Using Work Sharing to Improve the Economy and Worker Happiness

An important policy idea of reducing average necessary work hours (with at least similar wage levels ideally due to increased value via more productivity growth) that will keep becoming more important as technology continues to advance.

The United States is very much an outlier among wealthy countries in the relatively weak rights that are guaranteed to workers on the job. This is true in a variety of areas. For example, the United States is the only wealthy country in which private sector workers can be dismissed at will, but it shows up most clearly in hours of work.

In other wealthy countries, there has been a consistent downward trend in average annual hours of work over the last four decades. By contrast, in the United States, there has been relatively little change. While people on other wealthy countries can count on paid sick days, paid family leave, and four to six weeks of paid vacation every year, these benefits are only available to better-paid workers in the United States. Even for these workers, the benefits are often less than the average in Western European countries.

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Part of the benefit of work sharing is that it can allow workers and employers to gain experience with a more flexible work week or work year. It is possible that this experience can lead workers to place a higher value on leisure or non-work activities and therefore increase their support for policies that allow for reduced work hours.

Work Hours in 1970: The United States Was Not Always an Outlier

When the experience of European countries is raised in the context of proposals for expanding paid time off in the United States, it is common for opponents to dismiss this evidence by pointing to differences in national character. Europeans may value time off with their families or taking vacations, but we are told that Americans place a higher value on work and income.

While debates on national character probably do not provide a useful basis for policy, it is worth noting that the United States was not always an outlier in annual hours worked. If we go back to the 1970s, the United States was near the OECD average in annual hours worked. By contrast, it ranks near the top in 2016.

In 1970, workers in the United States had put in on average 3 to 5 percent more hours than workers in Denmark and Finland, according to the OECD data, by 2016, this difference had grown to more than 25 percent. Workers in France and the Netherlands now have considerably shorter average work years than workers in the United States. Even workers in Japan now work about 5 percent less on average than workers in the United States.

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It is also important to consider efforts to reduce hours as being a necessary aspect of making the workplace friendlier to women. It continues to be the case that women have a grossly disproportionate share of the responsibility for caring for children and other family members.

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In this respect, it is worth noting that the United States went from ranking near the top in women’s labor force participation in 1980 to being below the OECD average in 2018. While other countries have made workplaces more family friendly, this has been much less true of the United States.

Shortening Work Hours and Full Employment

There has been a largely otherworldly public debate in recent years on the prospects that robots and artificial intelligence would lead to mass unemployment. This debate is otherworldly since it describes a world of rapidly rising productivity growth. In fact, productivity growth has been quite slow ever since 2005. The average annual rate of productivity growth over the last twelve years has been just over 1.0 percent. This compares to a rate of growth of close to 3.0 percent in the long Golden Age from 1947 to 1973 and again from 1995 to 2005.

So this means that we are having this major national debate about the mass displacement of workers due to technology at a time when the data clearly tell us that displacement is moving along very slowly.[2] It is also worth noting that all the official projections from agencies like the Congressional Budget Office and the Office of Management and Budget show the slowdown in productivity growth persisting for the indefinite future. This projection of continued slow productivity growth provides the basis for debates on issues like budget deficits and the finances of Social Security.

However, if we did actually begin to see an uptick in the rate of productivity growth, and robots did begin to displace large numbers of workers, then an obvious solution would be to adopt policies aimed at shortening the average duration of the work year. The basic arithmetic is straightforward: if we reduce average work hours by 20 percent, then we will need 25 percent more workers to get the same amount of labor. While in practice the relationship will never be as simple as the straight arithmetic, if we do get a reduction in average work time, then we will need more workers.

As noted above, reductions in work hours was an important way in which workers in Western Europe have taken the gains from productivity growth over the last four decades. This had also been true in previous decades in the United States, as the standard workweek was shortened to forty hours with the Fair Labor Standards Act in 1937. In many industries, it had been over sixty hours at the turn of the twentieth century.

If the United States can resume a path of shortening work hours and get its standard work year back in line with other wealthy countries, it should be able to absorb even very rapid gains in productivity growth without any concerns about mass unemployment. While job-killing robots may exist primarily in the heads of the people who write about the economy, if they do show up in the world, a policy of aggressive reductions in work hours should ensure they don’t lead to widespread unemployment.

U.S. Supreme Court Damages Labor Rights by Ruling that Employers Can Legally Prevent Employees from Joining Together in Class Actions

Employers vs. employees — one of the core societal conflicts plays out again, benefiting management over labor as usual. Perhaps the solution is to make the employees the collective employer, so that the workers themselves can democratically decide who is hired and fired and what workplace provisions are applied. In any case though, it’s a serious affront to labor rights, with the law of contracts — a conservative pillar of democracy before modern “conservatism” turned into an ideology trying to justify giving as much money to rich people as possible — being further worsened.

The U.S. Supreme Court on Monday dealt a blow to worker rights, saying that employers can bar their employees from banding together to challenge workplace abuses including wage theft and sexual harassment.

