No Rest for the Productive

Greater output per worker is good for business and the economy. Unfortunately, it also means the overworked just have to toil harder

By Lewis Braham

What happened to the technological utopia promised in the 1939 World's Fair? Visions of idle homemakers and endless vacations have dominated American culture since then, as futurists have predicted a world where technology completely eliminates the need to work. But where is Elektro, the 10-foot singing robot who was supposed to do all our housework, and Sparko, the talking dog?

Not to be found in most American households, that's for sure. Quite the opposite of that imagined future has come to be. Today, Americans work more hours than they did 20 years ago. Vacations have dwindled, and "overtime" isn't overtime anymore. It's the norm.

Recently the Bush Administration lobbied to update the Fair Labor Standards Act so that millions of federal workers would no longer be eligible for overtime pay. Emergency medical technicians, paralegals, nurses, reporters, chefs, and dental hygienists would be affected. Under the Bush plan, they would work past five at the same hourly rate or become "salaried employees," who receive a flat annual wage for whatever hours they work.


  So why are Americans working harder than ever? The reason is that while technology has evolved, people haven't. If your employer discovers that a computer can cut the time it takes to do your job in half, is he going to let you work half your current hours for the same pay? No. When times are good, he'll ask you to produce twice as much work, or if times are bad, he'll fire half his employees. CEOs, driven by profit-seeking investors, want to squeeze as much output from each employee as possible.

Greed alone isn't driving management. Even if an employer recognized that technology could make workers' lives easier, lightening the workload could be a corporate death sentence. A competitor down the block or in Asia, Europe, or Latin America could use technology more efficiently and sell the same products more cheaply, possibly putting the company and its "enlightened" CEO out of business. Technology has, in effect, created a productivity arms race. By increasing the speed of production, it exacerbates the output demands employers impose on workers.

The productivity miracle kept the economy afloat during the 1990s, or so goes the mantra among most American economists. From the workers' perspective, however, the fact that technology enabled them to crank out more widgets per hour than they did a decade earlier wasn't exactly a blessing. Pay for the average worker (not top executives) grew just 0.5% annually after inflation during the 1990s, according to the Center for Economic & Policy Research, a Washington think tank. During the same period, the average CEO's salary grew 342%. Meanwhile, average annual hours worked grew from 1,783 to 1,878 -- about 12 additional days of work per year.


  The typical Joe or Josephine have only two ways to benefit from the productivity miracle. One is to have close to full employment in the country. Such was the case during the latter part of the boom -- 1997, 1998, and 1999 -- and workers made significant wage gains during that period. With unemployment at the 3% or 4% range, they had more leverage to pressure employers for better wages, hours, or benefits.

Even though the tech-induced productivity growth was just as strong throughout the decade, workers actually lost wages after adjusting for inflation during the first half of the 90s, when the jobless rate was higher, according to the Economic Policy Institute, another Washington think tank.

Unfortunately, creating jobs is challenging in a country with strong productivity growth. Demand for American goods must equal any productivity gains for additional employment to materialize. Consider: "If productivity growth is 3% and there's no comparative increase in demand, that's 3% less of the labor force you need that year," says Dean Baker, an economist at the Center for Economic & Policy Research.


  That brings me to the second way workers can benefit from productivity gains: Organize into unions and demand that employers share the wealth. In Europe, where labor unions are much stronger than in the U.S., workers have much longer vacations, five to six weeks on average compared to two or three in the U.S.

The average European's annual work hours actually declined in the 1990s to 1,629, compared to 1,878 here. American economists often point to all this "wasted time" as a sign of European inefficiency. But greater efficiency is often better for companies than it is for human beings. By traditional measures, Americans have a higher standard of living than Europeans do. But Europeans have longer life expectancies than Americans and spend more time with their loved ones.

Perhaps it wouldn't be utopia, and maybe the day is still far off when all household tasks are automatically completed by robots. But a return to unions negotiating with management for better pay and better hours would count as progress -- even if some profits have to be sacrificed along the way.

Let Elektro be the superproductive one. Americans need more free time.

Braham writes for BusinessWeek in New York

Edited by Beth Belton

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