Home > Economics - General > Working hours – the worm turns

Working hours – the worm turns

June 18th, 2003

Ross Gittins latest column says

the great epidemic of overwork is subsiding. Of late, we’re working less, not more. And, in any case, the latest research suggests the whole story’s been a bit overdone.

The first point is, I think correct. Gittins quotes ABS data to show that average working hours for full-time employees increased from 42 to 45 hours a week between 1982 and 1994, levelled out, and have declined slightly over the past two years.

This seems pretty much consistent with the anecdotal evidence. Concern about increasing working hours started in the early 1990s and was widespread by the mid-1990s. There was a clear cultural shift around this time – people who willingly worked very long hours, who had typically been presented in very positive terms in the 1980s were presented much more negatively. A particular turning point was the publication of an email sent out at 10pm by a partner in a law firm complaining that no-one else was working. He was held up to universal ridicule. And increasingly, people decided the game wasn’t worth the candle and pulled out of full-time work altogether. Clive Hamilton’s “downshifters” are part of this response. So the decline in working hours is basically an illustration of Stein’ Law “If a trend is unsustainable, it won’t be sustained” I’ve been pointing out the unsustainability of the push to longer worker hours and greater work intensity for quite a few years (PDF file), so I’m not surprised to see a turnaround.

On the other hand, I don’t agree with the claim that “the whole story’s a bit overdone”. It’s important to observe that the rise in fulltime working hours was a reversal of a trend that had continued for more than a century. It was accompanied by a substantial increase in job stress and job insecurity, and these things were needed to induce workers to put in longer hours. Gittins makes the point that a lot of unpaid overtime was “compensated” by salary packages, but the shift towards such packages in the 1980s was precisely one of the devices used to extract more work effort, along with the conversion of employees into supposedly self-employed “contractors”.

Gittins also quotes data on the relatively small proportion of employees who said they would rather work less hours for less money, but doesn’t mention the large proportion of those on long hours who said they wanted to work less hours for the same money (12.4 per cent of those working 49-59 hours and 21 per cent of those working 60+ hours). This response “was not a preference option, [but] interviewers recorded this response when it was given. ” You might say this is simple wishful thinking, but very few people working part-time or standard full-time hours gave this spontaneous response. I’d interpret it as the response of people who feel that they’ve been pressured into working excessive hours for no extra compensation.

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  1. Dave Ricardo
    June 18th, 2003 at 09:56 | #1

    John

    Just out of interest, how many hours do you typically work per week?

  2. John Quiggin
    June 18th, 2003 at 11:47 | #2

    Does blogging count?

  3. Dave Ricardo
    June 18th, 2003 at 12:47 | #3

    No, that’s a leisure activity.

  4. derrida derider
    June 18th, 2003 at 13:38 | #4

    It seems to me the fashion for ‘downshifting’ is exactly what you’d expect – under deregulation people have choices along the intensive margin of participation (ie hours worked) rather than being forced into a binary choice along the exensive margin (ie whether to work or not). And the deregulators are right to claim this as a real positive for human welfare.

    Of course most people would like to work less hours for the same money – and we’d expect this to be especially true of those getting lots of money (though there are some, poor sods, who’d be happy to work long hours whatever the money). But it is wishful thinking – skilled workers tend over time to get paid their marginal product.

    I can’t understand why lefties are so keen to coerce people into working less, and therefore earning less. You and I may think a workaholic’s choices are not for us, we may even think that person is doing themselves harm, but what gives us the right to impose a limit on their efforts?

  5. June 18th, 2003 at 14:53 | #5

    Who’s talking about imposing rules?

    If the overtime is unpaid, lefties would argue it should be paid. And if it’s paid, it should attract a premium rate of pay.

    In any case, there are social benefits to shorter working hours that might outweigh the private benefit of more cash — for example: parents spending time with their children, and more jobs.

  6. June 18th, 2003 at 15:10 | #6

    I see the split into over- and under-work as indicating a bifurcation (so averages and aggregates won’t be very meaningful), which in turn suggests a phase change and means that maybe some underlying curve has reversed its slope (tipping behaviour).

    Lots of “ifs” there, but they mean that DD’s reasoning isn’t enough – it assumes we have nice behaviour, but now there is the chance that there isn’t. And these things did suggest to me that there might be externalities in the labour market from spread costs of Social Security. If there’s anything to that, individual choices won’t tell us much about the framework as they will themselves be rational responses to a distorted framework.

    By the way, Jerry Pournelle has some globalisation/free trade insights at http://www.jerrypournelle.com/view/view262.html#tariff and http://www.jerrypournelle.com/mail/mail262.html#tariff – he actually mentions the possibility of externalities there.

  7. John Quiggin
    June 18th, 2003 at 15:55 | #7

    Dave, it’s actually very difficult to say how much time I spend working. As far as time at the office goes, I’d comply pretty comfortably with French law: no more than 35 hours per week, about 44 weeks/year. Not only that, but I’m blogging on company time, as you can see. What I do in the privacy of my own home is another matter.

