An observation about the hours debate

25 Aug

On both sides of the Atlantic, there is a debate about who works hard. In Europe, for instance, Greeks were accused of being trouble because they were lazy. As the graph below shows, this was pure nonsense. In fact, according to OECD data, Greeks worked longer hours than the very Germans who accused them of being lazy. Moreover, the same data shows that it is Germans who appear to work fewer hours than most industrial countries. And those slothful welfare-moochers, the Swedes, work nearly as many hours as eyes-on-the-prize Americans:

Hours of work in the US have become an issue for a variety of reasons. We noted that entitlements have come under attack, even though Americans have fewer paid vacations and worse family leave policies than most other industrialized countries, and one way it is proposed to cut Social Security is by raising the retirement age, despite the US already having one of the highest retirement ages in the industrial world. (Higher retirement age increases hours worked over the course of a lifetime.) But perhaps most centrally, hours of work is an issue because of the fact that, as a way of making up for stagnating wages, many Americans are working harder than they used to. This graph from a Brooking Institution study shows the increase in hours worked for two-parent families with average incomes:

This graph might seem surprising, given the data in the previous graph, which showed declining annual hours worked for the US. But that is because the previous graph aggregates trends for the entire labor force, not two-parent families earning average incomes. What this graph suggests is that for many Americans, making ends meet has become increasingly difficult, despite the rising productivity data we cited in previous posts. And in fact, as this chart at Visual Economics shows, a longer than 40 hour workweek is still a necessity for large segments of populations in both industrial and non-industrial countries:

What these graphs indicate to us is the relative uselessness of comparing hours worked by country. How much a ‘country’ works on average, and setting up distinctions between hard-working and slothful countries obscures as much as it illuminates because it tells us nothing about the distribution of work, unemployment and wealth within those countries. After all, Germany might be lower on the hours worked chart, but it also has much lower unemployment than the United States. A quick look at Eurostat shows us that Germany and Sweden (6% and 7.7% respectively) have much lower unemployment than ‘harder working’ United States or Greece (9% and 15% respectively).

To be clear, the point is not to set up a different standard of comparison amongst countries, but to suggest that a more important question is not ‘how much do countries work,’ but rather ‘what is the internal distribution of employment, and what is the quality of those jobs.’ As we will try to show in future posts, it is likely that breaking the data down that way shows that for many segments of the population there is more shared interest across nations – in higher paying jobs that don’t require long hours to make ends meet – as there is competition amongst them for who can work the hardest.

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