Do We Need to Work 40 Hours a Week?

there are a lot of things that we take for granted in our day-to-day lives one of the big ones is how we spend a good portion of our waking hours based on sophisticated youtube analytics we can determine that a majority of people watching this video are full-time employees working 40-hour weeks at their job like maybe you are supposed to be right now even for those of you who are students or business owners freelancers or part-timers there is no doubt that you in some way work around or are influenced by the 40 hour work week people arrive at work at 9 00 am go home at 5 pm monday to friday and this is pretty much the standard arrangement amongst a vast array of professions in an equally vast array of countries and companies but why what is going on here industry technology and culture have all drastically changed since this arbitrary figure was introduced yet it has stood the test of time and this isn't a video lamenting the need to actually work or commit some time to being a productive member of society but rather it's about what is the best possible arrangement for workers businesses and by extension the entire economy so is 40 hours really the optimal work week how is this figured out and are there alternatives that are based more in economics rather than tradition this episode of economics explained was made possible by acorns the app that simplifies all your money management needs saving investing retirement and checking all in one not to mention they help you earn money as you shop as well as provide you with financial wellness tips on the acorns grow your knowledge library to help yourself get started with automated saving and investing while also supporting our sponsor that helps make economics explain videos possible stay tuned until the end to learn more or sign up now and claim your five dollar bonus by going to acorns.com economics dash explained the link is on the screen now and in the video description below now of course the 40-hour workweek has not been around forever so before we start to explore alternatives it's important to understand how we got here our working lives are mostly determined by the value that we add the concept of having a set job with a contract and a set of expectations is a surprisingly modern concept of course it all ultimately started from the need to literally put food on the table in the days of hunter-gatherers and eventually developed into farming for most societies that have existed from the egyptians to renaissance era europe people were primarily farmers the working hours on a farm are very fluid there are days and even entire seasons where pretty much nothing needs to be done and then of course there are times of massive activity around harvesting and planting we actually explore this briefly in our video on the economy of ancient egypt which looked at how farming work schedules helped to build the pyramids but the takeaway from this is that a 40-hour workweek would just not function in this type of environment and that's not to say that farmers need to put in more hours although they definitely do but it's more so that clocking in at 9am and then clocking out at 5pm just wasn't going to work when animals need to be fed at 5am and rounding up cattle can take weeks at a time the other key point is that there is a pretty serious point of diminishing returns on farming man-hours so long as a farmer gets done what needs to be done they aren't going to get much more output from putting in any extra hours you can't harvest more wheat than what is growing in your field and even a 100 hour work week is not going to make a cow grow any faster this all started to change of course during the industrial revolution all of a sudden workers were moving into industrial settings on mass and into roles where they got out what they put in someone in a glass blowing factory could produce more jars in 12 hours than they could in six hours and a coal miner could dig more coal if they work six days a week rather than five days so the pressure was getting more people to work for more hours to make more output industry at this time was still very labor intensive the ultimate limitation on output was actually how many hours they could get people to work this continued on for some time but slowly and steadily technology did improve all the while there was tension between the factory owners that controlled the land and capital and the workers that controlled the labor in the factors of production if any of these factors went missing production would stop so things like labor strikes were kind of bad for everyone but they were essential in pushing the agenda of workers with limited individual negotiating power one of the big things that they were negotiating was working hours working 14-hour days was great for output but less great for workers sanity and safety especially when you consider that they were working pretty much around the clock and in amongst steam-powered cast-iron meat grinders by the late 1800s u.s congress and individual states were starting to pass laws that mandated a maximum eight-hour workday which sounded great but of course factory owners lobbied hard against this they argued that if something took 12 hours of constant work to manufacture then it would no longer be possible to make in the us and they would be forced to take their business overseas sound familiar this led to most of these laws being filled with so many allowances and loopholes it was pretty much business as usual this actually didn't really make much progress for the next few decades and it was only turned around by the decision of an unlikely champion of the working man henry ford rolled out the eight hour working day across all of his factories in 1914 much to the shock of his competition his workers and the government this also came along with a sweeping pay rise to five dollars per day which at the time was pretty significant the idea behind this was that if workers had more money in their pockets and more hours in their day they would have more ability to go out and consume up until this point economics was primarily determined by how much could be produced the bottleneck of a society was its industrial potential but with the rise of heavy industry and production lines this had shifted to consumption making all of the ford model ts in the world was useless if nobody would buy them the new hours also had some much more tangible benefits for the company it made them the place to work think of it in the modern world working at google or goldman sachs is anecdotally seen as professional nirvana in the 1920s that was ford they were on the cutting edge and they treated and paid their employees well this meant that they could attract the most experienced technicians which in the age of production lines was starting to become more and more important the profits of the company soon jumped from around 30 million a year to 60 million dollars a year this was of course due to a variety of factors but the big one was their new pool of