Where Less Work Is More Productive

Yesterday we found out that, pending a vote, the UAW strike was over. Different for the big three automakers, the tentative agreement included an immediate 11 percent raise and restored cost of living increases from all three.

Annual Work Hours

In 1914, Henry Ford shocked the auto world.

As founder, President, and CEO of Ford Motor, he raised a male factory worker’s minimum wage from $2.34 for a nine-hour workday to $5 for eight hours and extended the policy to women in 1916.  Then, taking the next step in 1926, Ford went down from six workdays to a 5-day 40-hour week.

Fast forwarding to 2023, we are talking about a starting wage of more than $30 an hour (if the UAW approves the settlement when they vote). Ignoring the deduction details, for an eight-hour day, that takes us to $240. Meanwhile, that $5 pay raise in 1914 would have been the same as $153.89 today.

Not in the deal, the 32-hour workweek at 40-hour pay had been in the union’s original demands. Currently, the U.S. annual average work hours are at 1,811. For OECD countries, the annual average total hours worked ranges from Germany’s low of 1,341 to a Colombia high at 2,405:

Our Bottom Line: Tradeoffs

Perhaps the more crucial question is not how long we work. Instead, we can ask about our productivity. Yes, because of more paid holidays and more part time workers, European employees work fewer hours than their U.S. counterparts. However, at work, they are more productive.

Focusing on Germany, we would see a typical German worker’s output is 20 percent lower than a U.S. employee. But comparing output per hour, the German worker produces one percent more.

What we have then is a European worker, valuing leisure time, that is willing to work less and earn less. Similarly, like Germany, the Luxembourg, Ireland, Belgium, and Denmark worker was more productive. And either equally productive or slightly lower, we have the Netherlands (equal), Austria (1 percent lower), France (2 percent lower), and Sweden (5 percent lower).

As a result, for the worker, the tradeoff is more leisure exchanged for less income and less work. But as a nation, productivity is not sacrificed.

You see where we have wound up. Less can be more. (But with the UAW more is more.)

My sources and more: Thanks to the Bruegel Blog for inspiring today’s post. From there, I went to CNBC and the AP for the UAW facts and then a Bruegel summary from Timothy Taylor, and the OECD. And finally, focusing on the U.S., WalletHub ranked the “hardest working cities.”

Please note that our Henry Ford history was in a previous econlife post.