theadanews.com - Ada, Oklahoma

October 18, 2012

Why working harder doesn't make you richer

By Charles Kenny
Foreign Policy

WASHINGTON — Declinists, get ready to fret: Sometime this past summer, the average net worth of Canadians surpassed that of Americans. Adding insult to injury, Canadians have universal health care and a lower unemployment rate too.

But you know what really makes it sting? They barely even worked for it. The average employed Canadian works 85 hours fewer each year than the average American — more than two full workweeks. And that may be the lesson that Canada has for the United States: Working 24/7 isn't the road to prosperity, much less happiness, and there are numbers to prove it. In fact, across rich countries, it turns out there's no close link between the average hours people put in at the office and how much they make. So go ahead: Take that vacation.

According to the Organization for Economic Cooperation and Development (OECD), the rich world's think tank, the average number of hours worked each year by someone employed in the United States is 1,787. In Britain, it's 1,625 hours — or about 20 fewer working days. In Germany, the engine of Europe's economy, the average employee works just 1,413 hours a year — that's more than 12 workweeks off. Nobody ever accuses Germans of being lazy; a lot of that is because the European Union mandates four weeks of paid vacation a year. But if you live in the United States, the government guarantees exactly zero paid vacation time. Thanks to the lack of any legal holiday requirement, nearly a quarter of workers get no paid vacation or holidays at all. Japan, the next stingiest among industrial countries, mandates 10 paid days off, with more the longer you have worked.

But doesn't working harder make you richer? It's true that at the individual level there is a link between working hard and being paid more. Nearly two-thirds of high-earning U.S. workers surveyed for the Center for Work-Life Policy clocked more than 50 hours a week, and one-third logged more than 60 hours. At the other end of the income scale, of course, many of those in poverty can't find a job to put in the hours at all. It's also true, however, that in many low-income families, parents are working two jobs just to stay above the poverty line. Poor people are poor because they don't get paid much per hour — not because they don't work hard enough.

A similar story applies across countries. The United States is more productive than the European Union — with annual output of around $42,500 per person, about 19 percent higher than Germany and 30 percent higher than France. But not much of that difference is due to working more hours. Take an example from a benighted country in Southern Europe: OECD data suggest that, in 2011, the average Greek who was actually employed worked 2,032 hours that year. The average German worked 30 percent less than that. For all that hard work, however, Greek GDP per hour worked was only $34 — compared with $55 in Germany. When it comes to relative economic strength, more efficient German production (alongside higher overall employment) completely outweighs those long hours the Greeks put in at the office.

And it's not just Greece. The link between work hours and output is pretty weak in general. In 1974, Britain was gripped by the threat of a coal miners' strike that forced the government to impose a three-day workweek to ensure there was enough electricity to go around. Despite the dramatically reduced number of hours worked, industrial production in those two months fell only 6 percent. In 2000, France cut its 39-hour workweek by four hours, but the country's GDP per capita climbed from $27,396 to $28,520 between 1999 and 2001. After President Nicolas Sarkozy effectively rescinded the 35-hour workweek in 2008, however, France's per capita GDP fell from $30,466 in 2007 to $29,169 in 2009. Clearly, the financial crisis was to blame for that decline, but the point is that working hours didn't do much, if anything, to move the needle in either direction.

So why do Americans fetishize hard work when the link between labor and economic strength is so tenuous? The bottom line is that productivity — driven by technology and well-functioning markets — drives wealth far more than hours worked. And very few jobs in developed economies nowadays are classic assembly-line positions, where working 20 percent longer will mechanically produce 20 percent more widgets. Psychology plays a role here too: At least 40 years of studies suggest that people work harder if you limit their time to complete a certain task. In some cases, working too hard can actually reduce output. Long working hours are also associated with ill health, which means lost labor in the long term, as well as higher medical costs for employers and government. A study of hospital interns found that young doctors who worked longer shifts made almost 36 percent more serious mistakes, like giving the wrong dose or the wrong medicine altogether to patients.

Working too hard has societal costs as well. Nearly two decades ago, Harvard University professor Robert Putnam warned that the "social capital" of the United States was decaying as Americans spent less time with family, friends, neighbors and community organizations and more time "bowling alone." Over the last quarter of the 20th century, Putnam recorded a 58 percent decline in attendance at club meetings and a 43 percent drop in family dinners. He blames television and commuting for much of the decline. But note also that the hyperactive U.S. worker put in over 20 percent more hours at the office than the average French worker in 2011. All that extra parental time at home might be why French kids are so much better behaved — rather than greater parental neglect, as suggested by the recent U.S. parenting hit "Bringing Up Bébé."

But if long hours aren't the secret to rapid growth and high employment, the reverse does appear to be true. As countries get richer, their citizens work less: Since the mid-20th century, average annual working hours have declined across the Western world. In the United States, however, the decline has been less dramatic.

So maybe it's time for you Yanks to relax a bit more. Take a full week off for Thanksgiving (as opposed to trying to sneak off on a Wednesday afternoon), or do like the French and take August off next year. It'll make the country healthier, happier — and maybe one day even as rich as Canada.

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Kenny is senior fellow at the Center for Global Development, Schwartz fellow at the New America Foundation, and author, most recently, of "Getting Better."