Why Americans can't stop working: the poor can't afford to, and the rich are enjoying themselves

Ever since Keynes's seminal 1930 paper Economic Possibilities for our Grandchildren predicted that technological progress would virtually eliminate work by making labor much more productive, economists have puzzled over why Americans' working hours have gotten longer and longer, until they are some of the longest in the world.

While its true that early technological progress brought shorter working days with it, until about 1973. The years since have reversed the trend, and the more technological we become, the longer we work, bringing our work home with us in pervasive, inescapable ways.

The traditional explanation for this is that Americans want more stuff, and so they'll work longer hours to get it -- but that doesn't explain why working hours contracted, and then lengthened and lengthened.

Harvard economist Benjamin M Friedman has a new paper in the Journal of Evolutionary Economics (paywall) that reinvestigates Keynes's prediction and the mystery of the longer American work-week. Friedman confirms Keynes's prediction about technological contributions to productivity: he says that by 2029, American will have octupled its labor productivity, just as Keynes predicted.

As to the longer working hours, Friedman thinks that the answer is inequality. Because all additional profits from increased productivity go to the owners of the technology (capital), labor's dividend is cheaper goods, not more leisure. Basically: Americans are too poor to stop working.

But why do bosses work longer hours, too? Friedman thinks that being a boss is a labor of love, so they pull long hours too. I don't know that this is true. I'd blame social norms: when incredibly long hours are normal, they're normal, for everyone.

This can be seen in the median worker’s income over this time period, complete with a shift in 1973 that fits in precisely with when the workweek stopped shrinking. According to Friedman, “Between 1947 and 1973 the average hourly wage for nonsupervisory workers in private industries other than agriculture (restated in 2013 dollars) nearly doubled, from $12.27 to $21.23—an average growth rate of 2.1 percent per annum. But by 2013 the average hourly wage was only $20.13—a 5 percent fall from the 1973 level.” For most people, then, the magic of increasing productivity stopped working around 1973, and they had to keep working just as much in order to maintain their standard of living.

What Keynes foretold was a very optimistic version of what economists call technological unemployment—the idea that less labor will be necessary because machines can do so much. In Keynes’s vision, the resulting unemployment would be distributed more or less evenly across society in the form of increased leisure.

Friedman says that reality comports more with a darker version of technological unemployment: It’s not unemployment per se, but a soft labor market in which millions of people are “desperately seeking whatever low-wage work [they] can get.” This is corroborated by a recent poll by Marketplace that found that for half of hourly workers, their top concern isn’t that they work too much but that they work too little—not, presumably, because they like their jobs so much, but because they need the money.

Why Do Americans Work So Much? [Rebecca J Rosen/The Atlantic]

Work and consumption in an era of unbalanced technological advance [Benjamin M Friedman/Journal of Evolutionary Economics]

(via /.)

Notable Replies

  1. Our economic policies are too often codependent with the idle wealthy by failing to use enough common sense, democratic solutions to support working people: single payer health care, fair access to no-interest credit for college, in-fill development, affordable housing, campaign finance reform, increased penalties for profiteering, public transportation, local food, etc.

    Supply side economics is basically plutocratic socialism that benefits people who live primarily from fees and capital gains and leverage from "smart deals" predicated on social inequality and predatory credit practices.

    ... Whew. Sorry. Feels better though.

  2. Management aren't owners. they, too, are reliant on a steady paycheck to pay for health insurance. If the owners demand that anyone who wants access to a hospital in case of emergency needs to work 8- hours a week, then managers must also comply.

    Unless somebody in is the 1% they are 1 accident and 2 paychecks away from catastrophe. Managers have a nicer house and better food in the mean time.

  3. I'd caveat to say we've got two problems

    1) We treat management as if it's a more valuable skill than actual competence in a field. Being able to manage a bunch of people is a different skillset, not a better one, and it shouldn't be the default growth path for skilled workers.

    2) The big 'suck' is actually way beyond management and instead comes from the top .1% and .01%, who rarely venture foot into the buildings we work on and very few of them have any positive relation with productivity. They're just good at paying people to help them influence policy and make money off of investments and tax breaks.

  4. I believe the point in this case is that with the top 1% (and more importantly .1% and .01%...the 1% is kind of a red herring here) gobbling up a disproportionate amount of our newfound bonus productivity and the people doing the work aren't reaping the benefits.

    It's like a tax on the efforts of the people doing the actual work.

  5. When I had to buy health care for a few months while under-employed, it cost the same as my mortgage for two adults. And considering if I hadn't, this incident would have bankrupted me, I don't feel like I have a choice.

    Employer health care is a blight.

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