Friday is the New Saturday
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Friday is the New Saturday

How a Four-Day Working Week Will Save the Economy

Pedro Gomes

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eBook - ePub

Friday is the New Saturday

How a Four-Day Working Week Will Save the Economy

Pedro Gomes

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About This Book

THE FIVE-DAY WORKING WEEK MUST CHANGE: HERE'S HOW.

'Fingers crossed that this book will shake up the five-day working week.'

Sir Christopher Pissarides, 2010 Nobel Laureate in Economics

Friday is the New Saturday makes a compelling, provocative and timely case for societal change. Drawing on an eclectic range of economic theory, history and data, Dr Pedro Gomes argues that a four-day working week will bring about a powerful economic renewal for the benefit of all society. It will stimulate demand, productivity, innovation and wages, whilst reducing unemployment and crushing populist movements. The arguments come from both the left and right of the political spectrum to show that a polarised society can still find common ground.

In the 1800s, people in the West worked six days each week, resting on Sundays. In the 1900s, firms began to give workers Saturdays off as well, realising that a two-day weekend helped the economy. In the 2000s, Friday will become the new Saturday, and we will never look back.

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Publisher
Flint
Year
2021
ISBN
9780750998291

PART ONE

Understanding the Four-Day Working Week

1

History Repeating

‘Progress comes from technical invention, and we shall be ever grateful to the discoverer of fire, the inventor of the electric dynamo, and the perfector of hollandaise sauce. But there are also momentous social inventions. Indeed, as society becomes more affluent, these may become increasingly vital. Without language we should still live in the cave, and all honour to that unknown genius who discovered that disputes of precedence could be settled by the toss of a coin. The four-day week is precisely such a social invention.’
Paul Samuelson, in his Foreword to 4 Days,
40 Hours, published in 1970
In 1970, Paul Samuelson received the Nobel Prize in Economics. The Nobel Committee stated that ‘More than any other contemporary economist, Samuelson has helped to raise the general analytical and methodological level in economic science. He has simply rewritten considerable parts of economic theory.’
An American of Polish origin, Samuelson received his PhD from Harvard, and spent his lengthy and distinguished career at the Massachusetts Institute of Technology (MIT), living long enough to write obituaries of all the other important economists of the twentieth century. Rightfully considered the father of modern economics, he developed so many different economic fields that it was impossible even for the Nobel Committee to select his single most important contribution. He influenced how economists understand the decision-making of consumers, the well-being of an economy, the workings of financial markets, the role of governments in providing public goods, the winners and losers of international trade, and how we perceive the economy as a dynamic process.
Samuelson was pivotal in increasing the use of mathematics in economics. He saw mathematics as the only language that could be used to tell logically coherent stories and express reasoning, and he came to personify the attempt of economics to distinguish itself from other social sciences, approximating it to the rigour of physics and the other ‘hard’ sciences. The adoption of mathematics became the defining feature of modern economics. Articles that had many words and few equations now have many equations and few words. For better and for worse, it is thanks to Samuelson that economists, proud of their intellect, are known for having over-inflated egos; they are disdained by other social scientists for over-simplifying a complex reality; they are mocked by natural scientists because of the unrealistic assumptions they make; and they are ignored by everyone else because their science seems impenetrable.
Today, Samuelson is widely admired for his ability to unify opposing views. He was, in his own words, a ‘dull centrist’. His textbook Economics: An Introductory Analysis has sold over 4 million copies worldwide and trained generations of economists. The book incorporates the two main branches of economics: microeconomics, which studies the behaviour of individual actors, such as consumers, firms or specific markets; and macroeconomics, which studies the whole economy within a country or region – how all firms, all households and the government interact. One branch studies a single tree, while the other studies the forest. Both are intertwined, but while microeconomics has a bottom-up approach, the approach of macroeconomics is top-down. Because of the inherited complexity of the interaction of so many actors, macroeconomics tends to be more controversial and is often more dogmatic. In his textbook, Samuelson combined two opposing views of macroeconomics. There was classical economics, the dominant paradigm up until the Great Depression in the 1930s, which focused on the capacity of firms to produce goods and ignored the role of spending by consumers. Conversely, Keynesians believed that recessions are caused by insufficient spending, and their approach was adopted to deal with the persistently high levels of unemployment that resulted from the Great Depression. The combination of these opposing views, now known as the neoclassical synthesis, reflects Samuelson’s ability to unify.
In 1970, Samuelson wrote the foreword to 4 Days, 40 Hours. A collection of articles by social scientists and management experts edited by Riva Poor, then a student at MIT’s Sloan School of Management, the book analysed a novel and promising management practice implemented at the time by more than thirty companies: a four-day working week comprised of forty hours, without reducing pay to workers. The book approached the four-day working week from a microeconomic angle. It reported how firms that implemented ‘4/40’ saw a rise in productivity and a reduction in costs, an increase in worker happiness, morale and job-satisfaction, and a reduction in staff turnover and absenteeism. It described how employees reacted to the change and what they did with their extra day of weekend, including resting, spending time with family, travelling, engaging in hobbies or sports, reading more, pursuing further education, or taking a part-time job.
Samuelson, in the year he was recognised as the father of modern economics, not only endorsed the four-day week but went so far as to call it a ‘momentous social invention’. Samuelson argued that it offered a new choice in an area where people had few options – what to do with their time – and that it could even change the structure of the family through levelling up the division of labour between husband and wife. However, although the most brilliant economist of his time categorically supported the idea, the four-day working week did not take off.
