Thursday, April 30, 2015


Study Finds Reduction Won't Necessarily Create Jobs 
Special to The New York Times
ITHACA, N. Y. Jan. 4—A reduction in the number of working hours a week in American industry will not necessarily create more jobs, a study recently completed by a former research assistant at Cornell's New York State School of Industrial and Labor Relations has found.
In a bulletin, "The Shorter Work Week," issued by the school, Marcia L. Greenbaum has reported that the 40-hour work week is likely to disappear, but much more gradually than many labor leaders seem to want. 
Miss Greenbaum notes that many of the nation's labor leaders believe that a 35-hour week with the same weekly pay now earned for 40 hours of work and double time for overtime will help to solve the problem of unemployment. However, she has pointed out that to maintain take-home pay will require a 14.3 per cent wage increase. 
In turn, she reported, this will mean an increase in management's labor costs that, in highly competitive industries will require the laying off of workers, increasing productivity and a passing on of costs to consumers. 
Her study, she reports, found that management and Government officials contend that a shorter work week at the same pay would probably mean a drop in living standards. 
"The 14.3 per cent wage increase is almost five times more than the normal annual productivity increase of 3 per cent," Miss Greenbaum said. "Productivity would have to increase as much as wages increase to prevent inflation." 
She added that, as a result, "real wages would be less since rising prices would mean higher living costs." The shorter work week would also lead, Miss Greenbaum reported, to a probable increase in moonlighting and an increase in the labor force of secondary workers such as housewives and retired workers. 
"There are other ways of decreasing hours of work, such as longer weekends, longer vacations and' earlier retirement ages," Miss Greenbaum reported. She also suggested sabbatical leaves for older employes.
The above article appeared on page 94 of the January 4, 1964 New York Times. Here is how the "former research assistant" Marcia Greenbaum summarized her chapter on the economic implications of the shorter work week:
If this chapter has painted a gloomy picture of the economic implications of the shorter workweek, it is simply reflecting the nearly unanimous opinion of economists outside of the labor movement. Every other labor proposal for coping with unemployment -- such as the AFL-CIO's recommendations concerning tax cuts, public works, aid to depressed areas, and retraining the unemployed-receives support from at least some economists and public officials. In their plea for shorter hours, however, union leaders stand alone, attacked even by the leading officials of a friendly Administration. 
Labor's arguments are simple and straightforward. If the government can not solve the severe unemployment problem, then unions must devise some method of inducing individual employers to hire more workers. If an employer can work each employee only 35 instead of 40 hours a week, then it is believed that he will hire more employees to make up the lost production. At the same time, labor claims, purchasing power can be maintained, or even increased, by requiring that weekly pay be kept at the 40-hour level. 
The objections to the shorter workweek, we have seen, center almost entirely on its cost impact. If hours are reduced in one large jump, labor's insistence upon maintaining weekly take-home pay means that the employer is faced with a huge hourly wage increase and perhaps some other costs as well. In that event, it is assumed that the employer will attempt to offset these increased costs by raising prices or taking other action that will most likely result in no net employment increase and might even cause a loss of more jobs. On the other hand, if labor asks only that shorter hours be introduced gradually, in step with productivity increases, then again the employer has no incentive to hire any additional workers, for nothing has happened either to his costs or to his demand. 
As labor leaders point out, the majority of economists have often been wrong before and perhaps they are wrong again on this issue. Until experience proves otherwise, however, prevailing opinion is that the shorter workweek is not the answer to the very real problem of unemployment which has plagued our economy in recent years.
The April, 1966, Labor Law Journal carried an article by Howard G. Foster, "a Teaching Assistant at the New York State School of Industrial and Labor Relations" that quoted the first paragraph of the above passage from Greenbaum's bulletin. Rather than simply citing what "management and Government officials contend" and the "nearly unanimous opinion of economists," Foster did the math. There was no report on Foster's findings in the New York Times. Not even on page 94.


Thornton Hall said...

It seems like a lot of work in these arguments is done by the "highly competitive environment."

What percentage of humans likes such things? Not me. Like normal people, my well being depends on working with people, not against them.

Wouldn't it be great if there were an institution that could save businesses from themselves?

Of course, there is such a thing. It used to go by the name of "industrial policy". McDonalds can't compete if it pays $15/hour? Well then, make everyone do it. Shorten the workweek and jobs go overseas? Not if our trade agreements are written by humane lawyers.

Sandwichman said...

The real "competition" is between wage share and profit share. Management doesn't want to make that point explicit.

Bill H aka run75441 said...


"this will mean an increase in management's labor costs that, in highly competitive industries will require the laying off of workers, increasing productivity and a passing on of costs to consumers."

Sigh, even though this is the sixties mentality, it is still a false premise. Labor is not 100% of the cost of manufacturing. It a percentage far less than Overhead and materials.

For Papa Johns to offer healthcare insurance would have cost 10 cents more a medium size pie. What a loss!

I am with you and the logic pronounce is logic defying.

blissex said...

«Like normal people, my well being depends on working with people, not against them.»

That's pious and simplistic because:

* "working with" and "against" can happen at the same time. A businessman both "works with" and "against" her customers and suppliers, as Adam Smith with his example about the butcher pointed out. Consider also a woman and her provider husband.

* The boundaries between "working with" and "against" also depends on group boundaries, because human beings have discovered that "working with" as a group confers significant advantages when working "against" someone. Human beings compete in groups, whether they be the Chamber of Commerce and the Republican party or the trade unions and the democrat wing of the Democratic party.

blissex said...

«The real "competition" is between wage share and profit share»

The distribution of "value added" among various claimants.

Which brings me to a different take as to your often tiresome arguments against the "lump of labor" fallacy.

As I have rather conclusively proven in previous comments it is well true that there is no such thing as a "lump of labor" and that full employment can be always achieved if workers are willing to be paid nothing or to pay employers for letting them work. The market will always find jobs for those who are willing to pay to work :-).

But I have come to the conclusion that your arguments are as hypocritical as those of the conservatives because you attack the notion of a "lump of labor" fallacy, when you know full well that the expression to use is "lump of income", as demonstrated by your writing "The real "competition" is between wage share and profit share".

The "lump of income" (GNI) aka value added is in the short and medium run pretty much a lump. It is the amount of *work* that is never a lump. Pointless work can always be found for those willing to do it for free or pay for doing it: and governments know that very well, thus encouraging 40-50% of people to spend several years pursuing a degree by borrowing a lot of money to pay for doing that work.

Sandwichman said...

"I have come to the conclusion that your arguments are as hypocritical"

Well, then, please stop reading.