Spinning Our Wheels...

The holiday season brings warm recollections of leisurely time spent with family and friends. But increasingly I have been wondering if these memories are more relics of the past than an accurate portrayal of the average worker’s experience today.

Average annual hours worked has fallen over the last six decades across much of the industrialized world. But around 1980 an interesting thing happened. Hours worked kept declining in places like Germany and France but leveled off in the U.S. Today, Americans with full-time jobs work an average of 47 hours per week and nearly 4 in 10 work more than 50 hours per week. As the chart below shows, this puts us second only to Ireland in hours worked and well above Germany, historically one of Europe’s strongest economies.

Labor economists point to a number of trends when trying to explain our frenetic pace. Most compelling is the fact that median incomes, which now average approximately $52,000, have stagnated over the last 15 years. Workers, facing flat wages, are likely working long hours in an effort to maintain and advance their standard of living.

The growing importance of the U.S. service sector could also be playing a role. Back in 1980, approximately 35% of the U.S. workforce was employed producing goods. Today, fewer than 10% of workers actually make things. Measuring worker productivity in manufacturing is fairly straight-forward; divide the amount of widgets produced by the number of worker hours. But assessing productivity in today’s service economy is much tougher. In the absence of measurable data, employers and employees may increasingly view hours worked as a sign of dedication and value.

Finally, while American workers toil more than many of their European counterparts, we still log fewer hours than many emerging economy workers. Mexican employees top the charts here, followed by those in Costa Rica, Korea and Greece. As we discovered in the most recent election, economic insecurity resulting from the threat of lower-cost foreign workers is indeed real.

While not captured in any official statistics, the way we work today is also having an influence. Americans’ dedication to work has long been evident in statistics ranging from our limited vacations to reduced sick leave and maternity policies. But our particular brand of capitalism together with technological advancements has created a work culture that often demands 24/7 access and round the clock meetings, texts and emails.

Interestingly, although we may be working more, we are not producing more. Productivity measures have been generally falling across much of the developed world over the last decade and the U.S. is no exception. Since 2007, output per hour worked in America inched ahead at a 1.7% rate. Between 1946 and 1973, U.S. productivity expanded at an impressive 3.2% annual rate (see chart above). This post World War II period benefitted from significant investments in education, worker training and infrastructure. To keep pace in the years ahead, American workers will need to not just work harder but smarter. Providing employees with the advanced skills, tools and techniques to work more productively will foster rising standards of living and easier work/leisure choices.