Reduction in Pay for Shorter Hours?
Source Sandwichman
Date 08/06/03/18:14

On 6/3/08, Eugene Coyle wrote:

> First, my view is that a reduction in working time should be with no loss
> in pay. The income distribution in the US, at least, must be (for reasons I
> won't get to here) corrected. One step toward that would be a simple one --
> shorter hours with the same pay.

In the abstract, Gene, I agree with you. But practically, for this to
happen, enough people have to really want it to happen even without
"no loss in pay". Historically, the *slogan* of shorter hours with no
loss in pay became the death knell of the union demand for shorter
hours. Why? Because it was negotiable for a wage hike with no
reduction in hours. Given a choice between more money without a fight
and fighting for shorter hours, union members took the money.

"With no loss in pay" is a no brainer. Would you like a hot fudge
sundae with that, no extra charge? It's all too easy to dismiss the
seriousness of people when they are asking for "something for
nothing". (Even if that something was rightfully theirs and was taken
away from them).

What I want to see instead is shorter hours with a
productivity-adjusted wage increase. Not on a case-by-case basis. The
calculations would be too cumbersome and controversial. But on the
basis of broad estimates. Let's say half of an eight-hour weekly
reduction in working time would be compensated for in total output by
increased hourly productivity. Then the formula would result in a 20%
cut in hours and a 12.5% wage increase. That would be, metaphorically
speaking, a "revenue neutral" change.

Why would I prefer a "complicated" (read unfamiliar) formula to a
"simple" slogan? Because its necessary for people to understand what
are the underlying economics of the hours of labor and the only way
they're going to learn that is by doing the real world calculations.
The formula isn't really all that complicated once you understand the
principles behind it. For that matter, the slogan of no loss in pay is
not as simple as it seems. It actually incorporates the assumption of
a 100% productivity offset into its implicit calculation. You don't
have to take my word for it. That's the *explicit* rationale given for
the standard contract-costing model used by unions to estimate the
cost of increased vacation benefits.

-- Sandwichman

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