Right, but why isn’t there the same pressure on every other side. That is, laborers compete for jobs, and those who value consumption highly in ratio to leisure will be more appealing to employers. But aren’t employers also competing for employees? Doesn’t that give the opposite pressure?
Why is having all the same workers are one tenth the hours an example of collective action, and 90% of the workers fired and the remaining 10% continuing at the same wage not an example of collective action? Aren’t both equally the results of hypothetical negotiations between workers and employers?
Sorry, this was left in in a mistake of editing. In that post, they clearly came in from decreased labor cost per good sold, not from a change in individual wages (just a change in the number of workers employed for the same level of production).
Most simply, the more people whose actions need coordinating, the more difficult it is to coordinate. Mancur Olson’s book The Logic of Collective Action has some influential arguments.
But you’re right. Think about it from the employer’s perspective. Suppose all employers made a pact to fire most of their workers and pay the remaining workers X. Now a lot of workers are unemployed, some of whom might be willing to work for much lower wages. What do the employers do?
Your story might in fact hit on some sort of equilibrium. It may be possible at a given level of bargaining power between workers and employers, at a given population, at given preferences for labor over leisure, etc, to sustain the conditions you articulate. But my gut says that this would life on the edge of a knife. Slight deviations in preferences, changes in bargaining power, etc would induce small behavioral changes that would take us to a much more familiar and steady state of the world.
I’d say first that the sorts of jobs available at the time had reached their specialization limit with respect to training individual workers. Humans were as close to cogs as they could become, and there was not actually any huge additional benefit to firms for squeezing out extra time from the same people. However, there actually was a huge human cost on the labor side, and that gave them a strong reason to work collectively to fix that problem. That meant that the difficulty of collective action, previously mentioned, was largely resolved.
That was a crazy fucking time. Anarchists killing presidents, bombings in Wall Street, the works. But eventually the productivity gains worked their way through the system, and a new equilibrium was negotiated where everyone was basically satisfied with the arrangement. And hey, it seemed to work well enough that we’re basically still there today.
But how come the reduction in hours did not destroy the economy by causing a massive labor shortage as fewer person hours had to do the same work?
As we’ve seen after layoffs, most employers have room to improve productivity if they are willing to make the investment. In fact, it is usually cheaper to invest in productivity improvements rather than people, assuming the people are not dirt cheap. (Cisco had discovered that many engineering projects to improve productivity do not pay off when you have a very low cost labor force.)
So, my guess would be that productivity improvements more than paid for shorter hours. If people then were anything like people today, there would be quality improvements and reduced rework from a better rested workforce.
Well, my first thought would be massive immigration. That was all going on at the same time-- tighter labor standards, huddle masses flocking to our shores. One of my grandfathers was in that group, working in a factory as an unskilled immigrant laborer.
Everyone says this - let me challenge it.
Now, it is true that people get what they are paid, and these are set by market forces. In fact it is trivially true. But a pricing class that says that prices are set by market forces period would not be very useful. There are obviously other factors involved.
First, dismissing value implies that all workers are identical. We are not talking human rights type of values, but value to the company. Anybody who has ever done hiring for a job with a fixed pay rate is clearing comparing worker value across workers. Unless you hire by throwing darts at resumes, you agree that there is a difference in worker value.
Let’s now consider productivity. Let’s say that productivity improvements - either from workers, machines, or both - have improved your profit margin. You have to decide what to do with this money.
You can give it back to your owners, but that is not helpful in growing the business. You can give everyone a raise, or give selective raises to improve retention of the best people. But this won’t improve productivity either. Usually. You can and will invest in further productivity improvements.
One of these might be hiring better workers whose boost to the productivity of the business is greater than their increased cost. Does anyone dispute that this is as much of a productivity improving strategy as automation? This strategy clearly recognizes differences in employee value.
This doesn’t just go for execs and highly paid engineers. In the old AT&T plant in Denver line workers could stop the line if they saw a quality problem. Paying a bit more to get workers who don’t stop the line in error and who do stop it when needed can be very cost effective.
If employees were interchangeable, I’d agree that value is purely set by market forces. In the real world, there is more to it.
Immigration happened before and after the move to the 40 hour week. In any case, since this happened by law, the cutover would have been too rapid to have been offset by immigration. In any case, since factory space did not change, there would be an immediate move to double shifts. And, unemployment would clearly drop as people were hired for these shifts. I’ll look eventually, but I don’t remember ever reading about a drop in unemployment about this time.
I think you’re overestimating the time period over which labor hours were changed. And there’s no reason to think that immigrants all got jobs right off the boat-- ie, that immigration could have created a relative large pool of labor that could be tapped into as needed.
