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Four-Day Work Week

As countries in Europe and North America emerge from lock-down and start trying to rebuild their devastated economies, the great concern is jobs.

Unemployment in the US and Canada is over 13%, a post-Second World War high. If it weren’t for subsidies that keep up to a fifth of the working population in paid ‘furloughs’ from their jobs, jobless rates in Europe would be as high or higher. That can’t go on forever, so there is a frantic search for job-saving strategies – and the ‘four-day work week’ keeps coming up.

Like that other proposed magic bullet, the guaranteed basic income, the notion of a four-day working week has been kicking around for a long time. The current emergency has given both ideas a second wind, and neither is nearly as radical or extreme as it sounds.

Less than a century ago the whole industrialised world transitioned from the traditional six-day working week (Saturdays included) to a five-day work-week, for the same pay, with no political upheaval and no significant loss of production. So why don’t we do that again, spread the work around, and save lots of jobs?

Because it doesn’t work like that. The four-day week is not about spreading the load. It is about finding ways for people who already have jobs to squeeze the same work into four 10-hour working days instead of five 8-hour days, or to work ‘smarter’ so that they can get the same work done (or more) in only four 8-hour days.

The 40-hour week done in four days is the only available option for most process workers on assembly lines or other repetitive physical tasks. Ten-hour workdays are even harder than they sound, but the prize is a three-day weekend and some people are willing to pay the price.

If everybody buys into that, then management can shut the plant down one extra day and save on power. If only some do, then management has the headache of scheduling some 10-hour shifts and other 8-hour shifts, plus the cost of the mistakes that may accumulate when exhausted people are approaching the end of a 10-hour shift. And no saving on electricity costs.

Nevertheless, it does make for a happier workforce, by all accounts, and maybe therefore a more efficient and productive one. There are already a few examples of this kind of four-day working in every industrial country, and now the prime ministers of Finland and New Zealand are both talking it up. Neither woman, however, is proposing to impose it nationally, and nobody is suggesting that it will create more jobs.

The four-day week is an easier and more attractive package for people in administrative and sales jobs, because everybody knows that there is a lot of wasted time in office work: social media, pointless emails, long boring meetings, etc. You could get the job done a lot quicker if everybody was motivated to concentrate on the bits that are actually useful and skip the rest.

So motivate them. Tell them that they can drop to four 8-hour days a week for the same pay as the old five days if they can still get the same work done – and leave it to them to figure out how. If they can’t, then it’s back to the same old five-day grind.

Miraculously, they almost always do manage to find the time. In many cases, indeed, productivity actually rises: happy workers do better work. The four-day week is an excellent idea whose time may finally have come, but it is not a magic bullet. Companies don’t ever hire more people just to spread the work around.

So what might spread the available work around? The US Congress had a brilliant idea in 1938, when it passed the Fair Labor Standards Act, which required employers to pay overtime at 150% of the normal hourly wage for anything over 40 hours of work a week.

The idea was to make employers hire more people. If they had 40 employees working 50 hours a week, they would have to pay each of them overtime for the last 10 hours. So why not just hire another 10 people and save all that overtime pay? It worked quite well at the time, but it would not work now. Don’t hire more people; just put in more automation.

The coronavirus is just an accelerator. The real problem with employment ever since the 1990s has been automation, which has been eating up good jobs and excreting low-paid, insecure ones instead – or none at all. Six million good manufacturing jobs were automated out of existence in the US in 2000-2010, which led fairly directly to the election of Donald Trump in 2016.

The current pandemic is speeding the process by driving more jobs online, especially in sales (a different kind of automation), and fiddling with working hours or minimum wages is not going to stop it. So what’s left? Maybe a guaranteed basic income would help, but that’s a discussion for another day.
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To shorten to 725 words, omit paragraphs 12 and 13. (“So what…work now”)

(Not Quite Universal) Basic Income

In Switzerland last June, they had a referendum on a universal basic income that would have given each adult Swiss citizen $2,500 per month. It was a truly universal basic income, because it would have gone to everybody whether they were working or not – and the horrified Swiss rejected it by a majority of more than three-to-one.

In Finland last January, the government actually launched a pilot programme for a “basic income”, but it was a timid little thing that gives the participants in the trial just $600 per month. It certainly isn’t universal: it only goes to jobless people who are receiving the lowest level of unemployment benefit.

And in Canada last Sunday, the province of Ontario launched a pilot programme that sits somewhere between the other two. It pays out more than the Finns – CAD $1,400 a month (US $1,050). Moreover, you don’t have to be unemployed to get it, just poor.

“The project will explore the effectiveness of providing a basic income to people who are currently living on low incomes, whether they are working or not,” explained Ontario Premier Kathleen Wynne. But it’s still far from universal, and its supporters are keen to stress that the ultimate goal is to get people back into work. As is Finland, they believe (or at least profess to believe) that the only real solution to poverty is full employment.

In the early 21st century, this quaint belief is about as credible as the Easter Bunny, but in last November’s US presidential election campaign both Hillary Clinton and Donald Trump were still peddling the same sepia-tinted fantasy of crowded assembly lines and the return of the Good Old Days.

Trump was even promising to “bring back the jobs” from abroad, as if they were all now sitting in China or Mexico. He may or may not know that most of the missing jobs whose loss created the “Rust Belt” were killed by automation and simply don’t exist any more, but he certainly doesn’t mention it in public. And Clinton was equally reticent about the fact that full employment is not a realistic option for the future.

A lot of other people have finally focussed on the real future, however, because if you want to understand the rise of Trump you first have to acknowledge what automation is doing to jobs, especially in the United States. And then you have to figure out how to prevent this huge shift from causing a great political, economic and social disaster.

That is why Universal Basic Income is now a hot topic in political circles throughout the developed democratic countries: it might prevent that disaster. But the curious thing is that none of trials now being undertaken is actually universal, with everybody getting the same “basic income” regardless of what other income they may have. Why not?

UBI is not meant to be merely a more effective and less bureaucratic means of helping the poor. It is also intended to abolish the stigma of “unemployment” and the misery, anger, and political extremism it breeds. If everybody gets the basic income as a right, the argument goes, then receiving it causes neither shame nor anger. And if the anger abates, then maybe democratic political systems can survive automation.

But nobody really thinks we should introduce UBI at a national scale today. We will need a majority of people to go on working for a long time to come, and we don’t even know whether enough people would choose to do so after they start receiving the basic income. That is one of the questions that the current pilot programmes are designed to answer.

However, these UBI test programmes are being smuggled in disguised as anti-poverty projects, with the announced objectives of streamlining the system and encouraging people to re-enter the job market. That’s because the public really isn’t ready for full-blooded UBI. There is a very strong popular belief that people should work for a living, even if the society as a whole is very rich and the work doesn’t actually need to be done.

This prejudice applies especially strongly to the poor. As Harvard economist John Kenneth Galbraith once put it, “Leisure is very good for the rich, quite good for Harvard professors – and very bad for the poor. The wealthier you are, the more you are thought to be entitled to leisure. For anyone on welfare, leisure is a bad thing.”

So these early experiments with guaranteed income pretend to be aimed solely at getting people back into work. But meantime they will be gathering valuable data about the actual behaviour of people who have a guaranteed basic income.

When the supporters of UBI come back with concrete proposals for national systems in five or ten years’ time, they may have much more solid arguments than they do now.
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To shorten to 725 words, omit paragraph 6. (“Trump…future”).