Sunday, July 01, 2007

Sunday dollars+sense: The more men are paid, the fewer hours they work

The London Times has just carried a report of a meeting of the New York branch of Workaholics Anonymous. It says four people turned up. Two were late. It says there used to be another branch, but it closed. Its members couldn’t find the time to attend meetings.

A lot of the time it feels as if we are like that – too busy working to worry about whether we are too busy working.

That’s why you might be surprised to discover that in the midst of all the hype about overwork, Australians are winding back.

Professor Mark Wooden from the Melbourne Institute outlined what’s been happening at a seminar in Canberra during the week...

We began ramping up our hours of work from 1983. We didn’t ease off until the mid-1990’s. In that time the proportion of us putting in more than 50 hours a week soared from 13 per cent to 18 per cent. The proportion remained broadly steady for a few years and then began to fall from the year 2000. It’s now down to 16 per cent.

So why only in this decade have we begun to see sense? Mark Wooden believes that we’ve seen it all along.

His theory goes against what a lot of us take to be economic wisdom. But here it is anyway.

Australians never much liked working long hours. (Two-thirds of the women working more than 50 hours a week want to work less. More than half the men do). But throughout the 1980’s and early 1990’s they felt economically pressured to. After 1983 the Hawke-Keating government put into place the Accord aimed at cutting real wages. Australians felt squeezed.

In the 1990’s the wage-setting system changed to enterprise bargaining and real wages began to climb again.

Wooden believes that as soon as it no longer became economically essential to work excessive hours Australians began winding back.

What’s so revolutionary about his thinking? It is normally believed that the more someone is paid the harder they will work.

Wooden believes that it is the reverse. An increase in our pay encourages us to work less.

It turns the rhetoric of the tax cut lobby on its head. Tax cuts might not incentivise us to put in more hours as they previously argued.

They might instead give us the freedom the take it easy.

Except perhaps for women who have or are likely to have children.

As I explained a few weeks back pay matters for them. If it is not high enough, it is not worth their while to get into work at all.