experienced and motivated workers now so far it all looks like working hours have adapted to the needs of the day farm workers worked around farm duties early industrialists worked around early industry and modern industrialists just worked around modern industry but office workers have kind of just followed suit so how is it decided that this is how we work the 40-hour workweek has a simple elegance to it it divides working days neatly into three with eight hours to work eight hours of recreation and eight hours to sleep and it still has two days off a week for people to go out and be good little consumers outside of this the 40-hour workweek has kind of mandated the 40-hour work week if a company is engaged in any type of business-to-business relationship it is going to need to be able to accommodate deliveries or sales orders at the time that they are processed which will be between nine and five but it is easy to tell that this isn't always the best arrangement but those of you who work in a normal office environment think on how much of the day is actually spent on task the figures vary wildly studied to study and industry to industry but most research notes that modern office workers only spend about 45 of their working hours on their primary task the rest is made up of things like lunch and coffee breaks meetings distractions and the infamous task of trying to look busy obviously some of these ancillary duties are important but in many ways office workers are a lot more like farm workers no matter how many hours an accountant puts in at the office they are only going to be able to produce one quarterly report per company per quarter and in the times between those reports they might not have anything to do at all there are exceptions of course things like sales and roles with billable hours can benefit from more time in the office but that's not most workers most workers have a task they do and so long as that task is done they have justified their existence now this all causes the first major issue the plight of the seasonal worker take that corporate accountant again they will be expected to come into the office 40 hours a week but for a lot of that time there won't be much for them to do at all between major reporting dates there will be a lull in their responsibilities in the same way that farmers had a lull in their responsibilities between planting and harvesting of course as we saw earlier the farmers would just pull back on their hours during these lulls but accountants can't really do that if they are not there from nine to five their boss will start asking questions during major reporting periods corporate accountants will be tasked with putting together major reports for investors regulatory bodies or even just the company's own management and those tasks could very easily consume more than 40 hours a week where a farmer is happy to work 70 hour weeks during harvest because they can go back to working 20 hours a week once they're done an accountant might be less thrilled about that arrangement because they will only ever be able to go back to the standard 40-hour week despite overworking the poor accountant it's actually very bad for morale humans are very outcome driven animals most research notes that people don't actually mind putting in long hours to achieve an outcome like presenting a report or finishing a harvest because they can feel a sense of pride and accomplishment in their work once it's done what they do hate is lots of time spent doing very little interspersed with peaks of massive stressful expectations the rigidity is built into a system designed to protect workers has been skewed to act as an arbitrary market inefficiency in the proper seasonal supply and demand for labor seasonality is one issue but even for more consistent roles if only half of the workers time is spent on task what are the solutions an obvious idea would be to cut working hours down if you only have to be in the office for a fraction of the time but you still have the same responsibilities there is going to be less time for dilly dallying now this would need to be a universal arrangement because as we saw earlier it's no point for a single company to adopt a six hour work day and then go bust because they couldn't deal with any clients after three o'clock where their competition could but fortunately this also looks like it might actually be starting to happen the prime minister of finland has made public plans for the nation to move to a six-hour workday noting that the same amount of work could be done by most workers in that lesser amount of time this would also come on top of finland's already very flexible working arrangement where workers can elect to come in three hours earlier or later than the standard working day to better suit their lifestyle sweden has actually run similar trials in government institutions to mixed results somewhat predictably the six hour work day worked very well for people in administrative roles but was cost prohibitive in operational roles like bus drivers or aged care workers where tasks can't necessarily wait for tomorrow now these government initiatives are great they will no doubt be very popular amongst a lot of workers and increase the quality of lives of those who they affect but government stipulations have already been somewhat ineffective already we are starting to see loopholes and extending work allowances will very quickly move from workers tasks with caring for the elderly to workers tasks with those tsa reports in reality this is much more likely to succeed if it's market-led and this too is already happening but not quite in the way that we would want despite what most people think big businesses are not dumb they are well aware of how much labor costs and if there was a way to increase efficiency they would jump on it this is why we are seeing the mass rollout of an increasingly casualized workforce in the past three decades the portion of employees working on variable hourly arrangements has increased from around 15 of the workforce to 23 now this varies from country to country but it is the logical market response to wasted hours if there is only three hours of work to do in a day that's how much a business will have to pay for now for individual workers this isn't necessarily great these casual contracts normally lack any semblance of job security and in the states specifically they can come without the all-important health insurance but for the wider economy it's quite good if this casual worker needs to work three jobs to make up a collective 40 hours a week then there is a good chance that their idle time during those 40 hours a week is going to be very limited because good management will only put on staff when they're required what this then means is that this single worker will be responsible for more productive output than they would have otherwise been if they were just working a single full-time job this is taken to the extreme with gig roles like ride sharing and food delivery in these instances people are