Americans Already Work Plenty Hard, Jeb
Jeb Bush caused a stir the other day when he admonished Americans to work more:
We have to be a lot more productive … It means that people need to work longer hours and, through their productivity, gain more income for their families.
The Republican presidential candidate's remark was immediately attacked for its insensitivity. Who is this rich, elite guy to tell us we should spend more of our time slaving away? Why should elites make our personal economic choices for us?
That reaction is also close to what the typical economist would say. In standard economic theory, labor hours are a choice that people make, balancing their desire for consumption with their desire for leisure. If the government distorts the labor market by encouraging less leisure and more work, it better have a darned good reason. People make choices that are best for them, and government shouldn't override those choices without clear evidence. So the outrage over Bush's remarks expresses the intuitive idea that people do what they do for a reason.
But there's another problem with Bush's idea. It demonstrates ignorance of economic facts and recent history.
First of all, we've been taking Bush's advice for years. The mass entry of women into the workforce in the 1980s and 1990s dramatically increased the total number of hours that the average working-age American spends toiling in the formal marketplace (as opposed to the home). In the 2000s, working hours per working-age person fell, due mostly to a decrease in the percentage of the working-age population with jobs. There was a small decrease in annual working hours per employed person, but it wasn't that big.
When we compare across countries, we find that the U.S. is very hardworking. In 2013, it ranked 12th among countries for which data was available in terms of the number of hours worked by the average employed person. Unsurprisingly, most of the top countries were middle-income economies such as Mexico, Hungary and Poland. Among rich countries, only South Korea and Ireland -- both of which became rich rather recently -- came out ahead of the U.S.
As a country gets richer, two opposite forces influence how much people work. First, an hour of work is worth more, which gives people an incentive to work more. This is called a "substitution effect" in economics. But as incomes rise, workers need less to buy the basic necessities of life, which gives them an incentive to work less. This is called an "income effect."
This is in stark contrast to the predictions of many early-20th-century economists, including John Maynard Keynes, that affluence would produce a society of leisure. In the U.S., these effects have canceled each other out to a remarkable degree. Some economists call this the "paradox of hard work."
So we already do work pretty hard in this country. Bush is calling for a solution to a problem that doesn't really exist.
Bush's suggestion might even be counterproductive. In the end, what we really care about -- what really increases the standard of living -- is productivity. Labor productivity is the average amount of value that workers create for every hour they work. There are reasons why working long hours decreases labor productivity.
First, people get tired, and tired people get less done. Second, having less time to rest and regenerate makes you tired the next day, as well. That's why working too many hours will drag down your productivity even in your most productive hours. Third, there is simply a limited number of tasks to do in any business -- you usually do the most important things in a day first, and each subsequent hour tends to be spent on less crucial tasks.
Research by economist John Pencavel of Stanford University shows that output at work tends to rise as the day goes on, with the fourth and fifth hours being the most productive, but that after that productivity begins to fall. After eight hours, productivity drops pretty dramatically.
Working more than about 63 hours a week tends to decrease the total amount you get done in a week. In other words, if you work too hard, you destroy value instead of creating it. Of course, most Americans aren't near that limit, but it goes to show that we should recognize human limitations when evaluating how much people should work.
So there are many reasons we should not listen to Jeb Bush's idea. Work ethic is fine and good, but there's a point of diminishing returns. And Americans, who work more than people in other rich countries, don't really need to push themselves closer to that point.
This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.
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