MSNBC host and legal analyst Ari Melber summed up the 5-4 decision (pdf) by tweeting: “Supreme Court rules that you have the right to your day in court, unless a corporation effectively makes you give up that right.”

Political activist Zephyr Teachout, meanwhile, said the decision “is terrible news for workers in America,” as it makes “it harder for employees to get a fair hearing when they are screwed.”

When employers mandate arbitration clauses, employees must act as individuals to challenge alleged workplace abuses, and are thus barred from gaining strength in numbers through class action suits to challenge corporate power. In the cases before the high court, employers had argued they had the right to impose such contracts under the Federal Arbitration Act, while employees argued they had the right to take collective action under the National Labor Relations Act (NLRA).

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Justice Ruth Bader Ginsburg wrote the dissenting opinion, and read a summary of her dissent aloud—”something justices do only rarely to signify their objections,” USA Today reported.

Ginsburg called the decision “egregiously wrong,” and asserted: “Recognizing employees’ right to engage in collective employment litigation and shielding that right from employer blockage are firmly rooted in the NLRA’s design.”

She further noted that made “to face their employers without company, employees ordinarily are no match for the enterprise that hires them. Employees gain strength, however, if they can deal with their employers in numbers. That is the very reason why the NLRA secures against employer interference employees’ right to act in concert for their ‘mutual aid or protection.'”

“The inevitable result of today’s decision ,” she added, “will be the under-enforcement of federal and state statutes designed to advance the well-being of vulnerable workers.”

EPI’s McNicholas urged Congress to take action to prevent that from happening.

“It is essential to both our democracy and a fair economy that workers have the right to engage in collective action,” she stated. “Congress must act to restore this fundamental right and ban mandatory arbitration agreements and class and collective action waivers.”

Racial Unemployment Gap Being Reduced by a Tightened Labor Market

There are numerous benefits to full employment policies. Of course, while there is a relatively tight U.S. labor market, some part of the low unemployment story is due to the significant number of workers who have dropped out of the labor force. The point I make repeatedly is that there’s a lot of important work to be done, people willing to do it, and an economic system that isn’t putting the two together. The U.S. is notably forgoing $1 trillion a year in added output because there isn’t enough demand in its economy.

One wants to always be careful not to over interpret any jobs report — the numbers are noisy in the monthly data. But when a number pops out that makes sense in terms of both theory and empirical evidence, it’s legitimate to take note.

In this spirit, note that the African American unemployment rate hit 6.8 percent last month, the lowest on record, with data going back to the early 1970s. In addition, the gap between black and white unemployment, measured as the black rate minus the white rate, hit 3.1 percentage points, also the lowest on record.

Now, you may well be saying, “Wait up; 6.8 percent doesn’t sound all that low, especially given that the overall jobless rate remains at a 17-year low of 4.1 percent.”

I agree. Where is it written that minority rates must be multiples of white rates? Some of the difference is due to educational differences, but not as much as you might think. Similar differentials in black/white jobless rates exist for all education levels. Racial discrimination is, of course, alive and well and in play in these gaps.

But that key observation underscores my larger point: A persistently strong macroeconomy is highly potent medicine for treating economic inequities, including racial ones. It’s not all that’s needed, by a very long shot. Purging discrimination and unequal punishment from the criminal justice, for example, is essential if we’re ever to achieve racial justice. But it’s not a coincidence that toward the end of his life, the Rev. Martin Luther King Jr. was pushing hard on a full-employment agenda.

The economics is straightforward. Discrimination — which doesn’t have to be only racial discrimination; employers might discriminate against workers who’ve, for example, been unemployed for a long time or have been out of the job market — is a “luxury” that employers who engage in it can’t afford when the economy tightens up. You either hire someone you might avoid if the labor supply queue was a lot longer, or you leave profits on the table.

So, while we shouldn’t get too excited about that relatively low monthly rate — given the high statistical variance in these data, it could jump back up next month — we should recognize and applaud these critical important macro-dynamics and the clear trends they’re delivering, as seen in the figure above.

The author of the article also co-wrote a useful book that covers the benefits and importance of full employment. It’s called Getting Back to Full Employment and can be read online for free (pdf).

Economic Policy Institute Head Steps Down

Working with Jared Bernstein, Larry Mishel is the originator of the famous graph that shows the split between productivity and wages. Mishel is also notable for helping some important and good economists early in their careers. He’s therefore one of the people I am willing to give a tribute to on this site.

WHEN LAWRENCE MISHEL came to Washington during the height of the Reagan revolution, the options for a young leftist economist looking to make a difference were nearly non-existent.

“The liberal position was represented by the Brookings Institution,” Mishel told The Intercept, “which at the time was very free trade uber alles, hostile to industrial policy, not interested in workers and unions. The debate was between Brookings on the left, and [the American Enterprise Institute] and the Heritage Foundation on the right.”