A decade later, in 1981, another book on the four-day working week was published: A Shorter Workweek in the 1980s. The author, William McGaughey, describes himself as ‘a philosopher, storyteller, landlord, labour economist, world historian, political candidate, arrestee and family man’. His book approached the four-day working week from a macroeconomic angle, as a policy prescription. It advocated the shorter working week as a solution for unemployment, by promoting work sharing. It also sought to counter the most serious objections to a shorter working week, namely that it would aggravate inflation, the economic bogeyman of the time, by raising firms’ costs, or that people might choose to increase their incomes by working longer rather than pursuing leisure.
McGaughey wrote a second book on the subject in 1989, Nonfinancial Economics: The Case for Shorter Hours of Work. This time he enlisted a heavyweight as co-author: Democratic Senator Eugene McCarthy. McCarthy was an economics professor before embarking on a career as a politician. He served in the US House of Representatives for ten years before becoming a senator in 1959. He was a maverick. Against the odds, he challenged the incumbent Lyndon Johnson for the Democratic nomination in the 1968 presidential election, galvanising the anti-Vietnam War movement. After a tight first primary, Johnson announced that he would not seek re-election and Robert Kennedy entered the race. McCarthy and Kennedy each won several primaries before Kennedy was killed. That year’s Democratic National Convention, marked by violence, picked Vice President Hubert Humphrey as its nominee. McCarthy sought the presidency a further four times, but never garnered the same momentum. In 2005, The Economist wrote in his obituary: ‘Irishness, daring, puckish humour, wilful solitariness, a sense of the pervading importance of higher things, were all delivered with professorial elegance by a man once described as “Thomas Aquinas in a suit”.’
In his first term as senator, McCarthy was the chair of a Special Committee on Unemployment, convened to consider the implications of automation. Among the various options to deal with worker displacement due to labour-saving technologies, the report stated that it might become necessary to reconsider the work-time option, should unemployment remain high. Many of these ideas were repeated in his co-authored book published some thirty years later, which also recycled several chapters of McGaughey’s original. The book argued that the four-day working week was the right policy to address increasing automation and the spread of labour-saving technologies. Its deeper philosophical point was that many jobs in the economy reflect pure waste. This waste has taken many forms, from excessive government regulation to the production of goods that could only be sold through significant advertising or by being exported cheaply to foreign countries, and from the conspicuous consumption of products we don’t need through to wars, the ultimate waste. The economy was full of fat, and reducing the working week would make it leaner.
Senator McCarthy is not the only high-profile politician to have supported the four-day working week. After the chaos of the 1968 Democratic primaries, Vice President Hubert Humphrey lost against Richard Nixon. This might have been good news for the four-day week, as Nixon himself, while Vice President in 1956, had foreseen in the ‘not too distant future a four-day work week’ and a ‘fuller family life for every American’. However, by the time Richard Nixon was president, he had changed his mind. (No wonder McCarthy later said that ‘Nixon is the kind of guy who, if you were drowning twenty feet from the shore, would throw you a fifteen-foot rope.’)
After a few decades in oblivion, the four-day working week made a comeback. In 2018, Robert Grosse, a Professor of Business Administration at Arizona State University and former President of the Academy of International Business, wrote The Four-Day Workweek. His book is a modern take on 4 Days, 40 Hours; instead of calling for a rearrangement of the forty hours into four days, it proposes a reduction to thirty-two working hours. Grosse reaffirms the link between reducing working hours and increasing productivity. He also analyses the implementation of the four-day week and the trade-off between productivity gains and wage cuts. Academic in tone and full of statistics, his book acknowledges a possible role for the government in providing incentives for workers and firms that switch to a four-day week, but overall it takes a microeconomic view – it is directed at ‘forward-thinking executives and leaders’.
In 2020, another book on the subject was published. The 4 Day Week is also written from the microeconomic perspective, but it is told from a personal perspective. The author, Andrew Barnes, is the CEO of Perpetual Guardian, New Zealand’s largest statutory trust company with £100 billion in assets and 240 employees. In 2018 he implemented what he called ‘the 100-80-100 rule’ at the firm. Workers received their wages in full and worked 80 per cent of the time, provided they delivered the agreed output. And they did. Barnes now travels the world, telling audiences how the ‘five-day week is a nineteenth-century construct that is not fit for purpose in the twenty-first century’. He did not implement the four-day working week for charity or for lifestyle reasons after a near-death experience; he is a businessman and he did it for profit.
These five books demonstrate the two approaches we can take to the four-day working week, and the range of actors who might lead the revolution. The books by Poor, Grosse and Barnes take the bottom-up microeconomic approach, listing the benefits to firms and workers of reducing working hours. Implicitly, they assume that workers and firms should lead the revolution, and that whatever they want will be provided by the market. The books by McGaughey and McCarthy present a top-down macroeconomic perspective. They list the benefits of a four-day working week for society, and do not expect markets to convert to the four-day week spontaneously. Instead, they argue that governments should lead the revolution through legislation.
It is a time of growing publicity for the four-day working week – more firms are implementing it with astounding results, new politicians are supporting it, unions are getting behind it too, together with several think tanks. Will the four-day working week finally take off?
There are grounds for optimism, but it is worth remembering that firms have been experimenting with the four-day working week and that for at least fifty years there have been calls for it from many serious economists and politicians. Doubters of the four-day working week can simply point to these previous failed attempts and discard the idea as an impractical fantasy. If it didn’t work before, why should it work now?
To understand why the four-day working week has not taken off before, we must look beyond the hype and learn why the considerable arguments in its favour have only ever persuaded a small minority. So, what can we learn from history to find better arguments for a four-day working week in the twenty-first century?

