Three-day Workweeks and Four-day Weekends

David Gelles interviewed Richard and Holly Branson for The New York Times Saturday

David Gelles (NYT): What do you think those in positions of power should do to address social problems like income inequality? 

Richard Branson: A basic income should be introduced in Europe and in America. It’s great to see countries like Finland experimenting with it in certain cities. It’s a disgrace to see people sleeping on the streets with this material wealth all around them. And I think with artificial intelligence coming along, there needs to be a basic income. 

David: Because of job displacement? 

Richard: I think A.I. will result in there being less hours in the day that people are going to need to work. You know, three-day workweeks and four-day weekends. Then we’re going to need companies trying to entertain people during those four days, and help people make sure that they’re paid a decent amount of money for much shorter work time. 

David: That’s a pretty rosy vision of what business can do. Is it really so simple? 

Holly Branson: If all businesses start doing the right thing for their communities and the world as a whole, all of the world’s problems could be solved.

Meanwhile, In The 'Not Too Distant Future'...

In the early days of the 1956 presidential campaign, U.S. Vice President Richard Nixon envisioned the achievement of a four-day, 32-hour workweek in the "not too distant future." Sixty years later, the average workweek in the U.S. for full-time workers was 42.5 hours. Seventy percent of all employed persons worked 40 hours a week or more.

Nixon was not the only seer to misjudge the future of working time. In the 1930s, John Maynard Keynes had famously speculated about a 15-hour workweek as an economic possibility for "our grandchildren." Towards the end of World War II, he offered a more modest, but more imminent opinion that a 35-hour workweek would be appropriate for the post-war U.S. economy.

In 1954, Fortune editor Daniel Seligman predicted a 32-hour workweek by 1980 – or sooner if workers chose to take a greater portion of their share of productivity gains in leisure rather than income. The First National City Bank of New York calculated in 1957 that it would take 31 years to achieve a 32-hour workweek, assuming the same mix of income and leisure as had prevailed from 1909 to 1941. Alternatively, a four-day workweek could be attained in eight years if productivity gains were applied exclusively to work time reduction. Four years later, economist Clyde Dankert suggested 1980 as the date by which "the thirty-hour workweek should be widely established and some progress made toward the twenty-five-hour week."

As it turned out, from 1954 to 1989, annual productivity gains averaged 2.1 percent a year. Assuming 40 percent of actual historical productivity gains, ten paid holidays, and four weeks annual vacation, a 32-hour workweek should have been realized by around 1990 – leaving aside the likelihood that progressive reductions of the hours of work could have accelerated productivity gains. Edward Denison estimated in the early 1960s that approximately ten percent of the productivity gains in the first half of the twentieth century could be attributed directly to the reduction of hours. So, adding in a ten percent productivity boost from work time reduction itself, a 32-hour workweek could have been achieved by 1984.

Why those reductions didn't materialize is a riddle that perhaps will never be completely solved. One element that must have contributed to that outcome, though, is the peculiarly ambivalent attitude of economists toward work time reduction. On the one hand, as the plethora of predictions suggests, economists were confident that reductions would occur virtually automatically. Many affirmed it would be a good thing, too. On the other hand, economists almost unanimously expressed misgivings or outright hostility to policy initiatives that would mandate shorter hours – whether through legislation or collective bargaining. Suspicion of shorter work time policy enjoyed a rare and unholy consensus among both interventionist liberals and laissez-faire conservatives.

Two significant facts are concealed by the economists' curious unanimity. First, that shorter working time is an unequivocally good thing for workers and second, that most employers tend to resist work time reductions like the plague, making the spontaneous reduction of working time highly unlikely and the imposition of shorter working time by policy an imperative for achieving reductions. These are not the opinions of radicals or crackpots but the conclusions of theory and empirical research conducted by economists of the first rank. 

In 1902, the report of the U.S. Industrial Commission concluded that "reduction of hours is the most substantial and permanent gain which labor can secure." It went on to explain that a wage increase "can readily be offset by secret agreements and evasions… but a reduction of hours is an open and visible gain and there can be no secret evasion." The report also observed that "strenuous objections and alarming predictions" have been the inevitable reactions to demands for shorter hours "but after a very brief period of trial these objections have disappeared." 

Thirty years later, John Hicks reiterated that historical experience offered "no ground for supposing that the reduction takes place at all easily." The reduction from the long hours worked during the industrial revolution had been achieved "mainly by State regulation and Trade Union Action" over the objections of employers, to most of whom it was inconceivable "that hours could be shortened and output maintained." 

By the 1930s, the case for shorter hours had been vindicated – at least among leading economists. Sydney Chapman's 1909 theory of the hours of labour was acknowledged as canonical by leading economists. It was no long necessary, assured Lionel Robbins in 1929, "to combat the naïve assumption that the connection between hours and output is one of direct variation, that it is necessarily true that a lengthening of the working day increases output and a curtailment diminishes it."

Up until 1957, labor economics textbooks concurred with Hicks's view that reductions in hours were gained by trade union pressure, either directly through collective bargaining or by legislation promoted by organized labor, as Stanford economist John Pencavel recently observed. Following publication in 1957 of an article by H. Gregg Lewis, "Hours of Work and Hours of Leisure," however, there was a "radical change in economists' thinking about working hours." Subsequent textbooks echoed Lewis's empirically-unsubstantiated hypothesis that workers freely choose their hours, based on their individual preferences for income or leisure.

On the final evening of the 1960 U.S. election, Nixon, then the Republican candidate for President was asked what his stand was on the 32-hour workweek. "Well," he replied, "the 32-hour workweek just isn't a possibility at the present time." Nixon continued:

I made a speech back in the 1956 campaign when I indicated that as we went into the period of automation, that it was inevitable that the workweek was going to be reduced, that we could look forward to the time in America when we might have a 4-day week, but we can't have it now. We can't have it now for the reason that we find, that as far as automation is concerned, both because of the practices of business and labor, we do not have the efficiency yet developed to the point that reducing the workweek would not result in a reduction of production

.There is a faint echo of 1930 Keynes in 1960 Nixon's "we can't have in now" deferral. A few paragraphs after making his prediction of a future 15-hour work week, the renowned economist cautioned:

But beware! The time for all this is not yet. For at least another hundred years we must pretend to ourselves and to everyone that fair is foul and foul is fair; for foul is useful and fair is not. Avarice and usury and precaution must be our gods for a little longer still. For only they can lead us out of the tunnel of economic necessity into daylight.

Nearly ninety years later, must we still pretend that "fair is foul and foul is fair"? Are avarice and usury truly leading us "out of the tunnel… into daylight" or are they dragging us ever deeper into an abyss of debt, inequality and degradation?