America’s obsession with work has produced a record-low unemployment rate and the developed world’s shortest vacations. It has also produced a backlash.
A loosely organized movement has emerged that urges its members to live modestly and work less. One version, known as FIRE (Financial Independence, Retire Early), is popular among high-earning young professionals. Adherents aim to save much of what they earn and retire at 40. However, as financial independence guru Mr. Money Mustache points out, the basic idea of living within your means and rejecting slavery to work is just as good an idea, or even a better one, for people with modest incomes.
None of this is new. In a 1928 lecture, John Maynard Keynes predicted that his grandchildren would live in a world where people worked fare less than they did in his own time:
We may be on the eve of improvements in the efficiency of food production as great as those which have already taken place in mining, manufacture, and transport. In quite a few years — in in our own lifetimes I mean — we may be able to perform all the operations of agriculture, mining, and manufacture with a quarter of the human effort to which we have been accustomed. . . .
Thus for the first time since his creation man will be faced with his real, his permanent problem — how to use his freedom from pressing economic cares, how to occupy the leisure, which science and compound interest will have won for him, to live wisely and agreeably and well. . . .
Three-hour shifts or a fifteen-hour week . . . is quite enough to satisfy the old Adam in most of us!
Paradoxically, it turns out that we are actually ahead of Keynes’ schedule in terms of productivity, yet we still work only about 20 percent fewer hours per week than they did in the 1920s. Why?
The sense in which Keynes’ prediction was correct
Keynes’ prediction focused largely on the supply and demand for material goods — “the operations of agriculture, mining, and manufacture.” The fact is that as a nation, we already average less than 15 hours a week working in those areas. In that sense, Keynes’ prediction has already come true. Let’s look at some numbers.
In the United States, mining, logging, manufacturing, construction and farming account for only 19 percent of all hours worked. The average work week for the labor force as a whole is 33 hours. That means each working American would have to spend just 6.3 hours a week producing material goods if the work were spread across the entire labor force.
But wait — isn’t that just because so many of the goods Americans consume are produced in China and elsewhere? Fair enough. Let’s try again.
Instead of starting with employment, let’s look at GDP. Consumer goods (including durable and nondurable, farm and nonfarm, but excluding services) account for 25 percent of U.S. GDP. That includes consumption of imported goods, which exceed the value of exported goods by about 6 percent of GDP. If we suppose that Americans were to produce all goods consumed in the United States, at an average level of productivity, and at the same time abandoned production of goods for export, it would still only take 10 hours of the average 33-hour week to meet the demand for consumer goods in full — well below Keynes’ prediction of three hours a day.
These numbers cast the puzzle of leisure in a different light. The question is not why we spend so many hours a week producing material goods that we don’t really need. Instead, the question is, what is important enough to occupy the other three-quarters of our working hours, rather than devoting more of them to leisure?
Working to provide government services
A big part of the answer is that many of those hours go to pay for the services of government. We expect far more of government now than in Keynes’ day. Government employees account for about 15 percent of all workers, which, averaged over the whole labor force, comes to about five hours out of the average workweek.
In fact, since many government services are performed by private contractors, just counting the hours put in by government employees understates the amount of time we work to pay for services of government. We could get a better estimate by looking at a line in the national accounts called government consumption expenditures and gross investment, which is equal to 17 percent of GDP. That includes both the salaries of civil servants and those of government contractors, as well as all of the goods purchased by government at federal, state, and local levels. If we convert that to a share of the average workweek, it brings the total to 5.6 hours.
Still another measure of the amount of labor time absorbed by government would be the number of hours we have to work to pay taxes. Tax revenues at all levels of government equal about 26 percent of GDP in the United States, which translates to about 8.6 hours of work per week.
We could, of course, free up more time for leisure if we accepted a smaller government, but that is not what has happened in the years since Keynes wrote. Instead, following a tendency sometimes known as Wagner’s Law, governments in most countries have tended to grow faster than the rest of the economy. There is abundant evidence that as long as the quality of government remains high, larger government adds to both our freedom and our prosperity.
What do we do with the rest of our time?
We have now accounted for about 19 hours of our average 33-hour workweek — 10 to produce goods and 9 to pay for government services. What do we do with the other 14 hours, rather than enjoying more leisure?
Part of the answer is that we work some of those hours in order to pay for services that we perceive as necessities and are not provided by government. In the United States, the largest such item is the part of health care services paid by households and private employers. That comes to about 9 percent of GDP, or a little under 3 hours per week. Many families also view higher education as an expensive necessity. Suppose, for the sake of discussion, we assume that paying for privately supplied service necessities requires an average of six hours per week. Adding six to nineteen still leaves eight hours, or one full working day, that people could devote to leisure if they chose. Why is that not happening?
What does leisure really mean?
A good starting point is to think more closely about what leisure means. We spend some of our leisure on purely passive rest and relaxation, but leisure is more than that. We spend many of our most valued leisure hours more actively, on sports, making furniture, painting, singing in a chorus, or playing cards with friends.
