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Forum Post: Work conservation is the solution to the global recession

Posted 8 years ago on May 1, 2012, 6:43 p.m. EST by Misaki (893)
This content is user submitted and not an official statement


Many people are confused about the underlying reasons for the recent economic crisis, which has lead to high unemployment and slow growth in many parts of the world. Some try to blame it on the incompetence or selfishness of some part of society, but the true reason is nothing more than that there are not enough people who are willing to reduce the amount of time they work.

In the United States, people are not likely to accept this explanation without understanding what is wrong with the conventional explanations for the recession. Unemployment is not high because of a lack of education. This can be seen by the large number of college graduates who have to work in unskilled jobs despite student debt which has exceeded $1 trillion in the US. The federal budget deficit is not because the wealthy pay less in taxes than the middle class. According to a report by the Congressional Budget Office[1], 30% of the income of the top 1% goes to federal taxes after including corporate income tax, compared to a national average of 20% of income.

Other people find it reasonable that with the amount of money the federal government spends, there should be no economic problems. In polls by the New York Times and CBS, 67% of the population think the government should do more to help the middle class but only 2% think they pay less than their fair share of federal income taxes. A majority of the population is opposed to government spending to create jobs, and 64% would choose cutting government spending over raising taxes on corporations despite that only 4% think that corporations use savings from tax cuts to hire more workers.

Despite this perception of government inefficiency, no one should expect government agencies to cooperate in reducing their spending because any government employees who are laid off would have difficulty finding work in the current job market. Unemployment must go down before government spending does. Some parts of society suggest increasing subsidies and direct wealth transfers toward the poor and taxing the rich regardless of government inefficiency, but this is not likely to happen. Socialism is viewed positively by 49% of the 18-29 age group but only 13% of the 65+ age group in the US[2].

The final alternative to working less is for communities to become more isolated and less open to world trade. Instead of buying the cheapest product that was manufactured overseas, people could be encouraged to buy from local producers either by choice or through raising trade barriers to make locally made products more competitive on price. Economists generally agree that this would lower the gross domestic product for a country and for the world, but on the other hand it would raise employment precisely because of the inefficiency that would result. The primary argument against doing this is that the same standard of living could be obtained by encouraging people to work less so that work, and jobs, are more evenly distributed in the population.

This leads to the question of why the average work week has not fallen as productivity has increased. The overtime pay system introduced in the United States in 1937 was not designed to cause people to work less than full time, only to be used in combination with a minimum wage to discourage businesses from placing unreasonable demands on their workers. When the minimum wage does not provide for living expenses workers may feel forced to accept overtime work, but even at higher wage rates overtime encourages people to work as much as possible.

The progressive tax system is just as ineffective in reducing in the average work week. Even with marginal tax rates in the top bracket of over 90%, it was understood that tax revenues from working more helped the United States against its enemies in World War II and the Cold War. Since income is calculated on a yearly basis, the tax rate also appears to be 'locally flat' for anyone considering taking a day off work during the week, meaning that there is no clear justification for doing so unless the non-work activity is particularly urgent.

For these reasons, giving an incentive to work less than full time is the quickest and most effective way for society to address the economic problems resulting from the recession in the United States and the rest of the world.

The following is taken from the full proposal.

A third major way to determine employee compensation, in addition to a monthly salary or hourly wages:

The first 20 hours are paid at 1.2 times the normal hourly rate for full-time work.

Work beyond 20 hours in a single week is paid at 0.8 times the normal hourly rate.

Businesses could also choose to use a more complex version, if they had seasonal demand or were based off of projects instead of a constant supply of work. Employees that took time off when they were not needed would accumulate a pool of credits that would increase compensation during the days or weeks that they worked until those credits ran out, allowing a business to more efficiently manage its workforce throughout the year.

Doing this in the United States requires legislative changes to prevent discrimination against employees who take the option to work less as long as they fulfill their responsibilities and to remove overtime pay for workers using this concept. The best protection against exploitation of labor comes from ensuring workers have a wide variety of options available to them if their employer tries to force them into an unwanted work arrangement.

However, the structural unemployment that will result in various regions should also be mentioned. Businesses which sell high-end or luxury products will see lower demand, and if it isn't profitable for them to lower their prices due to continuing demand from the very rich then they will naturally reduce the size of their workforces, leading to unemployment of people in those industries and ripple effects in the local economy. The protests taking place in the United States and other countries may serve as evidence that this structural unemployment in some industries will be justified by the larger number of jobs created in other industries and regions.

But none of this will happen without your help. In a study on ethics, 73% of participants said they would flip a switch to divert a train away from a track where it would kill five people onto another track where it would kill one person, possibly because that person could still reasonably save themselves from the incoming train. However, only 10% of participants said they would cause certain death to one person to save five people on a track from a train, and only 27% said they would do it to save 19 people.[3]

If as a society we decide to support working less as the solution to the global recession, it is completely certain that some people in the short term will be put out of work by the changes in spending patterns that will result. Politicians, and even the economists they depend on for advice, will remain paralyzed in a debate on the proper amount of socialism unless there is sufficient public support for people to be able to work less without discrimination by their employer. Public approval of Congress remains very low and they are widely seen to represent the interests of the rich, but the truth is that until now no one has offered a solution to the economic recession that the entire nation can support.

