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It’s Time to Share the Work and the Pie

by William McGaughey, Jr.

When the Great Depression hit, one of the earliest proposals to fight unemployment was the idea of reducing the workweek and weekly pay so that more workers could stay on the payroll. At President Herbert Hoover’s urging, the president of Standard Oil of New Jersey (now Exxon) went on a national tour to urge worktime reductions. In 1983, the U.S. Senate overwhelmingly passed a 30-hour workweek bill, supported by organized labor. Although President Franklin D. Roosevelt opposed that particular measure, he incorporated the work-sharing approach in his administration’s program for national recovery. The two most important pieces of federal work-hours legislation, the Walsh-Healey Public Contracts Act and the Fair Labor Standards Act, date from the late Depression years.

Historically, proposals to reduce the workweek have been associated with hard times. It has seemed natural that, in periods of sorest need, the humane impulse to share income and work with the unemployed should find strong expression. As an unfortunate consequence, though, the shorter-workweek proposal has come to be regarded in a negative light - as a temporary ‘quick fix’ - rather than as a solid advancement in workers’ living standards. Indeed, in the current recession some employers appear to be using shortened hours to ‘ratchet down’ wages to a permanently lower level.

Critics of shorter-workweek legislation frequently point out that the Fair Labor Standards Act did not create many new jobs, because the average workweek was already under 40 hours (thanks to the Depression) when it went into effect. What they ignore, however, is that such legal incentives to cap hours of work may have set the stage for broad-based prosperity in the late 1940s and ‘50s. Because weekly hours did not revert to their pre-Depression level, it became possible for more Americans to find employment in the post-war years, which then set off a boom in consumer spending.

Perhaps we ought to rethink our notions about a shorter workweek. Of course, if a shrinking economic pie is sliced into more pieces, each piece will be smaller; this happens not only because there are more pieces to share in the division but also because the pie itself is smaller. On the other hand, if an expanding pie is sliced into more pieces, the slices may be the same size or larger than before. Indeed, economic pies tend to expand when cut into more pieces because each piece represents a job for a worker who is producing, earning, and spending.

Prof. (later U.S. Sen.) Paul Douglas, an economist at the University of Chicago, undertook a thorough study of the relationship between working hours and wages in the United States from 1890 to 1926. He found evidence of an inverse correlation between the length of the workweek and real wages. Industries in which the workweek was shorter generally paid higher wages. Within particular industries, wages tended to rise faster in periods when hours were cut. This conclusion contradicts the consensus of contemporary economists that there is a trade-off between hours and earnings.

In the 20th Century, the average workweek in the United States declined most rapidly during the early years of the Depression and in the periods from 1916 to 1920 and from 1943 to 1949. After both world wars, periods of sustained economic growth followed initial brief recessions. In contrast, after the decision was made in the early 1960s not to reduce the workweek so that the economic pie would grow larger, the U.S. economy eventually slid into a period of protracted stagnation and decay.

If it is true (as the experts say) that cuts in the workweek stifle economic growth, why weren’t the ‘Roaring ‘20s’ stifled by the unprecedented reductions in hours after World War I? Why didn’t the reductions of the ‘40s make it impossible to experience the prosperity of the early ‘Eisenhower years’? Why didn’t Japan’s shift from a six-day week to a five-day week during the later ‘60s and early ‘70s strangle its economy and cripple its capacity to compete in world markets?

Deciding whether to reduce the workweek does not involve a choice between leisure and materials goods or, in graphic terms, between a smaller and a larger economic pie. Rather, the decision involves the question of whether a smaller or larger percentage of the population should be allowed to participate in the prosperity that follows a recession.

If the workweek is longer, a relatively small group of workers can handle the greater volume of production, given normal increases in productivity. On the other hand, if working hours are reduced to offset the increased productivity, more workers will have to be hired to meet expanding production schedules. That means that more people will float in the rising ride of prosperity, and fewer will drown.

The time to make plans for reducing the workweek is now. There will never be a ‘Reagan prosperity’ without this important structural adjustment.”


Los Angeles Times, June 25, 1982, Part II, p. 7

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