Leland Teschler, Executive Editor
If so, you might consider moving to Europe. Europeans work fewer hours and also might be better off than their colleagues in the U.S. These are some of the conclusions that can be drawn from recent research by a team comprised of Dartmouth and Harvard University economists.
The difference in working hours goes back a long time. German workers, for example, now spend about 1,400 hours annually on the job. U.S. workers spend over 1,800 hours per year working, and the figures haven't changed much since the 1980s.
Many economists have argued that this difference stems from Europeans being taxed at higher rates than American workers. The theory has been that Europeans figure long hours aren't worth the paltry additional takehome pay.
But surprisingly, the Dartmouth and Harvard authors concluded this isn't really what's going on at all. Instead, they say, it was the growing influence of unions in Europe during the 1970s and 80s that reduced weekly hours worked and boosted vacation time there.
Things weren't always this way. Europeans once labored longer than Americans. Germans, the French, and Italians all spent about 2,100 hours annually at work in 1960 while Americans only averaged 2,000 hours. By 1970 the figures were about the same, 1,950 hours. It was only at this point that trends diverged.
The reason, according to the economists, is that unionized workforces react to improvements in productivity by trying to preserve as many jobs as possible. The result in less-productive industries will be stable employment but fewer working hours.
In contrast, workers within nonunionized labor markets move away from less-productive industries and into more-productive ones to get more opportunities for advancement and higher pay. Meanwhile, workers staying in less-productive jobs must put in more hours to produce as much economic value, and get as much pay, as those who left for more-efficient industries. So rising productivity boosts the total number of hours worked for all parties.
Let's see: Unions preserve jobs in less-productive industries. What situation does that phrase seem to describe?
One that comes to mind is the U.S. auto industry. American automakers are still less productive than Toyota, according to the latest productivity figures from the Harbour Report. The same report notes that the Big Three are all improving, but not as quickly as their Japanese competitor.
It may not be mere coincidence that rising productivity in Detroit seems to coincide with diminishing clout for labor unions there. Contracts proposed by the bankrupt Delphi Corp. include cuts in wages and benefits. GM plans to reduce its headcount and ask its retirees to start paying healthcare premiums. And it's likely other Detroit automakers will ask their retirees to do the same.
So be careful what you wish for if you pull overtime in a unionized industry. Recent developments might suggest an extrapolation of the economists' conclusions about work hours: Unionization of an industry that isn't productive enough may, in the short term, lead to fewer hours worked. In the long term it can lead to no hours worked, as many in the auto industry are starting to discover.