Wednesday, July 18, 2012
Frankie Say: Relax
All over the world, people, companies and governments are trying to do something about the ridiculous surplus of people in or trying to enter the workforce. This week's Newsweek lead article is about the Millennial generation (those 18 - 35) getting royally screwed, economically speaking. I've certainly observed that situation growing over the past few years and I feel for them. I'm doing my part by exiting the work force (OK, not voluntarily) to make way, but the idea of early retirement is fading among us older Boomers as people cling to jobs or start back at the bottom after layoffs to keep some kind of income, well, incoming.
There have been books, essays and proposals since the 1920s about reducing the standard workweek to spread employment around. I don't remember which company (maybe Kellogg's) tried it, but they instituted a 30-hour week in the mid-20th century with great success; it proved economically viable for both employer and employee and was popular with most everybody. The story of why they abandoned it is murky, but I'm sure there was pressure from somewhere.
In the late Roman Empire, and in its successors in the Latin world today, there were as many as 175 holidays a year. It wasn't until the beginning of the industrial age that workweeks expanded beyond endurance (14 hours a day in America in 1800). The population was increasing, labor was cheap and could be made progressively cheaper in the factory system. Herbert Hoover proposed a standard 30-hour week in 1932 as a measure to deal with the Depression and in 1933 the bill passed the Senate, only to be blocked in the House by FDR (!), partly due to pressure from businessmen and partly due to a desire to advance his own agenda whole. The Supreme Court fought it through the 1930s, but gradually some parts were enacted, and by 1940 a standard of 40 hours per week at a minimum wage of .40/hour was set.
Studies have shown (as anyone who has worked intuitively knows) that productivity declines and errors increase after a certain mid-point in the day or week. And since our collective productivity is up by almost four times compared to that of 1950, we have the leverage to solve several problems simultaneously with some creative rebalancing.
It can and has been done, probably better from the bottom up than the top down. Nucor Corporation, the #3 steel producer in the U.S., has been very flexible in its labor policy and has avoided layoffs for 20 years so far. A nonquantifiable benefit is that lack of fear about unemployment = solid morale = safer, better work produced and experienced people retained. When work is slow, everyone goes to a 3-day workweek at $8/hr. When contracts roll in, the schedule expands up to 7 days a week at up to $22/hr. Everyone sacrifices and benefits together -- how uncapitalistic of them! BMW in Germany operates under a similar plan. The vast majority of companies, however, believe that it's cheaper to lay off than reduce hours. That's simplistic third-grade arithmetic. And, years of workforce reductions with no loss of productivity prove that the 40-hour standard is no longer realistic.
Local governments (and states, like Utah) and universities are trying out the four-day week, primarily motivated by energy savings; it's much appreciated and it works well.
Or, you can start with just yourself: one fellow in Massachusetts negotiated a 4-day workweek at 80% salary in order to enjoy his hobbies. In a recent survey, almost everyone responded that they would take a pay cut to have more free time. These couldn't have been people just hanging on with part-time minimum wage jobs, but it is consistent with what workers have said, when asked, many times before.
Now what was that, written long ago, about the lilies of the field?