Few, if any, of these activities are purely solitary. A painter might work alone in her studio, but some of her pleasure in painting comes from other peoples’ enjoyment of what she puts on canvas. The singer wants someone to listen, the writer wants a reader, and the cooking enthusiast wants someone with whom to share the meal. Although you can walk on the beach by yourself, you can’t play basketball alone, and playing bridge with friends at the local club is more fun than playing alone against the computer.
Looking at these leisure activities from an economist’s perspective, what we see is an exchange of leisure services:
- John views and appreciates Maria’s paintings
- Maria enjoys Howard’s cooking
- Howard cheers for John’s basketball team, and so on.
Certainly, those are hours well spent. People who work so much they don’t have time for them are missing out on some of the best things in life. But, as enjoyable as these activities can be, there are ways to enjoy them even more that require more labor hours in addition to the time spent in leisure. For example:
- John might appreciate Maria’s talented amateur paintings even more, and Maria might paint even better, if both of them spent some time viewing the works of professionals in a museum. To do that, they would need to work enough to buy a ticket, or, if it is a government museum with free admission, to pay taxes.
- Maybe Maria and Howard both love to eat, but neither likes to cook, so they prefer fine dining at a local restaurant even though that means working more to pay off the resulting credit card balances.
- Very likely John, as an amateur basketball player, would enjoy the sport even more if he went to see a professional game now and then, even though that would mean working enough to buy a ticket.
All of these things are leisure, and all of them involve an exchange of services, but now the exchange is mediated by, or perhaps we could say enhanced by, the market. Is that in any way bad? If we had to depend entirely on art, food, and entertainment produced by amateurs, would we really be better off? I can’t see that we would.
At some point the line between work and leisure begins to blur altogether. The above-mentioned Mr. Money Mustache, who advises people to live within their means and save enough to be able to retire early, does not insist that people spend their retirement years in idleness. They can continue working at their old or a new profession if they want, but he advises them to take on only work that they would be willing to do even if it were unpaid. If you’re doing something you enjoy, but someone happens to be willing to pay you for it, is that work, or leisure?
Resolving the puzzle
Here, then, is how I resolve the puzzle posed by Keynes’s “mistaken” prediction of a 15-hour work week:
- Keynes was right to think that his grandchildren would be able to satisfy their demands for the products of manufacturing, mining, construction, and farming with a 15-hour workweek. In fact, we are already doing better than that.
- Few people seriously think that we can make effective use of our enhanced capacity to create wealth without a government of some kind. If so, we have to devote some working hours to pay the taxes needed to support it.
- In addition to working to buy the material necessities of life, we work to buy necessary services that are not provided in full by government, such as higher education and medical care.
- By my calculations, we still appear to work about a day longer every week than we strictly need to provide all of the above. We spend much of the extra time earning extra money to spend on market-mediated exchange of leisure services, like watching professional sports and artistic performances.
I have framed the calculations in this post in terms of the length of the work week. Viewed that way, if we want more leisure, we should work shorter days, or take every Friday off to play basketball at the local gym, or fool around in the kitchen trying a new recipe. Alternatively, we could take every other Friday off and use the working Fridays to earn money to indulge in some market-enhanced leisure such as dining out in a good restaurant or taking a cruise.
But changing the length of our workweek is not the only option. Instead, we could continue to put in a full standard work-week and add more vacation time. The United States is, famously, the “No-Vacation Nation.” A quarter of Americans get no paid vacation or holidays at all, and the average is just 10 days. Contrast that with the Danes, who get 25 paid days off a year; the New Zealanders, who get 30; or the famously hard-working Germans, who get 35. We could also demand more paid sick leave, more parental leave, and the right to take more unpaid days off if we want them. Individually, not all of us can bargain with our employers for extra days off instead of higher wages, but if a majority really wanted them, we could get them through collective bargaining, or through political action.
Still another option would be to join the FIRE movement, live frugally, and retire at 40, 50, or 60, rather than never retiring, as an increasing number of Americans seem to be doing. Having the option of retiring early might call for some policy changes, such as health insurance that is not linked to our jobs. But again, if that is what we really want we can put pressure on markets and governments to deliver it.
Any of these patterns — shorter workweeks, longer vacations, earlier retirement — could mean a step toward “living wisely and agreeably and well,” to use Keynes’ phrase. We should celebrate the fact that rising productivity has made it possible for any of us, even those of us who are not hot-shot young professionals with the resources to retire at 40, to take at least some small steps toward working less and enjoying more leisure, if that is what we want to do.
Still, many people — here I am talking about people who have left the threat of absolute poverty far behind — have chosen to keep right on working in order to live in larger houses and drive fancier cars to work in the morning. That is their right. Perhaps the determination with which they exercise that right to work is what would surprise Keynes most of all.
Previously posted on Medium