It isn't important who wrote this. The desire to 'take credit' for an idea or advance in knowledge distorts people's actions and reduces the incentive to support changes that help all of society. It was once difficult to find or store information, or meet basic needs without relying on building up one's reputation in a mainly agricultural society, but the Internet has lowered the cost of information to the point that a conflict between ownership of information and benefit to society is no longer justified and this concept would make it easier for anyone to find a job to support themselves without the need for bias for or against a particular idea based on wanting to appear 'creative' or gathering reputation. If the global recession can be fixed through work conservation, this course of action should be taken without hesitation.

Beat It by Michael Jackson, Chinese version:

Knights of Cydonia by Muse:

[1] Trends in the Distribution of Household Income Between 1979 and 2007. October 2011. Figure 18.
[2] Little Change in Public's Response to 'Capitalism,' 'Socialism'. December 28, 2011.
[3] Principled moral sentiment and the flexibility of moral judgment and decision making. March 2008. Table 1.



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[-] 1 points by JesseHeffran (3903) 8 years ago

You've written a good article, and you may be on to something. There are other nations thinking about lowering the weekly work load. In fact, a good book on the subject is the "End of Work" by Jeremy Rifkin. He argues for a shorter work week for efficiency's sake. Again, It was a pleasure reading your article. Cheers!

[-] 1 points by stevebol (1269) from Milwaukee, WI 8 years ago

I don't know if this 'reverse' overtime would work. 20 hours a week is also too low. Labor unions might not go for it. People that are 'in the know' could work a second job at less than 20 hours and get over on those stuck in one job. Sounds like slackerism. I say raise the minimum wage but not enough to hurt small business. People stuck at low paying jobs will be less stressed out and they can spend, buy insurance they couldn't afford before, etc...

[-] 1 points by Misaki (893) 8 years ago

I think only about 13% of the US workforce is in unions? Higher for government employees though.

This would be aimed, in the short term, more at people with higher salaries who could afford to work less. (See the below example of physicians with median pay of $200~400k/year... which curiously, they think doesn't make them rich.) But at corporations that could afford to pay more, it might lead to higher pay for low-income workers for the same reason that people who are forced to work overtime in an hourly job will accept lower base pay: rent costs the same each month no matter how much you work.

Taking your response in mind though.

Edit: and keep in mind OWS happened because college students can't find good jobs. If people in well-paying jobs work less, there are plenty of people who can take up the slack.

[-] 1 points by stevebol (1269) from Milwaukee, WI 8 years ago

I don't know if unions have separate rules in regards to overtime so it might not matter. It would take looking into. I may be too old school but I think putting minimum wage at the right rate helps everyone. Minimum wage should be at around $12 an hour but shooting for 10 would be more realistic. Many people are stuck at, or near minimum wage so a 30-50 percent increase makes a big difference for them. As far as who's rich in the US, anybody who makes more than you is rich. That's just how we are. I bring up unions because there is serious money made with overtime. You might bring home 44-50 grand working a 40 hour week but with overtime it can get into 70 and above.

[-] 1 points by Misaki (893) 8 years ago

So in other words, you get paid more, and at a higher average rate, when the economy is doing well (and there aren't enough workers).

Wouldn't it make more sense to get paid at a higher rate when the economy isn't doing well but corporate profits are soaring, like they are now..? The whole 'countercyclical' thing that unemployment insurance is also supposed to do.

So using that same average wage cost, it might be 60k in a good year with lots of work over 40 hours/week (if that ever happens again with current employment and future productivity increases), 44-50k in an average year, and 35-40k in a 'bad' year with a recession when the business doesn't get enough orders (but still has high profits).

[-] 1 points by stevebol (1269) from Milwaukee, WI 8 years ago

Not sure what you're getting at. Minimum wage should be carefully determined so as not to hurt big or small businesses too much. I don't see how a good or bad economy plays into it.

[-] 2 points by Misaki (893) 8 years ago

It doesn't really hurt big businesses. Apple had $400k in profit per employee last year; S.&P. 500 companies averaged $420k in revenues per employee.

And only 4% of small businesses see "cost of labor" as their most important issue (historical low is 2%), compared to 19% that see the #1 problem as "poor sales" (historical low is 2%).

[-] -1 points by jgriff (6) from Tampa, FL 8 years ago

You need to break down their costs, not what they deem as their major concern.

Labor is usually the top expense.

[-] 1 points by Misaki (893) 8 years ago

Anyway, back to the topic: you said you brought up unions because "there is serious money made with overtime". Which shows that businesses can afford to pay for overtime; the system just needs to be such that people have a high wage rate without having to work overtime, so that when recessions occur more people are willing to work less so that jobs can be saved.

When businesses don't allow overtime because of "poor sales", then worker income drops but business profits stay high. Which leads to the current pattern of high corporate profits and high unemployment.

[-] 0 points by commonsense11 (195) 8 years ago

My lazy step son would love this philosophy. Anyway to cut it to 2 to 3 hours of work a week?

[-] 1 points by Misaki (893) 8 years ago

My lazy step son would love this philosophy. Anyway to cut it to 2 to 3 hours of work a week?

Unlikely, for most people. Maybe, just maybe doctors could pull it off:

A Medical Group Management Association report based on 2010 data, found the median compensation for radiologists was $471,253 and $192,148 for pediatricians.

Source: NPR

Since physicians generally work 50~60 hours per week, working just three hours per week would only be about $20k per year. It might be possible after paying off medical school debts of ~$200k though.

They would probably want to work at least 10 hours per week if they're making the commute, which would still be ~$100k per year which is very reasonable.

[-] 0 points by gestopomillyy (1695) 8 years ago

sounds like a crock , different spin on the how to increase poverty and blame the indigent for the situation