In the early 1900s, there were several labor strikes that demanded a 40-hour work week because, well, people were being overworked. In today’s world, the news is littered with several labor strikes that demand a 40-hour work week because people are being UNDER worked.
Just a note: this completely debunks the Income Substitution Effect Micro model that assumes that people don’t want to work. They clearly do, regardless of motive.
It’s really 2 sides of the same coin. The point is that companies are trying to control labor costs, to maximize profit. This is usually done in two ways: increase productivity while lowering wages (which creates Surplus Value), or increase productivity while lowering hours (which also creates Surplus Value).
So there’s two ways to measure this as a factor of productivity. If basic theory holds, the two measures should be relatively the same.
First is Compensation as a ratio of productivity output:
Next is hours as a ratio of productivity output
It’s pretty bad. Anything less than a 1:1 ratio means that productivity output outpaces wages and hours. And as of 2013, both wages and hours are below a 1:1 ratio. Basically, people are getting paid less for the same levels of production output, and getting fewer hours for the same levels of production output. The theory has been proved.
In other words, labor costs are being reduced on a Macro level, and it’s been going on since 2005. As soon as wages hit the 1:1 floor, hours moved closer to the 1:1 floor. Now both are below the 1:1 floor.
While this may sound kinda Marxist, it’s really not. Marx can be said to have been chasing the ghost of Adam Smith, because every economic theorist from Adam Smith forward has talked about labor costs as a variable control of capital on some level.
The demand for the 40-hour work week is exactly the same now, as it was in 1900; just for different reasons.
The fallacy, as I discussed previously, is that increasing hours has no effect on real income, since companies will reduce labor costs by reducing wages. Once those reductions in wages hits the legal bottom (vis-a-vis minimum wage), the only thing left to reduce is hours while maintaining productivity output.
And minimum wage has been under attack for a long time.