Work Less, Do More

may basketAnybody else remember May Day baskets? You made a little basket, put dandelions  or candy in it, left it at the door of the girl next door’s house, rang the doorbell and ran away. If she heard, she was obligated to chase you and give you a kiss if she caught you. (That never happened.)

Hey c’mon… winters were long in Minnesota….

On May Day 1926, Henry Ford gave his factory floor workers the ultimate May Day basket: the 40-hour work week, all the way down from 60 hours. Ford’s office workers got their reduced work week three months later.

Ford was progressive, and then some. Twelve years earlier, he’d given them another surprise:  a raise from $2.34 per day all the way up to $5.00.[1] You had to love the man, and they did. Little wonder that productivity skyrocketed. Ford’s employees were working lees, doing more, and now they could also afford to buy his cars — although only with prior approval from Ford’s Sociological Dept, which looked after workers’ personal, home, family, and financial health.

model a

We’ve been living with Ford’s 40-hour work week for 93 years now. Some people think maybe it’s time for an upgrade — they suggest a four-day work week.

“This position is backed up by Academic research. Multiple studies support the view that a shorter working week would make people happier and more productive, while OECD figures show that countries with a culture of long working hours often score poorly for productivity and GDP per hour worked.

“Meanwhile, one company in New Zealand that trialed a four-day working week last year confirmed it would adopt the measure on a permanent basis.[2]

“Academics who studied the trial reported lower stress levels, higher levels of job satisfaction and an improved sense of work-life balance. Critically, they also say workers were 20% more productive.

“Three-day weekend, anyone?”

From this article about a presentation on the four-day work week at the recent World Economic Forum conclave in Davos, Switzerland.

Another WEF article indicates that research reveals an inverse relationship between hours worked (units of input) and productivity (units of output). The extra day off per week raises employee morale, improves health and wellbeing, and yes, raises productivity. And although some jobs really need to be staffed more days per week. that’s readily addressed through job-sharing.

It seems intuitive, doesn’t it, that happier, better rested workers will do more, and probably do it better, in less time? Not everyone is so easily convinced — here’s a sample of articles that do their journalistic best to present both upsides and downsides, while barely concealing an overall thumbs up: Wired, Huffington Post, Stuff.

From what I can tell from a review of those articles and several others like them, the dividing line between pro and con seems to be how comfortable corporate managers and politicos are with the word “progressive.” The New Zealand Guardian Trust Company is the one that took the four-day plunge, and these days New Zealand is floating on a progressive tide — see these articles: Business Insider, Business Insider, The Independent.:

Next time, we’ll start looking at some other common advice about how to improve the workplace, such as finding your true calling/vocation, getting a sense of meaning and purpose in your work, following your dreams, doing what you love, etc. Good advice? Bad advice? We’ll look into it.

[1] That was for the male workers; the females got the same raise two years later.

[2] These are the researchers who conducted the New Zealand pilot.

The Rentier Economy: A Primer (Part 2)

My plan for this week’s post was to present further data about the extent of the rentier economy and then provide a digest of articles for further reading.

Turns out that wasn’t so easy. The data is there, but it’s mostly buried in categories like corporate capitalization, profits, and market concentration. Extracting it into blog post sized nuggets wasn’t going to be that easy.

Further, the data was generally only footnoted in a maelstrom of worldwide commentary. Economists and journalists treated it as a given, barely worthy of note, and were much more interested in revealing, analyzing, and debating what it means. The resulting discourse spans the globe — north to south, east to west, and all around the middle — and there is widespread agreement on the basics:

  • Economic thinking has traditionally focused on income from profits generated from the sale of goods and services produced by human labor. In this model, as profits rise, so do wages.
  • Beginning in the 1980’s, globalization began moving production to cheap labor offshore.
  • Since the turn of the millennium, artificial intelligence and robotics have eliminated jobs in the developed world at a pace slowed only by the comparative costs of technology vs. human labor.
  • As a result, lower per unit costs of production have generated soaring profits while wages have stagnated in the developed world. I.e., the link between higher profits and higher wages no longer holds.

Let’s pause for a moment, because that point is huge. Erik Brynjolfsson, director of the MIT Center for Digital Business, and Andrew McAfee, principal research scientist at MIT, wrote about it in their widely cited book The Second Machine Age: Work, Progress, and Prosperity in a Time of Brilliant Technologies (2014). The following is from a chapter-by-chapter digest  written by an all-star cast of economists:

Perhaps the most damning piece of evidence, according to Brynjolfsson, is a chart that only an economist could love. In economics, productivity—the amount of economic value created for a given unit of input, such as an hour of labor—is a crucial indicator of growth and wealth creation. It is a measure of progress.

On the chart Brynjolfsson likes to show, separate lines represent productivity and total employment in the United States. For years after World War II, the two lines closely tracked each other, with increases in jobs corresponding to increases in productivity. The pattern is clear: as businesses generated more value from their workers, the country as a whole became richer, which fueled more economic activity and created even more jobs. Then, beginning in 2000, the lines diverge; productivity continues to rise robustly, but employment suddenly wilts. By 2011, a significant gap appears between the two lines, showing economic growth with no parallel increase in job creation. Brynjolfsson and McAfee call it the “great decoupling.” And Brynjolfsson says he is confident that technology is behind both the healthy growth in productivity and the weak growth in jobs.

Okay, point made. Let’s move on to the rest of the rentier story:

  • These trends have been going on the past four decades, but increased in velocity since the 2007-2009 Recession. The result has been a shift to a new kind of job market characterized by part-time, on-demand, contractual freelance positions that pay less and don’t offer fringe benefits. Those who still hold conventional jobs with salaries and benefits are a dying breed, and probably don’t even realize it.
  • As non-wage earner production has soared, so have profits, resulting in a surplus of corporate cash. Low labor costs and technology have created a boom in corporate investment in patents and other rentable IT assets.
  • Rent-seeking behavior has been increasingly supported by government policy — such as the “regressive regulation” and other “legalized monopoly” dynamics we’ve been looking at in the past few weeks.
  • The combination of long-term wage stagnation and spiraling rentier profits has driven economic inequality to levels rivaled only by pre-revolutionary France, the Gilded Age of the Robber Barons, and the Roaring 20’s.
  • Further, because the rentier economy depends on government policy, it is particularly susceptible to plutocracies, oligarchies, “crony-capitalism,” and other forms of corruption, leading to public mistrust in big business, government, and the social/economic elite.
  • These developments have put globalization on the defensive, resulting in reactionary politics such as populism, nationalism, authoritarianism, and trade protectionism.

As you see, my attempt to put some numbers to the terms “rent” and “rentier” led me straight into some neighborhoods I’ve been trying to stay out of in this series. Finding myself there reminded me of my first encounter with the rentier economy nine years ago, when of course I had no idea that’s what I’d run into. I was at a conference of entrepreneurs, writers, consultants, life coaches, and other optimistic types. We started by introducing ourselves from the microphone at the front of the room. Success story followed success story, then one guy blew up the room by telling how back in the earliest days of the internet, he and Starbucks’ Howard Schultz spent $250K buying up domain names for the biggest corporations and brand names. Last year, he said, he made $76 Million from selling or renting them back.

He was a rentier, and I was in the wrong room. When it was my turn at the mic, I opened my mouth and nothing came out. Welcome to the real world, my idealistic friend.

As it turns out, following the rentier pathway eventually leads us all the way through the opinionated commentary and current headlines to a much bigger worldwide issue. We’ll go there next time.