Monday, May 9, 2011

The Economics of the Jetsons, Or Why Don't I Work 9 Hours a Week?


Matt Yglesias has an interesting observation about The Jetsons:
George Jetson enjoyed a nine-hour workweek—thee hours a day, three days a week. Mike Konczal rightly connected this to JM Keynes’ essay on “The Economic Possibilities For Our Grandchildren” (PDF) highlighting the consequences of a super-abundance of material prosperity.
...

Essentially imagine a world in which productivity grows by an average of 2.5 percent per year for the next fifty years and Mr and Mrs Jetson have chosen to take the cumulative 418 percent increase in income by reducing hours worked to one quarter of present-day standards rather than vastly increased consumption.

That seems like a valid choice. But what happens to income inequality in this kind of world? Imagine another couple, the Hardworkers where both parents put in a 30-hour workweek and their combined household income winds up being 20 times that of the Jetsons. Do we need to redistribute income to George & Jane? Or is the fact that their absolute living standards are high the relevant issue?
He brings up two interesting questions for me.


1) Should anything be done about the fact that the Jetsons choose to work much less than the Hardworkers and therefore wind up with 20 times less income?

I'm going to go with no - the Jetsons obviously have a very high standard of living, and if they want to make the choice to work less rather than consume even more, that's a perfectly valid choice for them to make. (Of course, Yglesias assumes that the Jetsons will reap the benefit of their increased productivity, which is not necessarily true - after all, the lion's share of workers' productivity gains since 1980 haven't gone to the worker, but rather to the super-rich.) This is also why, especially far into the future when people are presumably much richer than we are today, poverty should be measured in absolute terms (like a nominal poverty line, such as we have in the U.S.) rather than in relative terms (e.g. declaring that anyone with less than 60% of the median national disposable income is poor, as in some European countries) makes more sense.

I don't think this holds much relevance today, however, since the Jetsons live in a world where everyone is far richer than we are currently and poverty seems to be a thing of the past. This is obviously not the case right now, exacerbated by the fact that the U.S. poverty line (an absolute measure of poverty) is, in my (and others') opinion, too low. Relative measures of poverty can be useful when comparing the huge income gaps between countries, however, as they point out that rich countries should probably give far more aid to poorer countries, since it is far better to be relatively poor in a rich country like the U.S. than to be poor in a poor country - in fact, it's usually to be better to be relatively poor in a rich country than to be relatively RICH in a poor country. This points to the fact that relatively small transfers of wealth from rich countries to poor countries would drastically improve the quality of life in poor countries without diminishing the quality of life in rich countries much, thanks to the diminishing marginal utility of increased wealth (which, coincidentally, is the economic reason why tax systems should be highly progressive).

So, no, I don't really think we care about inequality in the super-rich world of the Jetsons - everyone seems to be sharing in the wealth (certainly relative to our standard of living nowadays), and people seem to be able to choose how much to work (and therefore how much to earn). Just so long as the super-rich in the Jetsons' world do not subvert the processes of democracy, I'm not sure inequality is a big concern - though I would still believe in a progressive taxation system, however, not a flat tax.

2) Why can't I work 9 hours a week?

OK, so 9 hours a week probably wouldn't be enough - but given that the law of diminishing returns also holds true for labor effort (i.e. the quality and/or speed of work I produce in my 1st hour of working in a day is, on average, just slightly poorer and/or slower than in my 2nd hour of working in a day), why can I not work with my employer to optimize the amount of work I have to do with my level of productivity while working and my desired balance of income v. free time?

For example, if I could do 65% of the work I currently do by working 50% of the time, I would be sorely tempted to take 2/3s of my salary and only work 20 hours per week.

In the U.S., at least, there are several problems with this, and even more problems for me, since I work for the government:
  • Benefits - to get benefits in the U.S., you usually have to work "full time," which is legally defined as 32-40 hours per week, depending on which U.S. state you live in. Healthcare and retirement are important to have, and in the U.S., its far cheaper to purchase insurance and save for retirement through a large employer than being self-employed and having to take care of healthcare and retirement on your own. Many European countries solve this problem with public healthcare and pension systems - since people's healthcare and pensions aren't tied to their current employer or to full-time work, part-time arrangements are more feasible and more popular in Europe than in the U.S.
  • Status Quo Bias - in much of the industrialized world, workers had to fight for decades, or even centuries, for a 40-hour week (60-100 hour work weeks were common). Winning the 40-hour week was a huge victory - but as we have gotten wealthier, we have not gotten more flexible with our working arrangements.
  • Union Contracts - not relevant to everyone, obviously, but relevant to me, since I work under the terms of a union contract. The union contract spells out the relationship between employer and employee, leaving little room for alternative arrangements. This definitely provides workers a number of beneficial protections, but it doesn't leave room for the government to recognize employees who are exceptionally productive and reward them with the opportunity to trade that productivity for more pay or more free time.
  • The Decline of Unions and the Rise of the Exempted (Salaried) Employee - strangely enough, the decline of unions has also decreased workplace flexibility. Nowadays, most employees are salaried, so their employers pay them a set amount of money to work for them, regardless of the number of hours they actually work - therefore, it is in the employers' interest to squeeze as much time (and work) out of the employees as the employees will tolerate, regardless of the law of diminishing returns. Without union protections, an employee can be fired if they refuse to do this and replaced with someone who will.
Maybe one day I'll have the experience and recognized expertise to charge $1,000s an hour for consulting services, and then I'll be able to work just a few hours a week - but for now, I don't have much choice but to keep my nose to the grindstone and wish that I had been born in the time of the Jetsons ....

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