while conversations about normalizing shorter workweeks tend to focus on knowledge work, that's only one portion of the US economy. Management consulting firm Gartner estimates the number of American knowledge workers at around a hundred million of the 168 million strong American workforce or around 60%, and based on what I know about the portion of the American workforce considered low wage, this actually more or less tracks with the numbers that I found for the white collar contingent. The Brookings Institute finds that 53 million Americans are considered low wage workers, so that's between 31 and 44%. Compare that to around the 10 million healthcare workers. You've got about 3 million teachers. You've got roughly a hundred thousand working commercial airline pilots.

So okay, I'm rattling off a lot of numbers here, but this mental scaling of just how big these various example groups are helped me personally to draw a clearer, albeit still approximate mental picture of what kinds of workers these conversations about work are going to affect. I was actually surprised that the knowledge worker contingent was so large and I have to admit I did feel a little bit relieved that my own knowledge worker home country bias was at least a little bit backed up by the data. It's clearly a very large group.

So now that we've taken a speed tour through a very high level of the American workforce and economy, let's zoom out a level further and compare the US with its peer nations. And if you're a regular listener, this is my favorite part where Western and Northern Europe absolutely dunk on our lifestyle. So we could dive into the weeds of the typical workweek of a Dane, which is 37 hours or the GDP per capita of a Swede, which is 56,000 US dollars per year. But what really struck me as glaringly different between some of our peer nations in the US was the way these countries treat vacation time. And Daniel seemed to agree. I asked him to confirm the perception that Americans work more than our high income peer nations.

Daniel:

Yes, we now certainly do work more than other countries like Australia, Britain, Germany, France, Netherlands, Sweden, other rich industrialized countries. We work more now.

Katie:

And you're saying now. You're making a point to say now. When did that change?

Daniel:

In the mid-seventies when we started getting these kinds of data, we were in the middle of the pack and over the years they've been cutting their hours of work substantially over for a year long hours of work and we haven't. So we've risen to the top of the heap in this dimension, the others really have fallen below us. That's the way to think about it.

Katie:

Okay, so what do you think might be driving that discrepancy? Is it the length of our workweek or is it something else?

Daniel:

No, it's not the number of hours we work per week. In a workweek, the average person who works is 34 hours, 35, and that's about the same in the other rich countries. The simple difference is we have very short vacations and very few paid vacations and workers in other countries have much longer typically paid vacations. A lesser importance is the fact that there are longer or more holidays in most of these countries than there are here. We have relatively few holidays. So it's not the number of hours per week, it's number of weeks per year that people are working.

Katie:

So in order to put a finer point on that, we'll start with the usual suspects in Scandinavia. In Denmark, employees are entitled to 25 days of paid annual leave or five workweeks as well as 11 paid holidays. It's another two weeks for a total of 36 paid days off per year and most workers qualify for yet another week on top of that through something called the additional sixth week agreement. Finland, Sweden, and Norway are very similar. Now, moving south, you'll find similar numbers in Germany, Spain, Italy and France, which ends up netting out to around between 30 and 36 paid days off total with the exception of France, where they evidently really prioritize leisure time with up to holy shit, 58 paid days off or nearly 12 workweeks according to sources online. Some more calendar math, that's three months per year. Cue the montage of the French people rioting in the streets over the retirement age rising from 62 to 64. What are y'all even protesting? Y'all already barely work. Okay, I'm kidding. I told you I was puritanical through and through puritanical work ethic.

But if you're like, how could they possibly know this information for the entire workforces of these countries? It's because the vacation is provided by the state. It's determined by their government's labor laws, not by individual employers. And I had to scroll all the way to the bottom of the list to find the United States, which federally guarantees zero days of paid vacation and checks notes, zero days of paid holiday. It is entirely up to your employer. So what went wrong in the good old US of A?

A recent Planet Money episode we'll link it in our show notes for this episode explored the issue and they found that there was a key period in the 1930s that I referenced at the top of this episode that was probably our best chance to get federally mandated paid leave. But one interpretation of what went awry was that the AFL or the American Federation of Labor, a national group of labor unions was very strong in their belief that this was something the private sectors should handle and vacation time was just one example. Pensions and health insurance were the other two notable chips on the table that got shuffled to the private sector side during this division of labor and benefits.

So instead of all three becoming federally mandated or federally provided as part of labor laws, when labor laws were #sohotrightnow, we got collective bargaining rights to negotiate with our individual employers. There was also unsurprisingly racism at play. People didn't want Black Americans to get these benefits from the state, so now nobody does. USA chant.

