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Working Longer and Harder
Subject Comparative Statics
Topic Labor Markets
Key Words ILO, work year, boom growth, overtime, recessions, employers, hours, productivity
News Story

The International Labor Organization (ILO), a U.N. agency, has found that Americans are working harder than ever. During the 1990s, they added a week to their work year, as the number of hours worked on average rose 36 hours to 1,978. In terms of weeks, that adds up to 49-1/2 weeks a year at 40 hours a week.

Japanese workers used to work the most hours, but American workers exceeded the Japanese average in the mid-1990s. Now Americans work 2-1/2 weeks more than the Japanese, 6 weeks more than British workers, and 12-1/2 weeks more than German workers. In fact, typically, other nations are reducing their work years.

Economists have many hypotheses to explain the trends. Some believe that Americans are keen to impress, so work long hours. Customarily, while Americans take two or three weeks vacation each year, Europeans often take four to six weeks. Mothers are returning to work sooner. Many people have taken jobs as salaried professionals and are working long hours, while low-wage workers need to work more to make ends meet.

Others believe that the U.S. economic boom of the 1990s provided more work and higher incomes, whereas growth was slower elsewhere. Employers reacted by increasing overtime in many cases. (Ironically, in recessions, although overtime may fall in some firms, in others, employers often downsize and ask the remaining workers to work longer hours.) Meantime the French government reduced the work week to 35 hours to create more jobs.

Productivity per U.S. worker in 2000 was $54,870 in constant 1990 dollars, about $1,500 more than in Belgium, $10,000 more than Canada, and $14,000 higher than in Canada. However, in terms of productivity per hour, France and Belgium edged out the U.S. Some believe that working long hours leads to burnout and diminishing returns.

(Updated October 1, 2001)

Questions
1. Draw a labor market diagram with axes representing the wage rate and the number of hours worked. Show the initial labor supply and demand curves. Mark the equilibrium wage rate and number of hours of employment. Illustrate the effect of the following factors on the equilibrium:
a) an increasing tendency to impress the employer by working longer hours
b) mothers returning to work sooner
c) more professionals in the work force
d) the economic boom of the 1990s
2. Incomes have risen during the 1990s. Some of the increase has clearly come from the increase in working time. Has any resulted from higher wage rates? Consult your diagram in answering the question.
3. As the economic boom proceeded, the U.S. and France reacted differently.
a) Why did U.S. employers decide to increase overtime rather than increase employment? Explain using economics.
b) In France, the government reduced the regular workweek to 35 hours. Why did employers not increase overtime like U.S. employers? Again, use economics in hypothesizing the reasons.
4. Some believe that working longer hours have resulted in burnout and lower productivity.
a) Draw a diagram with axes representing output and the quantity of hours worked. Add a marginal product of labor curve for an individual worker.
b) Explain how an increase in working hours can actually reduce the total productivity of the worker.
5. Why might the average productivity of French and Belgian workers be greater in dollar terms? Is it definitely solely due to labor?
Source No Author, "Work week in U.S. keeps getting longer," St. Petersburg Times, September 1, 2001. (Reprinted from New York Times)..

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