Update: The 35-Hour Work Week: Remedy for Unemployment

Reduce the standard working hours per week from 40 to 35.

Each week, the 325 million people of the United States produce, by their labor, a quantity of goods and services that more or less satisfies their wants and needs. They apportion the labor (strictly speaking, the employment) unequally to half of the people, about 160 million (excluding children, prisoners, the armed forces, and people who can’t work or don’t want to work), including 124 million employed “full time”, and 28 million employed “part time”. 

The average number of hours of employed work per day, for a person who works on a weekday, is about 8. They work 40 hours per week.  

Different people work different numbers of hours per week. In 2015, 25% worked less than 35 hours per week, 68% worked 40 hours per week or more, including 16% (1 out of 6 workers) who worked 49 hours per week or more.  

The people who want to work, but haven’t found a job, are about 5% or 8 million, plus about 1 million “marginally attached” to the labor force. 

As a first-order calculation, if the people worked 7 hours per day, instead of 8, then they would produce 7/8 as much stuff as they now do. If they also hire an additional person for each 7 persons now working, that would make up the difference in production. That would create a labor demand for 20 million workers. That would employ most of the 8 million now seeking work. 

The question immediately arises whether to adjust the pay rate of the employee working 7 hours per day, instead of 8. In the California state employee furloughs, the additional time away from the job had net value for many workers. Further, Talent Thread in Sep 2016 reported 

“...when a company comes up short on the salary side of the equation, workers said they’d consider options like a flexible schedule or more paid time off to balance things out.” 

This question of pay adjustment need not have a generally applicable answer. Workers and employers can forge relevant agreements in each organization.

If you have a car with a leaking engine, you might keep it going a few more miles by adding oil. However, this won’t fix the problem. To fix it, you must make structural changes. Similarly, President-elect Trump’s $1 trillion infrastructure program, if implemented, won't fix the continuing unemployment in the United States, though it will save some people from destitution. In our opinion, the society, led by the government in partnership with businesses, must seek structural changes to reduce income disparities and distribute income more broadly, and thereby remedy the extensive unemployment in the economy. Reducing work to 35 or fewer hours per week per worker is one structural change that tends to distribute income more broadly. (Nobel economist Joseph Stiglitz has documented a number of other possible beneficial structural changes in his book “Rewriting the Rules”. )

One policy to incentivize the 35-hour work week might look something like this:
1. The spirit of this policy. The national interest warrants that, while large numbers of willing workers are unemployed, excess hours of work facilitate a negative economic externality, and employees should work 35 hours per week or less, with few exceptions.
2. Reduce employer’s incentive for excess hours. Employers will pay the employee 135% of the employee’s regular pay rate for hours worked in excess of 35 in any week and on days worked in excess of 5 in any week.
3. Reduce employer’s incentive further. Employers will pay a payroll tax surtax of 35% for employee’s pay for hours in excess of 42 hours in any week, for each employee working excess hours.
4. Reduce employee’s incentive to work excess hours. Each employee working excess hours will pay a payroll tax surtax of an 35% for their pay for hours in excess of 49 in any week. 
5. Reduced hours won’t imperil benefits. Employers will provide full employee benefits to any employee who usually works more than 10 hours per week.
6. No excuses - the rules apply to just about everyone. Employers will make a fair and reasonable estimate of hours worked for each employee not paid by the hour and for every employee paid at a lower rate than 1/10 of the rate of the most highly compensated employee.
7. No excuses - if they look like a worker, and act like a worker, then they are a worker. Employers using contract employees, or time and materials workers, or workers via an agency or similar arrangement, will consider these rules to apply to these workers. 


Related earlier articles:

This 2016 article makes updates a 2010 analysis: The 35-Hour Work Week http://daniel-brockman.blogspot.com/2010/07/the-35-hour-work-week-remedy-for.html.

The California Experience http://daniel-brockman.blogspot.com/2010/12/california-experience.html 

The French Experience http://daniel-brockman.blogspot.com/2010/11/french-experience.html 


Additional information on Sources:

24 Seven, “Talent Thread” (Sep 1, 2016, downloaded Dec 1, 2016) https://talentthread.com/2016/09/01/66-of-employees-are-planning-a-job-change-job-market-report-2016/

BLS Bureau of Labor Statistics, “Technical Notes, Household Data” (Feb 2016) http://www.bls.gov/cps/eetech_methods.pdf 

BLS, “The Employment Situation - October 2016” (Nov 4, 2016) http://www.bls.gov/news.release/archives/empsit_11042016.htm

BLS, “Labor Force Statistics from the Current Population Survey; Household data annual averages; 19. 2015, Persons at work” (Feb 10, 2016, downloaded Dec 1, 2016) http://www.bls.gov/cps/cpsaat19.htm

United States Census Bureau real time population clock http://www.census.gov/

Donald J. Trump, “Infrastructure: Donald J. Trump’s Vision” (Downloaded Dec 1, 2016) https://www.donaldjtrump.com/policies/an-americas-infrastructure-first-plan