2

Singing an Old Song

‘The biggest problem is not to let people accept new ideas, but to let them forget the old ones.’
John Maynard Keynes
Working five days a week is not written in our genes, the scriptures or the stars. The working week is an economic, social and political construct. Until the beginning of the twentieth century, people in the Western world worked six days each week and rested on Sundays. In 1908, a few small businesses in the US implemented a revolutionary practice: the five-day working week. In 1922, the National Association of Manufacturers published a bulletin called Will the 5-Day Week Become Universal? It Will Not. They gave eight reasons against the radical proposal:
• It would greatly increase the cost of living.
• It would increase wages generally by more than 15 per cent and decrease production.
• It would be impractical for all industries.
• It would help meet a short-term sales decline but would not work permanently.
• It would create a craving for additional luxuries to occupy the additional time.
• It would mean a trend towards leisure and the Arena – Rome did that and Rome died.
• It would be against the best interest of those who want to work and advance.
• It would make us more vulnerable to the economic onslaughts of Europe, now working as hard as she can to overcome our lead.
The objections to the four-day working week today are simply repetitions of these same arguments. They can be grouped into four categories: economic, operational, ethical and comparative. The first and second reasons are economic. They are misguided because they take a static view of the economy and of the relationship between workers and firms. They assume nothing else will change in response to the four-day working week; workers will not change the energy they put into production, managers will not change their practices, and consumers will not change their demand for goods. In fact, the opposite is true – economies are dynamic and are constantly adjusting.
These economic reasons also ignore the distinction between average and marginal productivity, one of the crucial concepts in economics. The longer you work, whether in hours or days, your added contribution – your marginal productivity – declines. Workers are less productive in the eighth hour of work than in the seventh, and less productive on a Friday than on a Thursday.
Arguments three and four concern the practicality of shortening the work week. Recently, we could read in The Telegraph: ‘We all know that the four-day week proposal is unaffordable, impossible, imaginary’ or ‘It is too operationally complex’. A ‘crackpot plan’ said Boris Johnson, the UK Prime Minister. These are lazy arguments made by people averse to change and unwilling to judge a proposal by its merits. Moreover, there is no economic substance to an argument of just following the status quo.
Arguments five to seven are ethical in nature. Their modern equivalent is ‘Under the four-day working week, people are just going to watch TV and get dumb.’ These types of arguments are paternalistic and patronising, and behind them lies the view that leisure is somehow perverse or evil. At the beginning of the nineteenth century, the workday lasted from sunrise to sunset, and the first shorter-hours movement aimed to reduce the maximum working day to ten hours. In 1825, the master carpenters in Boston responded to the demands of the journeymen whom they employed: ‘We learn with surprise and regret that a large number of those who are employed as journeymen in this city have entered into a combination for the purpose of altering the time of commencing and terminating their daily labour from that which has been customary from time immemorial.’ They considered such a combination ‘fraught with numerous and pernicious evils’ and would expose the journeymen themselves ‘to many temptations and improvident practices’ from which they were ‘happily secure’ when working from sunrise to sunset. In other words, workers would spend their free time drinking, gambling, fighting and fornicating.
The philosopher Bertrand Russell, in his 1932 timeless essay In Praise of Idleness, summarised it well:
The idea that the poor should have leisure has always been shocking to the rich. In England, in the early nineteenth century, fifteen hours was the ordinary day’s work for a man; children sometimes did as much, and very commonly did twelve hours a day. When meddlesome busybodies suggested that perhaps these hours were rather long, they were told that work kept adults from drink and children from mischief. When I was a child, shortly after urban working men had acquired the vote, certain public holidays were established by law, to the great indignation of the upper classes. I remember hearing an old Duchess say: ‘What do the poor want with holidays? They ought to work.’ People nowadays are less frank, but the sentiment persists, and is the source of much of our economic confusion.
At least the biblical argument widely invoked those days against the five-day working week – that God only rested on Sunday – cannot...

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