Speaker 4:

USA! USA! USA! USA! USA!

Katie:

This lack of state provided paid vacation days I think is partially to blame for the challenges we now face in the US because it creates an interesting incentive or rather disincentive system for employers to provide time off. It's considered a perk of the job to have paid vacation. It's a luxury, it's a benefit rather than a necessity. This means American businesses competing with one another are balancing their desire to attract top talent with their reticence to be generous with leave policies. Whether that takes the form of a standard shorter workweek or vacation time since they might assume, hey, my competition is not "only working four-days a week", so I can't have my people only working four-days a week. The standardization in other countries means that all businesses face the same set of circumstances with employees working or not working and vacationing for the same amount of government mandated time.

I presented this conundrum to Daniel. I wanted to know how this lack of federal policy affects employees' work lives and employer benefits. Will the free market solve for the discrepancy or is it just a race to the bottom for everyone?

Daniel:

If you want to get ahead in the company, we're talking now white collar work. If everybody else is working very, very hard and you take more time off, unless you're the top of the ladder in that company, this is not good for your promotion prospects. This is what we call a classic externality. Unless all of us do it, no one person, no one firm can do it without having her or his firm be at a competitive disadvantage vis-a-vis the competitors. So it's got to be some mandate that can be enforced as it is. And once it's enforced, it becomes a custom, just as it is in other countries.

Katie:

I like that. Thank you.

Daniel:

I realize that and it's sort of depressing in the sense that you'd like to have this wonderful thing where everybody gets more, but it just doesn't happen that way.

Katie:

And in the absence of trustworthy ways to measure productivity and output, as is often the case in knowledge work, that doesn't really produce a predictable widget on a predictable cadence. We're not shipping Model Ts off the assembly line. We tend to default to time spent in front of the computer, also known as butt in seat time. It doesn't matter if you were scrolling through the bachelor subreddit or answering useless emails or solving world hunger. If you are at your desk for eight hours, that tends to be the primary concern. It's the metric that we're watching to determine if you're working.

In my mind, it makes perfect sense in this inefficient unregulated environment why individual workers would feel a little nervous about taking vacation time. Even vacation time that they're technically allowed to take by their benevolent corporate benefactor.

We'll get right back to it after a quick break.

So let's unpack that a little more. Why don't Americans take more vacation time? Well, the Planet Money reporter tried to answer this question and the episode opened with a story that felt all too familiar to me, which is the quintessential mid-twenties American takes their first trip to Europe in the summertime and is absolutely aghast at all the working age people who are, checks notes, not working. But there are interesting economic theories for why Americans don't take vacations and predictably, they vary on partisan lines.

Planet Money reported that the "righty" argument is that lower income taxes mean Americans are more incentivized than Europeans to adapt and uphold that #grindset. If you're going to keep more of your income, you're going to work more, the thinking goes. And I can see why this explanation would be attractive to an economist. I can see why it might hold true for hourly shift work with no paid vacation time. Furthermore, Cato reports findings that most Americans are in favor of things like paid parental leave until they learn that their taxes will go up and then favorability drops precipitously.

But for your average knowledge worker with a few weeks of paid vacation each year that they aren't using, it doesn't quite explain why American workers who already have that vacation time as part of their compensation wouldn't use it. In a perfectly rational homo economicus society, rational actors would use their allotted paid time off, but that's not what happens.

Another thing that occurred to me as I shoot on this after the fact is that we already have a bit of a test case for this in the US with our state income taxes and state GDP per capita. Some of the highest taxed states also show up in the top 10% of the highest GDP per capita. Think California and New York, meaning high state taxes don't really seem to necessarily dissuade productivity. Though Texas and Florida which have no state income tax are also in the top 10. So do low taxes explain our work ethic? Daniel wasn't convinced.

Daniel:

Certainly we are taxed somewhat less than other countries. But heck, even Japan, which has very low tax rates like ours, people there, believe it or not, are now working less than we are. It's also the case that those countries have always had these high tax rates and we've always had quite low tax rates. So if nothing's changing in taxes relatively, why the amount of work relatively changed? But I don't think that's a good story. And finally, a huge number of studies looking at the effect of taxes on individual behavior suggests that the amount people work is really very, very minutely responsive to tax differences. So just the evidence at the micro level looking at individuals is just not consistent with that explanation at all.

