Counterpoint: Shorter workweek is a solution to labor disruption

  • Article by: WILLIAM MCGAUGHEY
  • Updated: January 20, 2014 - 6:16 PM

It’s been a while since this was a welcome topic, but it has its advantages.

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An article in the Economist, republished in the Star Tribune on Jan. 19 under the headline “Worker vs. machine: Managing upheaval,” accurately stated the problem of labor disruption, but its proposed solution is no good. Yes, machines are displacing human labor. They are now starting to displace intelligent labor, so education affords no place to hide. Yet, the solution the Economist writer envisions is, again, more and better education. It is for government to provide income supplements and tax credits to low-wage workers. Same old, same old.

There is an alternative — a solution even older than job-oriented education and government subsidies. It is to reduce working hours to offset the shrinking demand for human labor. This was the approach that organized labor took in the 19th century as it sought the 10-hour day and then the eight-hour day. Samuel Gompers, the AFL’s first president, said: “So long as there is one man who seeks employment and cannot obtain it, the hours of labor are too long.”

It was not only labor officials but also enlightened business leaders such as Henry Ford who favored shorter hours. Besides his famous $5-a-day minimum wage, Ford unilaterally gave his employees the eight-hour day and the five-day week. Ford said he did this for business reasons, not charity. To buy consumer products, workers need both adequate income and sufficient leisure to find uses for those products.

In the 1932 political campaign, both Franklin Roosevelt and Herbert Hoover favored shorter work time to deal with unemployment. The high-water mark for this policy came when the U.S. Senate passed a bill sponsored by Hugo Black for a 30-hour workweek. However, certain financiers and congressional staffers persuaded the incoming Roosevelt administration not to support this bill, and it died in the House.

The opponents of shorter hours, notably Leon Keyserling and Bernard Baruch, argued that the shorter-workweek approach was defeatist; it meant “sharing the scarcity” rather than promoting abundance. This concept became enshrined in the National Security Council Report 68, which, inspired by the stimulus of World War II, called for greatly increased military spending for economic as well as national-security reasons. Bottom line: We rejected leisure and got a war economy.

Since organized labor abandoned the fight years ago, one would be hard-pressed to find any public figure supporting shorter hours. Only a few mavericks such as former U.S. Sen. Eugene McCarthy of Minnesota have dared touch this subject. He and I published a book in 1989 supporting legislation to shorten work time.

What type of legislation? One could start with the Fair Labor Standards Act, passed in 1938. One could change the standard workweek from 40 hours to some lower number such as 32. Equally important would be other modifications such as tightening eligibility for exemptions and, possibly, raising the overtime rate and eliminating the financial incentive for covered employees to seek and accept overtime.

As it is, such an approach might be unpopular because shorter hours are equated with lower income in people’s mind. A century ago, however, it was understood that the free market would make the necessary adjustments to preserve income as working hours were reduced. In fact, a thorough study by a University of Chicago economist and later U.S. senator, Paul Douglas, found that industries having the highest wages also had the shortest work hours.

Perversely, Obamacare’s requirement that employers provide health care to employees who work more than 30 hours in a week may stimulate discussion of the hours question and, hopefully, precipitate a comprehensive study. For starters, I like the proposal of Ross Eisenbrey, vice president of the Economic Policy Institute, that the overtime threshold salary for workers covered by the Fair Labor Standards Act be raised from $455 to $970 hour per week, in line with increases in inflation.

Even though government would be instrumental in making the required changes, its role in stimulating employment through reduced hours would be less intrusive than the preferred alternatives. As a beneficial byproduct, we would be gaining increased personal freedom.

 

William McGaughey, of Minneapolis, is the coauthor of “Nonfinancial Economics: The Case for Shorter Hours of Work.”

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