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unemployedA jobless recovery? New jobs they mean, as reported in the Times today. No surprise in this, as the character of the American economy is changing. Manufacturing and the industrial sector have undoubtably shrunk due to international competition, and the tertiary or service sector must take its place. Training for decent service jobs–working in banking or finance or education–takes time, but I believe there are policies that can help.

A shorter work week would easily expand the number of job offerings being made. For a long time now many European countries have considered a 35 or 36 hour work week to be full time. My time in The Netherlands, it was common for people to work only four days a week, and employers are still required to give full benefits. My German friends in Suzhou never work Friday afternoons. Their weekend starts Friday at noon. By contrast, it is common for American workers to be put on salary and work 60 hours a week or more.

Of course it would also be a good idea to subsidize the training for service industries. The wrong response? Protectionism, and I am afraid there is more talk about that than there should be. 

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  1. Hi Phillip,
    I’m uncertain whether your solution of a shorter work week would result in more employment for the American workers. One reason the unemployment data in the US is misleading is that it does not account for underemployment. The average work week among the 90% of American workers who still have jobs is already down to around 32 hours. Mandating an even shorter work week would do little to create new jobs, because it is based on the assumption that there are a fixed number of jobs in the economy to go around, therefore requiring workers to work less (say a maximum of 30 instead of 32) would create more employment. In fact, this is highly unlikely to be the result. If firms are forced to pay overtime to workers employed beyond, say, 30 hours per week, this creates an incentive for firms to outsource these jobs to countries that do not mandate a shorter work week; even if this effect is marginal, i.e. only a tiny percentage of jobs are lost, the effect on new job creation is likely to be none or negative, as the firms that do not outsource work will face higher costs, they’ll find it hard to employ more workers.
    Policies that put upward pressure on wages such as a shorter work week are bound to be counter-productive during a recession. What’s needed is more flexible labor markets and workers who are wiling and able to accept lower wages; only then will firms begin hiring once more and employment can return to a higher level. Anti-competitive policies like a 35 hour work week (despite the fact that this ceiling is above the current average work week, therefore would prove ineffective) are also what accounts for country’s like France’s high natural rates of unemployment and low rankings among developed economies in terms of global competitiveness (France, with its 35 hour workweek is ranked 16 in competitiveness).
    Thanks, it’s a good discussion starter, for sure!

  2. Hi Phillip,

    Just one more thing. I’m looking at the data for France, the country whose 35 hour work week is most widely discussed, and found that in the WEF’s 2009 Global Competitiveness Survey, France ranked 116 out of 133 countries surveyed for “Rigidity of Employment”. Every category surveyed under “Labor Market Efficiency” was considered a disadvantage for France, meaning it harmed France’s global competitiveness. I have a feeling a maximum work week in the US would further harm its global competitiveness through increasing the rigidity of its already struggling labor markets. For more data from the GCI rankings, have a look here:

  3. Jason,

    Nice to hear from you. The point that I want to make here is that social welfare–the general welfare of people in general–is better off with shorter work weeks in wealthier societies. Welfare–of course–does not only depend on income or productivity. Leisure time is also important to the equation. And I would bet that your leisure time in Switzerland is often better valued than your salary at work.

    I’d love a response.

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