That would be reflected in the unemployment rate. I’ll have to research this - my grandparents and great-grandparents, who arrived around this time, didn’t work in factories in New York.
Actually, I’m righter than I thought.
Here is the wiki entry - go down to the US. Though various industries won eight hour days through labor action, the federal law was passed in 1916 as a result of greater worker power through labor shortages from greater production due to WW I in Europe.
I haven’t found anything talking about the impact of this. All articles on the impact of the 40 hour week seem to be saying wouldn’t it be nice to go back to it again. Anyhow, it appears not to have made enough of an impact for anyone to notice.
Fascinating discussion. When talking about increases in productivity, it can be helpful to view the cost of living in terms of time, rather than dollars. When we purchase things we are spending time, in the sense that it takes time to earn money. In 1919, the average worker had to work over 2 hours to earn enough money to pay the cost of a chicken, whereas it cost fourteen minutes for the average worker in our time (cite).
Of course, these changes may not necessarily be the result of increased productivity, and may instead be the byproduct of depressed wages resulting from immigrant labor forces or offshoring (as some of the previous posters have already mentioned).
Several effects are in play. As John Mace points out, more money is required for equivalent style in the modern world.
But the biggest single factor is consistently ignored. The portion of a nation’s wealth which takes the form of unskilled or semi-skilled labor is falling. Land, oil, minerals and even water are scarce; people aren’t. The ratio of the values of highly skilled and unskilled workers is huge and getting huger. As more and more machines (e.g. robots) are built the ratio of capital value to labor value rises.
In other words, the portion of income which unskilled or semi-skilled labor “deserves” in a modern free-market economy is falling. This isn’t complicated; this isn’t Marxist propaganda. It should be obvious fact.
Since the purpose of economic activity is to produce goods and services for people to buy, buying power is needed. This is why non-market interventions like minimum wage laws to increase consumer income make sense.
Whether Karl Marx was right is a topic for another thread. However the claim that anti-market interventions like minimum wage are clearly bad because they violate Greed-is-God dogma show immense confusion.
No, we’re not, the equilibrium is swinging back very, very quickly. Wealth is being accumulated by the 1 percent to an extent not seen since the Guilded Age. Middle class wealth has risen at a very slow rate, whilethe wealth of the 1 percenthas shot through the roof. A few wealthy individuals and corporations are more or less buying our government with huge contribution to super PACS thanks to Citizens United.
Equilibrium? You gotta be kidding! It’s not a question of if violence and rioting will break out. It’s a question of when. I think things will have to get a lot more miserable before that happens, and I think they will.
That’s true, but the reason is technology, not earnings. Politicians in the early part of last century promised a chicken in every pot because chicken was a luxury food. Factory farming was very cheap. In the opposite direction, not many people can afford to eat Maine lobster every week - but a century ago they were almost giving the things away.
If you are comparing things, you need to compare things at comparable levels of scarcity and value.
Those of us who are trying to follow this logic are the ones who are confused. The value of unskilled labor is falling because of automation. Therefore we should mandate that unskilled labor be paid more?
Why don’t we just skip the middle man and make it a crime to give the poor jobs?
Karl Marx claimed that automation would mean that the middle class would be hollowed out and there would be a vast underclass and a few rich capitalists. Instead real wages doubled between 1850 and 1900. Whether Karl Marx was right would be a short thread. It would be the OP and then one reply that said “Hell NO”
Hellestal is of course right. But I think the biggest downward pressure on the working week has come from rising wages, especially post-WW2. It was easier to induce people to work 90 hours per week in the factory year-round when their next best alternative was farm semi-employment at the mercy of the weather and the vagaries of agricultural economics. As second-best alternatives got better, the length of the workweek shrunk.
Changes in collective bargaining as helped, though that is less obvious nowadays since so much of the labor force has moved out of union employment.
For anyone interested, the original paper from report from the Dallas Fed from 1997 is here (pdf). As far as I know, no one has thoroughly updated it in the past 15 years. Here is a blog post comparing time prices in the 1975 and 2006 Sears catalog.
I’m not sure that living the 50’s lifestyle on 11 hours a week is as unrealistic as people think. Here’s a blog about a guy who lives on $7,000/year. So that translates to $14,000/year for a married couple, which could be done with the equivalent of a full time ($14000*40/11=)$51,000 after tax income. Sure, it’s a bit higher than the median income, but it’s not a ridiculous number. And keep in mind, when most people think of the 50’s lifestyle they’re thinking of the upper middle class in the 50s.
Maine lobster might have been cheap 100 years ago if you were lucky enough to live in Maine, but I bet it’s a lot cheaper here in Arizona today than it was 100 years ago.