Katie:

The "lefty" argument according to Planet Money's reporting for why Americans don't take time off is that we are too consumerist and we're hyper-targeted by advertising. So we are all but forced to stay on that hamster wheel to earn more money so we can keep up with our own late capitalist urges. Daniel thinks this explanation leaves something to be desired too.

Daniel:

I've heard for all my adult life since the early sixties that Americans are consumerists. What happened here in the seventies and eighties to suddenly make our consumerism be evidenced in these long work hours where other countries, which in fact one might argue became more consumerist as they got richer, decided to use their excess income, their increased wellbeing to have more leisure? So I think it's a matter of political choice. We've chosen to use our ability to earn more money to work the same number of hours. They've chosen their ability to earn more money, to enjoy some more leisure along with their work and their income. It's a political choice. It's a choice of individuals made through the political processes in each country. But we've had such political gridlock here that if you introduced a bill in Congress to mandate three week paid vacations, what's going to happen with that? You know as well as I, would go absolutely nowhere. So it's a political issue.

Katie:

And that's what's tricky about this. People are not taking the vacation time that they are already being offered. Fewer than half of US workers who have paid time off as part of their compensation use it all. And Bloomberg sites "fear of falling behind" as the main reason why. While it's not federally mandated, which is something I think would go a long way, you effectively have one in two workers to whom a free day off is being offered and they're going, "That's okay, you keep it." Huh? But you could use that time to shop if the consumerism argument is the core root cause. I guess Americans just love work, or do they? Why is there such reticence to change and adapt? If a five-day workweek is, for all intents and purposes, mostly arbitrary thanks to Henry Ford, why are we, employers and employees alike, nervous about cutting back? Why are we nervous about working less, whether in the form of a four-day workweek or six hour workdays or taking more vacation time? So we'll get to my take on this in a bit, but I wanted to run one final theory past Daniel.

What do you say then about the theory that Americans work more because of a Protestant work ethic? Because that on the surface sounds really compelling, but will you poke a hole in that?

Daniel:

It's very facile. It sounds wonderful, but gee, Germany is Protestant, mostly. Netherlands, mostly. Britain, mostly. Sweden, essentially. So unless our Protestantism is much different from other people's Protestantism, which I sincerely doubt, then that's just not a theory that explains anything at all. And even if it were different, why had suddenly from the seventies to about 1995, the positions changed? Did our Protestantism suddenly get more stringent than others? So this is not a good explanation at all.

Katie:

Okay, I like it. So we're taking a firm stance.

You've heard the "righty" argument and the "lefty" argument via Planet Money as well as Daniel's thoughts. So let's drill down a little bit now.

I've already shared the challenge with letting individual employers determine vacation time and why it tends to lend itself to a hyper-competitive environment among companies. But I think that deserves to be unpacked a little bit further because I think this hyper-competitive environment explains why individual workers behave in such confounding ways too.

In her recent piece for the New York Times writer and organizer, Astra Taylor bottled the very feeling that I believe keeps us stuck. She argues that while economic inequality has become the lag indicator that most economists and activists are concerned with, economic insecurity might be a more insightful focus, one that can explain more about what's holding everyone back. She captures this idea pretty well in my opinion. She says, "And unlike inequality, insecurity is more than a binary of haves and have notch. Its universality reveals the degree to which unnecessary suffering is widespread. Even among those who appear to be doing well, we are all to varying degrees, overwhelmed and apprehensive, fearful of what the future might have in store. We are on guard, anxious and complete and exposed to risk. To cope, we scramble and strive, shoring ourselves up against potential threats. We work hard, shop hard, hustle, get credentialed, scrimp and save, invest, diet, self-medicate, meditate, exercise, exfoliate."

Now admittedly, this is what I'd call a bit of a doomer take in some ways, but she addresses that a little bit. She does make the distinction between existential insecurity, so the type of insecurity that's part of being human and manufactured insecurity. I might exercise and meditate to cope with my existential insecurity, but I do things like hustle and invest to deal with the manufactured kind.

The former is about as human as it gets. For hundreds of thousands of years, we weren't really concerned so much with comfort or security or self-actualization, but just survival. But her thesis circles the fact that while there are obviously physical and psychological harms we'll probably never outrun, plus that pesky fact of our eventual mortality, modern life in the US simply feels more precarious than it would need to given the absolute abundance of resources, wealth, and technological advancement that we enjoy. She refers to manufactured insecurity as the result of society being structured in a certain way. She says, "Where existential insecurity is an inherent feature of our being and something I believe we need to accept and learn from, manufactured insecurity facilitates exploitation and profit by waging a near constant assault on our self-esteem and wellbeing."

