The real reason economic progress hasn’t lowered work hours more
Assume for a moment that you’re running a small business manufacturing pins and exporting it to the rest of the world. If you are working…
Assume for a moment that you’re running a small business manufacturing pins and exporting it to the rest of the world. If you are working the standard North American schedule, it would translate to 40 hours a week or 8 hours a day. Now imagine that through some innovation on your part, you are now able to produce the same number of pins at half the time. To satisfy the same demand you can now work only 4 hours a day and enjoy an additional 4 hours of leisure. Straightforward math so far.
Let’s take this a step further. This time, you’ve automated the process further and you can now produce the same number of pins at a quarter of the previous time. By the same math, now you can work an hour a day and enjoy 7 hours of additional leisure. This is essentially the reality for our productivity curve between 1950’s and today. We are far more productive today by every measure. However, the number of hours we work hasn’t budged.
The above was a prediction by a famous economist, John Maynard Keynes, in 1930. The video is a lecture by a professor in Economics trying to answer why this prediction did not materialize. The lecture is very insightful and brings up many interesting statistics about work, prosperity and well being broken down by gender, age and race. However, his main reason as to why the number of hours we work hasn’t decreased despite much progress in productivity is our love for work and money.
Although he presents good evidence to support his case, I believe there are a couple of other reasons we are working the same 40 hour weeks as we did in the 50’s that he overlooked. I would also argue that these reasons are equally important if not more so.
The system isn’t conductive to less hours. Let’s go back to our pin maker from before. If the pin maker decided to lay back and enjoy the additional 7 hours of leisure, what do you think would happen? All of her competitors would eventually figure out the same new, faster method of production and flood the market with pins since they can now produce more — each trying to wrestle away market share. In turn, that would push prices down and our (lazy) pin maker would quickly go out of business. This is the basis of capitalism.
We can thank our high standard of living to this phenomena. It brought us many innovations by aligning incentives and pushed billions of people out of poverty all around the world. It does this by rewarding work and innovation but penalizing complacency.
However, there are certainly few employers out there that have toyed with the idea of lowering work hours. For example, back in 2016, Amazon considered introducing a 30 hour work week for some of their employees.
If we have employers that are open to this idea, why don’t the employees rise up and demand lower work hours? Do we love money this much? I think there’s another more subtle reason that is driving it beyond greed.
Most people haven’t discovered their purpose. If you ever needed to describe your purpose in life, could you? Not the purpose of life, that’s also beyond the scope of this article. Your purpose in life is what you’d like to achieve or do. If you can’t, that’s okay. Few people can.
Once you free up those 7 hours of leisure time, you must have a way to fill them up with some leisure activities. If you don’t have a purpose, it’s hard to come up with things to do unless traveling the world for 40 years sounds like a good idea to you; and there’s certainly people who think so.
I’ve encountered this a lot when I talk to people about financial independence (FI or effai 😃). The question of what I would do with all that free time immediately comes up. This question sometimes stems from curiosity and other times to ridicule the idea (read this article for my thoughts on this behaviour). I’ve spoken to countless people about FI but only a handful ever considered what they would do if they had more time.
That’s why a job is usually the de facto source of purpose and the main occupier of time for most people. Once it’s taken away, people may feel lost. That’s also why early retirees seem to die earlier.
Of course, I wouldn’t even be considering FI if I believed dying early was an inevitable fact and no amount of salad eating could save me. Nor would I ever recommend it to anyone else. I believe that anyone who is working towards FI the traditional way — that is, by saving hard — must at some point consider their purpose. Otherwise they could not maintain the motivation to save so much for 15 plus years. That’s a tiny minority of people though.
Hence the result. Still working 100% of the time while creating 800% the product instead of working 1/8th of the time while producing 100% of the product.