only paid for the tasks that they complete but it does reintroduce the same problem of idle time as these workers will now have to wait between jobs and because these wait times are so sporadic these workers cannot fit in a second job like the part-time or casual worker would have been able to now in all of these examples we have still been falling back on the assumption that a 40-hour week is gospel that even part-time workers should string together a few jobs to make that 40-hour a week mark but of course there are better market-driven alternatives for all workers take our accountant from earlier the logical arrangement for them would be a results-driven working environment as long as they get done what needs to get done it is done and they are free to come and go as they please if that means working two days a week in between reporting periods just to catch up on meetings and trainings so be it as long as they are willing to then turn around and do 60 hour weeks when it is required which many people would be happy with but a lot of people wouldn't and that's part of the problem given that in many ways these more productive alternatives are worse for the worker people yearn for the 9-5 a 40-hour work week has become the arbitrary benchmark for full-time employment anything less than this will fall under a different label if it was found that the same job could be conducted with a 30-hour workweek a business would just make this a part-time role and people wouldn't want it because this doesn't fit with most people's career plans a part-time role is fine for some workers but it has the stigma that this is something to fill in the time between picking up the kids rather than being a job that will lead to promotions and career development an article by the journal of career development found that part-time workers were one-tenth as likely to receive internal promotions as compared to their full-time counterparts now for most part-time workers today this is fine they have elected for more spare time rather than lofty career ambitions but for companies looking to fill out every role with these sorts of positions they're gonna have some difficulties full-time roles are normally seen as more prestigious to demonstrate this consider a thought experiment you are currently employed full time but you are looking for a new role that will be your next step up on the career ladder you are currently a successful computer engineer but you want to become a team lead with the hopes that it will get you one day to being a tech lead or project director or maybe even a chief technical officer you are scrolling through job postings and see two promising roles both in relatively small businesses and both roles involve looking after a team of five engineers working on financial software development both roles pay one hundred thousand dollars per year roll one is advertised as a tech manager and it's a standard full-time arrangement 40 hours per week monday to friday 9-5 roll 2 is advertised as a part-time tech manager and it's a 4-day a week part-time role monday to thursday what role would you pick well the obvious choice would be the part-time role it's the same money for less hours but because of the connotations that come along with part-time work in the real world it's likely that a good majority of ambitious career-driven individuals wouldn't even consider the part-time role for long enough to toss up the pros and cons now in order to attract this type of motivated top talent these companies are better off hiring a full-time employee for a part-time role and just loading the rest of their week up with filler responsibilities we ourselves may be as guilty in perpetuating an inefficient and arbitrary work week as pesky government regulations or stubborn corporate executives why do we work 40-hour weeks because everybody has decided that is what people work people who work more than that have hustle people that work less than that lack motivation but ultimately everything is built around an arrangement that has been made to accommodate an industry that very few of us work in anymore the shifts in the way that we work and the increased pressure to move into casualized or completely independent roles will disrupt this convention in the same way that henry iv disrupted the convention of pushing workers around the clock will this be the best outcome for individual workers well no probably not say what you will about the nine to five grind but it does offer a lot of security will this be the best outcome for the economy well in a macro sense it is doing whatever needs to be done to increase total output but people are more than a factor of production they are who we are producing for standards of living in an economic sense improve when people have more stuff but maybe the ultimate luxury is just having more hours in the day if nothing else the takeaway should probably be amongst all of this that it's better to own a company than work for one and since we are all fortunate enough to live in the age of consumption you can capitalize on this with acorns thanks to acorns it's easy to automatically set aside money for your future using roundups from your everyday spending acorns makes it possible to round up your credit or debit card purchases to the nearest whole dollar while auto investing the difference for you right into your diversified portfolio making investing as easy as spending the average american acorns customer invests 390 a year from their spare change alone that can go a long way towards something properly worthwhile patreon.com and don't worry about picking the right stocks and bonds to invest in as acorn provides out-of-the-box professionally crafted solutions acorns has also partnered with hundreds of brands that want to invest into your future for example let's say you use postmates or some other food delivery service to order a delicious filet from a restaurant like oh i don't know let's say outback steakhouse because apparently that's what americans think australians eat postmates will set aside a portion of your order and deposit that some right into your investment account even better you can also earn money on a ton of other everyday essentials like gas or pet supplies or stores like walmart which invest a percentage of what you spend right into your acorns portfolio check out the link in the video description below or go to acorns.com economics explained to get started today thanks guys bye

Channel: Economics Explained

Views: 861,919

Keywords: do we need to work 40 hours a week, the economics of the 40 hour work week, 40 hour work week explained, 40 hour work week, economics of the 40 hour work week explained, what is the optimal work week, why we do work 40 hours per week, whats the point of the 40 hour work week, work week, 40 hour work week economics explained, history of the 40 hours work week, origin of the 40 hour work week, forty hour work week, forty-hour work week, economics explained

Id: rVAJC2FMyuY

Length: 20min 54sec (1254 seconds)

Published: Sun Aug 09 2020