Something else I've experienced and not yet articulated neatly is something she also clearly identifies, which is the idea that once you have wealth, there's a sense you need to protect it. The stress of being penniless is undoubtedly greater, but this fear of loss is very real. You've worked so hard to get where you are and to have what you have that now you must work harder to ensure its safety. This phenomenon might explain why I feel more latent stress about maintaining my current state of financial security than I did when I was skating through my early twenties with no more than a thousand dollars in my checking account at a time on little more than a pleather miniskirt and a prayer. I spend more time thinking about money now than I did then, and not just because of my profession.

The lack of universal floors and ceilings engenders a sense of total uncertainty. Put simply, it's this idea that once you make it to a certain status or professional class, you cannot afford to rest. You must stand vigil over your foothold to prevent a backslide down net worth and self-worth mountain.

This strikes me as a more compelling explanation for why even solidly middle and upper middle class knowledge workers with access to paid time off unlimited in some cases, myself included, may still feel as though it is unsafe to downshift. If the competition isn't taking time off, neither should you. Right? And this is true at the individual and enterprise level. When everyone is left to their own devices, it's a race to the top or bottom.

I'm not quite sure where I come down in my own grappling with this manufactured insecurity. There is, of course, old faithful. The saying that rest is productive, which refracts leisure through the lens of productivity culture where every decision is judged by what it contributes to the bottom line. And yeah, that strikes me as an incomplete solution, but potentially the stepping stone that I might personally need to feel more comfortable with taking some time off because you know what they say, federally mandated paid vacation time would be socialist or something.

The stock market crash and result in global fallout of the 1920s ushered in a new era of work and working conditions. Will the global pandemic of the 2020s eventually do the same? We know we're able to do more in less time now. The data proves it. We're generating 500% more gross domestic product in just 74% of the time. Who's to say that new inventions like advancements in artificial intelligence can't allow us even more time, space and energy to connect more dots and solve even more complex problems? What if we work to less like surgeons and more like pilots?

So this brings us to the movement for the four-day workweek. Part of the case that proponents make for a four-day workweek is that it drives productivity. That people working fewer hours can do more with less time because there's currently a lot of leakage in the five-day workweek. They say that people aren't very productive right now and less time at work might actually increase productivity. And if mandated vacation time isn't possible at a federal level, then maybe it's on employers or state governments to consider the four-day workweek as an alternative.

According to a June, 2023 survey from resumebuilder.com with 600 US business leaders, 20% of them said that their companies currently have a four-day workweek and 41% of them said they plan to implement a shortened workweek by the end of 2023. The main benefit cited by participants, 92% of them said it would help reduce employee turnover. After all, if you're offering similar pay for four-days a week, that's sure to persuade some folks to stick around even if they could earn more elsewhere, right?

To bring it back to childcare and education, which we mentioned earlier, there's also a theory that the four-day workweek might contribute to closing the gender pay gap. Following economist and now Nobel Prize winner, Claudia Goldin, who we've cited on the show before, part of the current earnings gap is attributed to the disproportionate amount of unpaid childcare responsibilities that are borne by women, but by implementing a four-day workweek, one Fortune peace writes "that can empower employees by providing them with the flexibility they need to juggle work and caregiving responsibilities more effectively, closing the gender pay gap. Critically, it would narrow the gap between women working part-time due to childcare and family responsibilities and their full-time colleagues."

Now, of course, there are economic risks to consider too. Daniel isn't convinced that this working fewer hours will create more productivity argument holds up to scrutiny. He says it's likely to bring about a substantial decline in output and a resulting decline in income. And he's generally skeptical about the overall premise that a four-day workweek would even be possible in American society.

Daniel:

Let's say we do cut from full-time workers of 40 hours to full-time, 32 hours. That is a 20% cut in work. Do you think, does any reasonable person think that there's that much slack in the system that employers and companies can produce just as much with 80% of the amount of work time? And that implies incredible stupidity on the part of employers paying people 40 hours a week and really only get 32 hours worth of output. I mean, think about it in a retail establishment. Are the people there just goofing around most of the time and would they be happy to be running around more in 32 hours? That's the first thing. Certainly, in a manufacturing assembly line, there's no way you can cut hours without cutting output proportionately. Now, maybe white collar work, people are diddling around and wasting time, but I can't imagine employers are letting them do that. So I don't think... We probably wouldn't cut out GDP 20%, but we'd go down a substantial amount.