And then there was the Economic Policy Institute, a new think tank designed to fill the ideological gap and shift America’s economic debate to the left. In 1987, Mishel joined EPI as a research director, later becoming vice president and eventually president in 2002. As his thirtieth year at EPI winds down, Mishel gets to see the Democratic Party finally move closer to the positions the think tank has always had. Now, he is stepping aside.

“The hallmark has been to center that an economy is only working if it’s working for the benefit of the vast majority,” Mishel said. “We hammered that every day.”

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From the beginning, EPI elevated the daily struggle of those on the economy’s margins. Starting in 1988, Mishel and colleagues produced a biennial report, The State of Working America, with comprehensive data on wages, incomes, jobs, and wealth. The reports found a discordant trend in the economy: wage stagnation amid increasing productivity. Prior to the late 1970s, these two measures followed one another: as workers produced more goods, they made more money. When that changed, others made excuses for this bifurcation while EPI insisted that conscious policy choices shortchanged workers and funneled the gains to the very top, as evidenced by rising CEO compensation and the erosion of living wages. In other words, EPI argued, natural forces didn’t lead workers to their plight — those in power pushed them there.

If these themes of rising income inequality sound familiar today, they were practically a foreign concept at the outset. In 1994, Mishel and Jared Bernstein created a now-famous chart showing the split between productivity and the median hourly wage.

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Much of EPI’s work under Mishel served to reject pernicious myths about the economy, hardened into perceived wisdom by self-interested forces. EPI’s research found that social and economic disadvantage, not failing teachers or schools, depressed student achievement. It refuted that high school graduation rates were collapsing, an alternative fact used to push vouchers or charter schools. It proved that automation played little role in inequality. It laughed off the idea that CEOs were paid nearly 300 times more than the average worker based on a competitive race for talent.

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As Mishel steps aside, he believes America needs a broad set of policies to rebuild worker power, things like raising the minimum wage to $15 an hour, empowering union organizing, ending worker misclassification in the “gig economy” to deny benefits and overtime pay, preventing arbitration agreements that limit worker options in a dispute, and banning non-compete clauses that stop workers from moving to similarly situated employers. These moves to strengthen worker bargaining power, collectively and individually, cut a path to robust wage growth for the 99 percent. “It will take bold proposals,” Mishel said. “If not, we won’t have a vibrant middle class, or a democracy.”

Mishel’s mission in 30 years at EPI was not only to identify the economy’s problems, but to demonstrate how to fix it. And he consistently brought complex insights down to a level of popular understanding, striving to reach the ordinary worker rather than the academy. The way he talked about the economy mirrored who he fought for. A garrulous man with a shock of white hair, Mishel cherishes that EPI has become a fixture in Washington, and that the poles of the economic debate have finally trended in his direction.

Horrible Labor Conditions at Amazon Warehouses

Amazon CEO Jeff Bezos would sell at least a few hundred million dollars of his Amazon stock and grant it to Amazon workers if he actually cared much about them. He could also do a lot to improve working conditions at Amazon, but he is a prominent example of corporate greed in today’s world for a reason. The world’s richest person treating his exploited workers like garbage is truly an ongoing moral outrage.

Alan Selby went undercover at the firm’s Tilbury warehouse in Essex where ambulances are regularly called and where workers face the sack if they fail to pack at least two items per minute

Alone in a locked metal cage, 10 feet from my nearest colleague, a robot approaches from the shadows and thrusts a tower of shelves towards me.

I have nine seconds to grab and process an item to be sent for packing – a target of 300 items an hour, for hour after relentless hour.

As I bend to the floor then reach high above my head to fulfil a never-ending stream of orders, my body screams at me.

Welcome to Amazon’s picking floor. Here, while cameras watch my every move, a screen in front of me offers constant reminders of my “units per hour” and exactly how long each has taken.

This is the online giant’s biggest European packing plant, set to be shipping 1.2 million items a year.

As the UK’s top retailer, it made £7.3billion last year alone. But a Sunday Mirror investigation today reveals that success comes at a price – the daily ordeal of its workers.

I spent five weeks at the firm’s newest warehouse in Tilbury, Essex, armed with a secret camera bought from Amazon’s own website.

I found staff asleep on their feet, exhausted from toiling for up to 55 hours a week.

Those who could not keep up with the punishing targets faced the sack – and some who buckled under the strain had to be attended to by ambulance crews.

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Across Italy and Germany staff have gone on strike, complaining of low pay and poor conditions.

And employees at UK warehouses have told of sleeping in tents and under bridges just to get to work on time.

Timed toilet breaks, impossible targets and exhausting, “intolerable” working conditions are frequent complaints. Staff have been paid less than the living wage, and it even emerged drivers had faced fines for “early” deliveries.

As experts warn of workers facing an increased risk of mental and physical illness, Amazon repeatedly promised to clean up its act. But a whiteboard in the plant for staff comments suggests it has far to go.

There were complaints of filthy toilets and breaks still too short.

One asked: “Why are we not allowed to sit when it is quiet and not busy? We are human beings, not slaves and animals.”