Home > General Comment, shorter work time > Why can shorter working time increase your standard of living?

Why can shorter working time increase your standard of living?

We figured it was time to throw this question out there, since it is commonly assumed that less work translates into a lower material standard of living.

We think the case can be made that the opposite is true: Engaging in work that has no useful economic value ultimately impoverishes you, reduces your standard of living, and, paradoxically, forces you to work longer to maintain the same standard of living.

To put it another way, by maintaining your long hours of work, Washington can extract vital resources it needs to maintain and expand its empire; and, Wall Street can, by the very same method, fatten its bonuses.

It is clear that a too long work week is directly connected to a number of ills, including the neglect of children as both parents spend increasing amounts of time away from home, but it also depresses your material standard of living, imposes heavy damage on the environment, and is the underlying generator of massive poverty and income inequality throughout the United States and the global economy.

We believe we are the first to tie all of these social ills into one bundle and link them directly to hours of work.

To understand how longer working time results in a lower standard of living we should begin by examining income inequality since 1992:

Zero Hedge: Historial income and net worth by income level since 1992

Zero Hedge: Income and net worth by income level since 1992

As you can see from the above chart, since 1992, net worth and income growth has been decidedly skewed toward the very wealthiest 10 per cent of the population.

According to the blog, Zero Hedge:

What is immediately obvious is that based on estimates by Bank of America, the 50% of US population which makes up the middle class, is responsible for the same amount of total consumption as the 10% of the upper class. Another observation is that the balance, 40% of population considered Low-Income consumers, is responsible only for 12% of total consumption.

Ther top 10 percent of the population now has a material standard of living equal to the entire middle class of the United States, and several times the poorest 40 percent of the population!

Even by the standards of inequality produced by two decades of economic disaster – the stagflation of the 1970s and the Reagan economic revolution of the 1980s – the poorest parts of American society, and even the middle class have suffered a massive collapse of their material standards of living.

And what of hours of work?

Economists love to trumpet the decline in hours of work in the United States as proof of improving material standards of living; an example of this is an article posted by Robert Whaples disputing Juliet Schor’s contention that Americans are overworked:

Some analysts, such as Schor (1992) have argued that the workweek increased substantially in the last half of the twentieth century. Few economists accept this conclusion, arguing that it is based on the use of faulty data (public opinion surveys) and unexplained methods of “correcting” more reliable sources. Schor’s conclusions are contradicted by numerous studies. … the average length of the workweek has dropped since 1950. Although median weekly hours were virtually constant for men, the upper tail of the hours distribution fell for those with little schooling and rose for the well-educated. In addition, Coleman and Pencavel also find that work hours declined for young and older men (especially black men), but changed little for white men in their prime working years. Women with relatively little schooling were working fewer hours in the 1980s than in 1940, while the reverse is true of well-educated women.

What Robert Whaples does not disclose is another equally important set of statistics regarding number of hours worked by all Americans: Individual hours worked have indeed fallen from a high of 34.6 hours in 1992 to 33 hours in 2009 – approximately 4.6 percent; but during the same period total hours worked by Americans have increased by 17.4 percent!

Individual versus aggregate hours of work

Individual versus aggregate hours of work

Individually, we may or may not be working less – there is little agreement on this – but taken as a population, there is no doubt we have been working longer and harder for a declining standard of living. As we have seen, no there has been no improvement in material standards of living for the vast majority of the population since 1992, yet this same population is working nearly 20 percent longer than it was in 1992!

Since, any given worker in an economy may or may not be doing any productive work – lawyers, for instance, contribute nothing to economic activity – it is total hours of work, not individual hours, which provide the basis for the material standard of living of any country. The way our economy is organized, we are quite like one collective worker, setting in motion one massive production machine. The effort of each individual to the total sum of the output of that machine is important, but only the combined effort makes our life possible.

This completely escapes the understanding of economists who continually focus on individual employment decisions while ignoring the necessary conditions of cooperation which alone provide for our material well being.

Being a lawyer, or a commodity trader, may vastly improve your standard of living – and even the standard of living of your clients – but it produces nothing, and only rearranges existing income into different hands – in the worse case, it only reinforces existing inequality, since those with the most money can afford the best lawyers and commodity traders.

Likewise, when you read that an “improvement” in GDP was achieved last quarter, because the U.S. government spent 13 percent more on defense than the previous quarter, you have to ask yourself did any of this spending result in an improved standard of living for the country, or did it just waste valuable resources?

There is one telltale sign that longer hours of work operate to reduce your standard of living: INFLATION.

One chart we like to play with is the changing ratio of jobs in agriculture, once the most labor intensive line of work in our economy, to the jobs which produce nothing – service jobs, including government employment.

In 1940 there were about 11 jobs in agriculture for every 19 service jobs; in the intervening years between 1940 and 2000, that ratio shifted decisively in favor of jobs which produce nothing. There were some 107 million jobs service jobs to just under 1 million jobs in agriculture.

During that same period of time, same period of time the median price of a single family home in the United States went from just under $3ooo.oo, to a whopping $119,600 – according to the census bureau.

We thought you might like to see what that looks on a chart:

Inflation and the ratio of employment in servces to agriculture

Inflation and the ratio of employment in servces to agriculture

And, as is clear from the chart, there is a clear correlation between the changing composition of the American work force and the inflationary spiral we have been suffering through for the past seventy years.

As the most labor intensive goods producing employment in the economy has given way to employment which produces nothing, inflation has worked as the mechanism to transfer the nation’s wealth to the wealthiest 10 percent of the economy – leaving the poor deep in poverty, and the middle class mired in debt.

Longer hours of work, since they do not increase the amount of goods produced in our economy, only add to the costs of those goods.

GM may, for instance, increase its employees, but if it is only adding lawyers, and not autoworkers, the additional employees do not add new cars – only new lawsuits. And, these new employees have to paid for by adding to the price of automobiles.

In the same fashion, when Washington increases is borrowing to build out its military machine, jobs can indeed be created, but those jobs do not result in a better material standard of living, they only result in the things which make life impossible: war materiel.

That same spending, however, still produces vast profits for a handful in society – increasing income inequality – while driving up the prices of goods and driving down your standard of living.

Such spending is the equivalent of the empty calories in a candy bar.

Make no mistake: longer hours of work only serve to keep you poor and in debt!

The policy of this administration to stimulate employment will only result in millions more falling into poverty here and around the globe.

Only shorter hours of work can reverse the decades long inflationary spiral which has been the most important mechanism for maintaining and extending income inequality.

Advertisements
  1. No comments yet.
  1. No trackbacks yet.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

%d bloggers like this: