Sunday, February 22, 2004

Welcome to the 60 hour work week

Title: Overtime overhaul worries workers
Source: The News and Observer
Date: February 21, 2004

From the article:
    New "white-collar exemptions" could shift nurses, cooks, architects, paralegals, dental hygienists, secretaries and millions of other workers who are now paid time-and-a-half after 40 hours into the group of workers who can't get overtime pay, labor organizations warn.
These white-collar exemptions are scheduled to go into effect in March, 2004.

This is part of a growing trend. The article 40-hour week eludes millions of workers discusses the problem. From the article:
    For many if not most professionals today, Balak said, working in excess of 40 hours a week "is expected. You don't have an option."
Once these new overtime rules go into effect for white collar workers, the next phase will be to extend it down to everyone else. No one in the U.S. will get overtime pay. As that occurs, here's what will likely happen:
  • Imagine a worker working in a retail store earning $7 per hour, 35 hours a week, or roughly $250 per week.
  • Overtime pay is eliminated.
  • The store now requires employees to work 50 hours a week. "If you don't, we fire you."
  • 50 hours a week has one benefit -- the employee now earns $350 per week.
  • Since the employee is earning more, the employer now cuts pay to $5.50 per hour. "If you don't like $5.50/hour, we fire you."
  • 50 hours a week becomes the new "norm" in the industry.
  • Then it rises to 60 hours per week.
  • Then pay falls again.
Meanwhile, the people at the top take the money saved in wages and give a good portion of it to themselves. The concentration of wealth accelerates.

I came across a fascinating article entitled, Economic Possibilities of Our Grandparents: A Retrospective on Keynes's 'Economic Possibilities for Our Grandchildren'". Keynes published his paper in 1930. In it Keynes predicted what would happen economically in the future. According to the article:
  • [Keynes] correctly observed that economic productivity had already lifted the average person in Europe and the United States well above subsistence.
  • [Keynes] correctly predicted that average living standards would rise by another four- to eightfold in the next hundred years.
  • Therefore [according to Keynes], we should soon free ourselves from the struggle for subsistence, transforming the central problem of humanity from the struggle for survival into the challenge to find meaningfully use for our abundant leisure time. The little work that needed to be done would be spread out among the population in portions of perhaps 15 hours per week.
Keynes -- a world renowned economist -- got his prediction completely wrong because he did not forsee the concentratation of wealth.

Keynes assumed that wealth would be spread somewhat equally through the population -- Everyone would participate in the benefits of technological innovation and productivity increases. Instead, wealth is concentrating dramatically, and we are headed toward a 60-hour work week instead of a 15-hour work week.

Some might argue that the 60-hour-per-week situation we find ourselves in today has nothing to do with the concentration of wealth. Instead, they would argue, people could live on 15 hours per week of labor if they were willing to live a 1930s lifestyle. The rebuttal to that involves this simple question: Could anyone in America live a "normal" life on 15 hours per week of labor today? To test that question, imagine the following.

Assume an engineer with a spouse and 2 children earning $25 per hour. Imagine this person trying to survive on 15 hours per week of labor. At 15 hours per week the person earns $1,400 per month or so (and will get no benefits). Taxes will eat a portion of that. In Raleigh, where I live, A small 3-bedroom apartment costs $800 per month at least. Food for four -- even on a Thoreau-esque diet of rice and beans -- is $200-$300 per month. Clothing for the children, even if purchased from the Salvation Army... but we are already about out of money. We are not allowing this "typical American family" the "luxury" of any electricity, any heat in the winter (never mind A/C), any running water or hot water, any telephone service, any transportation (and certainly no car), any furniture/linens/utensils/pots, any cleaning supplies, any entertainment of any sort, any luxury items of any sort, any medical treatment of any sort, any vacation of any sort, etc., etc.... and yet the engineer is already out of money. And if you can find a $25 per hour engineering job that would allow the worker to come in only 15 hours/week, it would be surprising. And if the job exists, it is quite likely about to go offshore.

Never mind attempting to do this on a far-more-common $10/hour job -- that would be completely impossible, even with both spouses working.

John Maynard Keynes was not a lightweight, nor a fool -- he remains one of the best known economists in the world today. He was not assuming that people would be working 15 hours/week and living in abject poverty. He assumed that they would be working 15 hours/week and would be living a better lifestyle than in the 1930s because of technological progress.

In the words of Wilderquist:
    For the last 30 years the benefits of economic growth have been concentrated heavily on the people in the top 10 to 20 percent of the income distribution. The mistake in Keynes’s prediction stems from the belief that more capital and technology inherently increases wages. It might increase wages, but recently the benefits of growth have been concentrated on the owners of capital and on the upper end of the increasingly hardworking professional class. There is no level of national wealth, no matter how high, that necessitates some of that wealth trickling down to the common wageworker. This fact can be shown by the commonly cited thought experiment: what would happen to wages if capital became so productive that it could produce all goods with no aid from labor? Wages would become zero, and laborers would have no other means of survival but the charity of capital owners. When we read “Economic Possibilities for Our Grandchildren” today, we cannot dismiss Keynes’s vision as far off or fanciful, but neither can we simply wait for the inevitable to arrive. The possibilities are there for us now; they may have been there for our grandparents when average living standards were already substantially above subsistence. But society will have to make a conscious effort to free workers from the struggle for survival, if they are ever going to be able to take advantage of the possibilities our economic growth has already made real.
At some point, in other words, "We, the People" need to decide that enough is enough. We need to halt the run-away concentration of wealth, so that everyone can benefit from the fruits of progress and technology.

1 Comments:

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