  8. John Quiggin
    June 18th, 2003 at 15:57 | #8

    DD, unless you are taking the 19th century line that any contract must reflect voluntary choices, I see no basis for the assumptions you are making. I suspect most downshifters would have preferred the choice that was taken away in the reforms, a steady and secure job paying a decent wage for 35-40 hours work, and overtime for anything on top of that.

  9. June 18th, 2003 at 16:45 | #9

    >>>In any case, there are social benefits to shorter working hours that might outweigh the private benefit of more cash — for example: parents spending time with their children, and more jobs.

  10. Dave Ricardo
    June 18th, 2003 at 16:57 | #10

    John

    I’ve done a bit of research on you and looked up how much you write. Unless you are the most productive academic in world history, I strongly suspect you work more than 35 hours per week.

  11. John
    June 18th, 2003 at 17:22 | #11

    Jason, my reply to DD also applies to your comments about “enforcing” family values.

    Dave, I type at 25 wpm, and an upper bound for my output would be 250K wpy, which would take 10 000 minutes/year or about 7 hours/week. So I don’t spend that much time actually writing.

    My big work activity is thinking which I try to do all the time (please, no cheap shots from commentators, I’ve already thought of them).

    To respond more seriously to your question, if everyone could have a job like my current one, overwork wouldn’t be a problem. It’s not only hours, but autonomy, stress, unpleasant tasks etc that matter in all this. I admit to working long hours, but I choose when and where to work and what to work on, which makes a big difference.

  12. Dave Ricardo
    June 18th, 2003 at 17:39 | #12

    I see. I take it you don’t teach or sit on committees.

    You must have a more pleasant life than the academics I’ve known.

    Which reminds of the Q&A:

    Q. Why are academic disputes so bitter?
    A. Because so little is at stake.

  13. James Farrell
    June 18th, 2003 at 18:36 | #13

    It seems pretty obvious that in the last twenty years many people have been bullied into working longer hours as John asserts. I wonder about the effect on productivity. During the eighties the growth of productivity (GDP over hours worked) was pretty low, and I suspect it can easily be accounted for by technical change. So let’s suppose that the longer hours did not have any net effect on productivity per hour at the aggregate level. Now, if the extra three hours per week were unpaid, it doesn’t matter whether those extra hours were relatively productive or not. But if they were paid (and this includes implicit overtime payments included in salary packages), the question is why employers were paying their workers – against their preference – to work longer hours if those hours weren’t more productive. Could the answer be that most of the extra hours were worked in industries whose principal income is rent-seeking, such as commercial law and advertising? This would explain why the extra hours might have been more productive from the firm’s point of view but not at the aggregate level.

  14. June 18th, 2003 at 19:16 | #14

    The 19th century line? Of course contracts represent voluntary choices. You say ’19th century’ to try and belittle the idea, which is probably because you don’t like the idea but can’t think of why it’s wrong.

    I guess the 20th century definition of a contract was something that you did only under duress? That would be consistent with a century that gave us Hitler, Stalin and Galbraith.

  15. John
    June 18th, 2003 at 20:24 | #15

    “Hitler, Stalin and Galbraith” – I’m not impressed by this

  16. Dave Ricardo
    June 18th, 2003 at 21:30 | #16

    That would be Mao Tse Galbraith

  17. June 18th, 2003 at 22:32 | #17

    James Farrell’s hypothesis is another externality point, or maybe a different aspect of the same one I made.

    Now if only I could get my prose coming out right so I could make the points I want when I want to, and effectively, rather than poorly and after so much careful thought that I miss the boat.

  18. John
    June 19th, 2003 at 06:34 | #18

    Dave, I do some teaching, but I don’t sit on any committees or answer to any administrators. It’s a lot more pleasant than my last regular academic job, which I resigned some years ago.

  19. John
    June 19th, 2003 at 06:36 | #19

    PM, I thought your post was clear and well-written, but since I agreed with your point I didn’t say anything. Please keep commenting.

  20. derrida derider
    June 19th, 2003 at 13:41 | #20

    Umm. John, why is the hours you work at home nobody else’s business, but the hours you work at the office a fit subject for government intervention?

    This whole argument reeks of old Marxist “exploitation” ideas, grounded in the labour theory of value – a true 19th century idea. And really, 24601′s point is hard to refute – absent physical coercion or deception, in what sense is the employment contract not voluntary? Why is more choice seen as a bad thing?

    There is such a thing as revealed preference. Most people who work long hours do it because the alternative doesn’t attract them – they love their job, or they want the money. Its noticeable that the industry with the highest proportion of people who work longer than 49 hours a week is mining – which has no shortages of applicants for entry, because they pay so well. They can pay well in turn because they get the output per worker. Who the hell are you to deny people these choices? And why would employers hire someone at these higher wages absent this extra productivity?

    If you really think that there are external social costs large enough to justify heavy-handed intervention, you might note that we already have a method of encouraging employees to substitute leisure for labour – its called progressive income tax.

