Redistribution of hours?

It seems pretty intuitive that we work for money, otherwise we would work for free, that’s not to say that everyone is miserable at their work but the goal is monetary is it not? So with that said doesn’t it seem strange that the wealthier people are, the more they work? Over the years more and more hours have been allocated to an increasingly smaller proportion of the population. This seems unintuitive…as you gain more economic security… the more work you have to put in to retain it? Does it not make more sense to seek social security(take care of kids, be a good husband, etc) next? It seems we got lost somewhere along the way.

So lets think about this skewed distribution of hours. Do we need more hours to do work because work is getting harder and harder to do? Not likely, technology ensures that we do what used to take hours in fractions of seconds and merely with the touch of a button. So productivity is up, yet real wage stagnation has ensured that in the US people to have work more and more hours to keep up with inflation. In Europe working hours have been reduced but there is still more room for improvement(especially in the UK). So with these facts in mind lets ask some incremental questions.

What is a job? Is it not a function in society that requires a number of hours to (hopefully) achieve a certain GDP output? So lets look at the economy in hourly terms. It seems we have trouble expanding our hours(create new jobs) but reduce our hours with ease(technology). Redistribution of wealth is often attacked because it is said to create moral hazard for those who don’t work. So what about redistribution of hours?

Lets say the economy had a certain number of workers, working 40 hours(the current UK average) and an unemployment rate of 20%(its not as high as it might sound if take into account part timers looking for full time and discouraged workers). What if we could redistribute those hours to those 20% so we could have 32 hour working weeks? This would be an especially effective measure to help people cope with recessionary periods where the unemployment rate rises. In the long run this kind of redistribution will result in there being  less inequality and probably more community involvement.

So what stops this from happening? The main obstacle is that some jobs are very hard to replace so training costs for some companies could dramatically increase. Additionally workers insurance programs will also guarantee an increase in costs, making this a losing proposition from the company’s point of view. This is where government can come in, especially since its mandates(worker’s inurance) discourage this from happening. Government can subsidize companies specifically to just the right amount so this becomes a profitable proposition, something like tax cuts for meeting a certain weekly quota in employee hours.

Some argue an altogether drop in working hours without thinking about GDP, an incentive of that might be more environmentally friendly economy. here‘s a lecture on that if your interested.

Some Answers to my own questions(if you have questions ask them in the comments):

Should this be mandatory?

This should not become a mandate policy because some people just like working and there might not be a reasonable substitute for their work, resulting in a potentially large GDP loss. Some people just don’t value social life as much (Mckinsey employees work 70 hour weeks, though their social work life balance reporting is very low).

Are people potentially equal?

Of course one of the main assumptions is that the people who are unemployed have just as much potential for productivity as those who are not.

What about the minimum wage?

Minimum wage structure creates some complications, especially when calculated in hours(not to mention that its currently probably too low for a reasonable standard of living). However practically this would be overcome by the fact that we would not mandate this policy.

How to separate education from degrees

One of my last posts here was about making education more integrated with the market. But there are some who want education to be pursued for its own sake. How could this be achieved? Simple we restrict the ability of employers to request educational information. Now this might seem contradictory if you read my last post about the hazards of information asymmetry. But this is a very different case because this isn’t about bearing risks its about a selection process. The actual hands on knowledge we receive from degrees is very little, most of their earning power is from the brand, and the selection process, less than 30% of the difference in salary between Ivy schooling and non Ivy schooling can be explained by the content.

The most immediate reaction of someone would be… how will the companies decide who to select? Especially for specialist roles such as doctors? Its very simple really, the companies will just incorporate more tests into their selection processes to ensure that people really know what they are talking about. Why this is favourable? Well social mobility is one answer. Anybody can just pick up a book learn all the content, then maybe watch a couple of videos on youtube on how stuff works and then go through the application process. The concept might seem frightening and its true that its very reliant on companies being able screen candidates in a much more integrated way, however this is not far fetched at all.

Degrees in this day and age don’t guarantee jobs anyway, and vast majority of people who actually only go to University because they want to get a job, which is understandable but it is perhaps unnecessary. Seeing that most of the content they will be learning is not applicable to their careers. The end result would probably that people who don’t want to learn just for the sake of learning but for work would structure their studies at their own pace to reach only in areas that are relevant to where they would want to work, probably through private tutors.

On the University side, sure they would get less students, either most Universities will shut down or classes will merely be smaller, either way the result will be that whoever is in University will be studious and passionate about the subject leading to a much more intellectual environment that will be less about achieving grades(since they won’t help you get a job), and more about achieving knowledge.