There is an old idea being promoted as a new idea. The old idea is that if people would work less, there would be more wealth since more people would have jobs. You see, if instead of having three people work 40-hour weeks, for 120 hours of work, you could have four people work the same 120 hours with 30-hour weeks. Sounds like a great way to create jobs, doesn’t it? The new twist is that by working less, we could reduce emissions of carbon dioxide, and thereby slow or stop global warming.
Now, the hypothesis of man-made global warming, or climate change, has its issues despite claims of “absolute truth” being floated during the last ten to fifteen years. Indeed, the earth has been much warmer in the past, long before significant amounts of carbon dioxide were produced. Also, while it is true that carbon dioxide levels are much higher than the have been in the past, the correlation between CO2 levels and temperature is non-existent when looking at the long-term trends. Indeed, another inconvenient truth is that the recent rise in temperature has essentially stopped since 1998 despite increases in CO2 levels of about 10% during that period.
Let ignore all of that, however, and just look at what would happen if people work less from an economic standpoint. It certainly sounds nice to have 30-hour work weeks. Maybe work three sixes and a four. Maybe just work three tens and be done with the week with five days to relax and play. Longer, European-style vacations are also advised. Who wouldn’t want three months off a year? We could all work like teachers, except without the long hours during the school year.
The trouble is that the amount of wealth in an economy is proportional to the amount of goods, services, and materials being produced. Actually it is the amounts being produced minus the amounts being consumed. If people are working about 30% less, there will be 30% less wealth being produced. Even if employers continued to pay the same amount of money to each employee, the price of goods would increase since dollars would be less valuable than the goods available.
Furthermore, the goods that were made, assuming the goods that were the most needed were produced, would be things like food, shelter, and clothing. There would be no reason to make cell phones and iPods and iPads because people would not have the ability to afford them. Forget being a painter or a musician – people wouldn’t have money for art or music. The basic goods would cost so much that no ne would have any money left over to pay for luxuries, so the luxuries would be that much more expensive and rare. In addition, food and clothing are wasting assets, meaning that they are consumed and then gone after a relatively short period of time. This means that the wealth in the world would stagnate or even decline with time.
Another factor would be the cost of energy. As efforts to reduce carbon dioxide emissions increase, power is being produced in more expensive ways. Things like solar panels and wind turbines. Because power is more expensive, a much greater percentage of a person’s wages would be going to pay for energy. Heat and air conditioning would also be a lot more expensive, if air condition could be had at all with the limited amount of electricity that would be produced. Think of paying $500-$1000 per month to light, heat, and cool your home. At some point, something would need to give.
So how is it that people in Europe are able to have short weeks and long vacations? Indeed, every week that contains a feast for a saint requires the whole of Italy to take the whole week off. The reason is that because people in other countries (the US and China, for example) are working more hours, some people are able to work less and yet still have access to less expensive goods than they would have if everyone had been working less. They will not be able to buy as many goods as those who work more, and therefore have more to trade are able to buy, but the average price they pay will be less than it would have been if goods were more scarce. This means they can afford more with their reduced income.
So, before you cheer the idea of short work weeks and long vacations, realize that the more people who are working productively, the more wealth that is being created. The more wealth that is created, the better off everyone is and the more people who have access to both necessities and luxury items. To see this, simply look at the boom years during the late 1990’s when welfare recipients were forced to enter the workforce and the bust years since 2008 since people have been on unemployment for an extended period of time and many have given up looking. We have lost those workers and the goods that they would have produced, and the country is poorer for it.
Certainly one shouldn’t devote one’s whole life to work, and with saving and investing you won’t need to, but trying to artificially get more with less work universally simply by having everyone work fewer hours is not a good plan.
Do you find yourself working a lot of hours, working about a 40 hour week, or working less?
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