    But the reverse – trading more leisure for labour – is exactly what you’d expect as the wage rate paid rises – see here.

  21. June 19th, 2003 at 15:12 | #21

    DD writes “If you really think that there are external social costs large enough to justify heavy-handed intervention, you might note that we already have a method of encouraging employees to substitute leisure for labour – its called progressive income tax.”

    Unfortunately that has the wrong point of impact. It’s squeezing the wrong pips. What counts far more is the cost effectiveness for employers. E.g., my employers are about to do some arm twisting to get us to give up an unpaid weekend for nothing for “team building”. I plan on dropping them right in it when the time comes, but only because my back is already to the wall (things have been getting bad for a while now). As for the others being pressured, their PAYE situation doesn’t flow through to any change of acceptability of the “offer”.

    Oh, and suggesting “…to justify heavy-handed intervention” is reaching beyond what’s implied. All that was pointed out was the problem, nothing was said about the best kind of solution (as I’ve said before, I think this particular area would work best with a Pigovian solution rather than regulation).

    With an externality, you would ALSO expect to see what you describe – since the only responses relate to what’s left after leaving out the distortions, to making the best of a bad job. The existence of carrot tells you nothing one way or the other about any stick.

  22. derrida derider
    June 19th, 2003 at 16:00 | #22

    PM, do you think you would get paid as much if your employer didn’t get as much out of you? And you’re perfectly free to tell your employer to stick it – no-one will jail you. If you are worth your current money to him without that weekend work then s/he will keep you on (yes, yes, I know you bear more of the costs from any separation than your employer does, and that therefore there is a local monopsony element – but that too is already built into your pay agreement).

    There are a lot of people who really want to have their cake and eat it too. If you want a good wage package you’ve got to accept that employers have to be able to make a profit from you with that package. If the personal price is too high, then downshift – its a perfectly rational and admirable thing to do.

  23. June 19th, 2003 at 17:41 | #23

    I wasn’t trying to impress you John. Just as I’m sure you weren’t trying to impress me with your crude implication that freedom is an outdated and irrelevant concept.

  24. June 19th, 2003 at 18:55 | #24

    Sigh. DD, please don’t take this the wrong way, but I mean it quite literally and technically when I tell you you do not know what you are talking about.

    My employer is currently putting improper pressure on me, and it is going through lawyers (luckily I have been keeping a paper trail over the last year and a bit). When I say “improper”, I mean the grievance process itself has been captured so I cannot use it and so on.

    For obvious reasons I will not give more detail. I should point out that “leave” is no solution as in all the circumstances I would receive bad references and wouldn’t ever be able to work again. My only hope is to find an escape while still in place.

    Before you retort that I am an isolated case, no, I am not. I have been seeking stress counselling as a result of what has been thrown at me, and I am assured by my specialist that not only am I not paranoid, he has to deal with a new similar case about once a month. Last week he told me a little about the work environment of a cousin of his, which bears it all out.

  25. John
    June 19th, 2003 at 20:41 | #25

    24601, I don’t see anything pejorative about referring to something as being associated with some specific century. To suggest that “19th century” is inherently pejorative, is to adopt some implicit assumption of continuous progress which I’ve explicitly rejected. I said “19th century” because the claim that all contracts are voluntary in some sense that makes state interference with them a violation of the rights of both parties, is a doctrine that was put forward most clearly in that century, notably by the US Supreme Court (actually the leading case, Lochner vs New York was in 1905. I was asking DD whether he meant to rely on this claim, or was saying something different.

    As regards doctrines on contract, I don’t think much of (the dominant trend in) 19th century thought. But in many other respects I prefer it to the 20th and 21st.

    By contrast, your reference to Hitler & Stalin was a straightforward smear.

  26. John
    June 19th, 2003 at 20:47 | #26

    DD, I didn’t have my irony alerts on. What I said in response to Dave was intended as a joke.

    On the “more choice is better”, I agree, but you haven’t responded to my point that reform has removed choices that were previously available, and this is almost invariably the case with economic policy changes. To put the point more sharply, more choice for everybody must be a Pareto improvement, since everyone is free to remain where they were ex ante, but at least some can choose an option they prefer. Are you, or 24601, claiming that changes in labour markets have been a Pareto-improvement in this sense. If not, what are you claiming?

  27. June 20th, 2003 at 14:45 | #27

    I think you know that your ’19th century’ reference was negative, even if it was only playing on the ‘progress’ assumption held by others. There are many ways of saying the same thing… and you chose one that suited the point you wanted to make (ie that DD was wrong).

    I’m sure there are ways for me to defend mentioning Galbraith (the three people I mentioned show the three trends of the 20th century – fascism, socialism & social democracy) – but the reason I said it was the (pointless) attempt at showing how annoying it is when other people use language intended to bias the audience.

    If you want to pretend you are innocent of such actions, there is little I can do to show you otherwise.

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