But what's more important if we want to cut work time, the 32-hour week is not a great way to do it. Mandate longer vacations. Give people time off to recharge their batteries, not just a three-day week. But even that, of course, because it is fewer hours work is going to cause a reduction in output and thus a reduction in our living standards. I'm willing to accept that. I think people are, but they have to remember, there's not going to be a free lunch. You're not going to get more leisure and the same amount of income.

Katie:

Well, it occurs to me that we've seen a lot of growth in GDP in fewer hours worked over the last century because of technology. And so I wonder if you would look at that technology leverage, if you will, and its ability to multiply output or multiply productivity as a potential avenue for that to happen, or how would you push back on that claim? Do you find that idea dubious?

Daniel:

No, I find it perfectly reasonable if because of technological improvements, we are producing much more per capita than we did 50 years ago, more than double. And the question to me is why we don't take a little bit of that extra ability to produce and put it into the leisure that people enjoy a bit more rather than grinding out more and more consumer goods and producer goods for people to enjoy. Other countries have done it. They've gotten more productive. They've taken some of that out as I've said in more leisure time, we haven't. So sure, we could very happily do that. I'd be all for that, but it's not going to happen, one single company is not going to say, oh, I'm going to cut work hours and produce less because I do that, I know darn well my company will take a beating in the market. So unless there's some external force that's getting companies, yes, all to do it, either a government mandate or much less likely companies just getting together and doing it, which I'm sure the antitrust division would kill anyway. So it's got to be a government mandate.

Katie:

The good news is this momentum already exists at a government level. There are at least six states from the last three years, California, Hawaii, Maryland, New York, Pennsylvania and Washington that have considered legislation that would incentivize a 32-hour workweek maximum for hourly workers according to state line. So that's looking ahead, but what about today's landscape?

Daniel:

Take a guess of people who work 30 hours or more a week or 35 hours, what fraction are working four-days? Give me a number.

Katie:

Oh my goodness, how many people have a four-day workweek currently?

Daniel:

Yes, among full-time workers.

Katie:

I'm going to say like 15%.

Daniel:

Well, you're way, way too high. Why don't you try 6%?

Katie:

6%?

Daniel:

Which is what the evidence shows in the US. And on the other hand, 50 years ago was one and a half percent. So the fraction of full-timers working full four-days has gone up, but it's still only 6%. And what's really quite cool about this, it's been the same increase in the foreign countries for which I could get data. Korea, Netherlands, and Germany. Again, they too maybe four to 6% of the full-time workforce is working four-days. It's gone up everywhere, but it's still a tiny fraction of full-time work.

And this is such a wonderful thing that would solve all their problems. As a free market economist, deep down at heart, I'd have thought that everybody would be doing it. So obviously the evidence is, it's simply not consistent with that. But the facts are 6% are four-day working full-time, which is pretty small potatoes. And the same person working four-days, 40 hours with the same education, same experience, same location, makes a little bit less per hour. In other words, companies are willing to give you the chance to do this, but it costs them something in terms of arranging schedules. They're not going to pay you the same amount as you would if you're working a four-day, eight hour day, week, five days. So yeah, it's doable. It costs workers a little bit. It's not big, but it's growing, which I think is fine if people want to do it.

Katie:

So there you have it. Now we can ask ourselves if the four-day workweek is something we would be interested in, are we willing to give up some of our income for it? Maybe for you, the answer is yes. Or maybe you're still staunchly in the five-day workweek camp, whether out of preference or necessity, and you'd prefer broader vacation mandates, or maybe you're perfectly content with the status quo as it exists now.

Regardless, it's clear to me that given the advances in technology and increased output and consumer spending, we could probably withstand a small decrease in work. But what do you think? Are you team yay or nay? Email us at moneywithkatie@morningbrew.com and let us know. And if you already have either of these policies in place, reach out and let us know about your experience too, because we'd love to hear from you.

As for me, while career success feels like three to four-days a week of work, I am still on that six day workweek personally, and I'm trying to take accountability at the individual level right now to right size in 2024. So we'll be talking more about that, aligning our financial and life goals for next year in next week's episode. It's going to be a very workshoppy affair, so fire up the journals and the vision boards.

That is all for this week. I will see you next week, same time, same place on the Money with Katie Show. Our show is a production of Morning Brew and is produced by Henah Velez and me, Katie Gatti Tassin. With our audio engineering and sound design from Nick Torres. Devin Emery is our Chief Content Officer, and additional fact checking comes from Kate Brandt.