2008 September 06 Saturday
Rich People Work Harder Than Poor People
Dalton Conley, chairman of NYU’s sociology department, says the most affluent work the longest hours.
But what’s different from Weber’s era is that it is now the rich who are the most stressed out and the most likely to be working the most. Perhaps for the first time since we’ve kept track of such things, higher-income folks work more hours than lower-wage earners do. Since 1980, the number of men in the bottom fifth of the income ladder who work long hours (over 49 hours per week) has dropped by half, according to a study by the economists Peter Kuhn and Fernando Lozano. But among the top fifth of earners, long weeks have increased by 80 percent.
This is a stunning moment in economic history: At one time we worked hard so that someday we (or our children) wouldn’t have to. Today, the more we earn, the more we work, since the opportunity cost of not working is all the greater (and since the higher we go, the more relatively deprived we feel).
I personally would rather work more hours to get paid more money. But I've had jobs where my employer was happy to take the greater amount of work product I produced by working more hours without paying me any more for doing it. So how many of the people working longer hours are self-employed or have earnings very directly tied to performance? For example, salesmen working on commission have strong incentives to work longer hours.
To put it another way: Do higher income people work in more incentivized environments? Even if higher income people work in more incentivized environments that does not mean that is the initiating cause of why they work longer hours. It would be that they have a stronger preference for jobs and occupations where they can make more by working more. So lower income people of similar levels of talent put into similar jobs might not choose to work as hard at the same tasks and with the same incentives.
So then what caused the shift in work hours for higher and lower income workers? One possibility: changes in tax law. Starting in the Carter Administration capital gains taxes were cut and later under Ronald Reagan income taxes were cut on higher income people. This probably unleashed a lot of suppressed desire to work among those who have the potential for very high productivity.
But tax law changes probably don't explain the decline in hours worked by lower income workers. The men in the bottom fifth have experienced a number of changes. First off, a huge influx of cheap unskilled immigrant labor has lowered the returns on working and has reduced the dignity of manual labor. Second, the decline in marriage reduces the number of men in marriages with children with the pressures to bring home the income needed to feed and house the family. The huge decline in black male labor market participation explains part of the decline in hours worked by the poorest. That decline in labor market participation has been accompanied by an order of magnitude increase in black male incarceration.
Higher paid workers tend to have more interesting jobs, so its easier to work longer hours. The reverse is the case for lower paid workers.
Have lower paying jobs become less interesting than they used to be? I doubt it. So why are poorer people working less?
"So why are poorer people working less?"
Randall, you had it right in your posting: Wages for unskilled workers have been driven down to where it has become impossible to live a decent - not luxurious, just decent - life on what the biz interests are willing and, thanks to massive unskilled and often illegal immigration, allowed to pay.
"First off, a huge influx of cheap unskilled immigrant labor has lowered the returns on working and has reduced the dignity of manual labor. Second, the decline in marriage reduces the number of men in marriages with children with the pressures to bring home the income needed to feed and house the family."
In some cases, the inability to actually support a family is driving unskilled men away from marriage.
Well Tech has replaced many labor intensive industries. I'm not just speaking about manufacturing but even admin work. Before the invention of computers it would have took much more manpower to type up, file, and put together a complex document (like a business proposal for a government contractor) than it does today. Hell, technology has made everything easier. Imagine how many liberal arts grads would not get graduate degrees in 2008 if they had to type and re-type drafts due to spelling errors. Today you can easily edit pages and re-print and there is spell check. The amount of labor per hour to get such a degree (and likely the drop out rate) has dropped significantly.
D. Flinchum has already hit on illegal immigration as well. Those two factors have killed many labor intensive jobs.
I would say a lot of "wealthy people" are lawyers, doctors, investment bankers, etc. They are basically hourly employees or the amount of effort they put in directly relates to their income (such as stock brokers...which involves quite a bit of old fashioned sells techniques).
I would also say that technology has increased the amount of work a well paid (well paid to me is 100K +) worker can do. People now often work on the weekend or at night from home or even on vacation by tele-commute. This was not possible 20 years ago. So now the same person who would have spent 50 hours at work per week 20 years ago might work 60 hours, possibly 15-20 of them at home, 7 days a week. These people are 'salary' and usually don't get paid more, but for maybe a bi-annual bonus.
longer hours doesn't mean working harder. 40 hours a week doing construction is more work then 80 hours behind a computer and will get you half the money. As I am a IT guy now, once a laborer can attest. Failed experiment....defining longer hours as working harder is a sign of the sheltered society.
I think It would be a bit easier to work behind a computer in a cozy office for long hours as opposed to working in a slaughter house, factory, construction site, roofing, etc. Also many people who work for companies end up getting their work hours cut or aren't allowed to work as many hours as they would like to. Just my take on it.