It was not that long ago that a 60-hour work week was considered standard in the U.S. The evolution to a 40-hour work week came about because of changes in the way Americans lived and earned their livelihood. Over the past few years, the global financial crisis and other major events have challenged us to rethink the length of the U.S. work week.

 

Much has been written recently about the U.S. unemployment rate, which as of April remains high at about 9 percent. Although they are unwilling to hire, many corporations are sitting on tremendous piles of cash. According to Bloomberg, S&P 500 firms had $1.18 trillion in cash on hand in early February. The U.S. Department of Commerce in April reported the 21st straight month of U.S. manufacturing growth. High unemployment coupled with a growing manufacturing sector suggests significant increases in worker productivity. And, sure enough, the U.S. Department of Labor (DOL) announced non-farm output per hour worked increased by 2.6 percent, on an annual basis, during the last three months of 2010. This seems counterintuitive when the DOL also announced real average hourly earnings fell by 1.0 percent in March year on year.

When taken together, this data on the U.S. economy paints a rather strange and paradoxical picture. Now may be the time for a radical new approach. Let us assume a firm employs four workers, each working a 40-hour week. What would be the consequence of the same firm hiring a fifth worker and placing all five workers on a four-day, 32-hour work week?

If the five workers had staggered days off, the firm would have the same number of workers on the job each day of the work week. The workers could schedule their dental and other appointments during the one weekday a week they have off. This could make workers less likely to ask for administrative leave and this could reduce stress at work and at home.

Second, there are questions of employee compensation and labor costs. For workers to indeed be better off with a 32-hour work week, total compensation should remain the same as before. This means the same pay as before for 40 hours of work in addition to the same benefits package. In order for the employer to remain whole (and not have to pass increased labor costs on to customers, which would be highly inflationary), perhaps there could be an off-setting tax credit for implementation of such a plan.

Third, from a government revenue perspective, there would be more taxpayers and a dramatic reduction in expenditures for unemployment and many other social welfare benefits. Most social science research suggests that people are overall better citizens if they have a job and consequently feel productive. So, maybe, with appropriate individual and business tax laws, governments could possibly receive a similar amount of revenue.

If the three components above were given proper consideration, perhaps one could argue such a plan might narrow the gap between the haves and the have-nots, because some wealth would most likely be shifted to workers from other sectors of the U.S. economy. But workers may also become even more productive than they are today, because they would probably enjoy an overall higher quality of life. Theoretically, the unemployment rate would be reduced significantly and there would be an accompanying lower amount of "social wreckage."

Obviously, with such a reform, the devil is in the details. Many unemployed Americans do not have marketable skills; they are the so-called structurally unemployed. The proposed policy does not address this very significant issue. To gain the listed advantages, safeguards against cheating would also be necessary throughout the process. Many four-day-a-week workers would moonlight, or start and run side business during their off hours. This might create additional societal wealth, but it could also reduce the need for that fifth 32-hour-per-week worker. Employers might try to cut corners on compensation for four day per week workers, and they may also try to game a tax credit incentive plan. Finally, no one should underestimate the political difficulty of the proposed plan's required tax reforms.

Nevertheless, there are significant changes occurring in the American workplace. So, perhaps what we are seeing today is just another evolutionary cycle that could result in a shorter U.S. work week sometime in the near future.

The author is a columnist with China.org.cn. For more information please visit: http://www.ccgp-fushun.com/opinion/node_7078635.htm

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