Introduction

Americans worked a collective 270 billion hours in 2017, 1,739 hours for every worker.¹ These numbers mark an extraordinary burden of labor in our country: millions of people are spending far too much of their waking lives ensnared in needlessly excessive hours of work.

Too many Americans have no vacation days, or very few, or they are not paid enough to enjoy them properly. Too many Americans work hundreds of hours of unpaid overtime, or are forced to choose between parenthood and employment. Too many Americans are spending their twilight years in front of a cash register because they can’t afford a real retirement.

But it doesn’t have to be this way. With some simple and easy reforms, the United States could greatly increase the leisure time enjoyed by its workers. America has long since solved the hard, labor-intensive problems of economic production. This is a very rich country; we can afford to make sensible and morally urgent changes to our labor system.

In this paper, I will outline some of the problems plaguing the American labor market, and then suggest several policy solutions to fix them.

Hours Worked Among Nations

Americans work far, far more than their counterparts in peer European nations. The Organization of Economic Cooperation and Development (OECD) collects national statistics on labor, which are shown in Figure 1.² In one year, the average American worker labors more hours than the average worker in any peer nation.

This trend becomes even more pronounced when we consider the wealth of different nations. Across almost all countries, the richer a nation is, the less time its workers spend on the job. Intuitively, this makes sense: the more output a nation’s economy is producing per unit of labor, the more free time workers can have.

European countries have typically chosen a mix of greater wealth and greater free time—but the United States is different. Figure 2 shows a plot of GDP per hour worked compared to working hours for all countries in the OECD (except Ireland and Luxembourg, as their output is inflated due to tax shelter activity, and Turkey, for which hours-worked data are not recently available).³ This provides a good measure of how countries have chosen more leisure time as their productivity has advanced. The trend line is strong—but so is America’s outlier position:

Alternatively, we can calculate the distance from the trend line in hours, and thus calculate how overworked or underworked each country is relative to average behavior. Figure 3 shows that the US works 269 more hours than its enormously wealthy economy would predict—making it by this measure the second-most overworked country in the world, just slightly behind Iceland.

America: a historical laggard

Another way of conceptualizing American overwork is by looking at the past. As most nations have gotten richer, their average worker has worked fewer hours. But this is not true of the United States. As shown in Figure 4, among wealthy OECD nations with data going back that far, the U.S. was in the middle of the pack among rich nations in 1970. Now, it works the most out of any in this cohort.

Alternatively, we can examine how average working hours have dropped among wealthy nations since 1970, as seen in Figure 5. Just Sweden has dropped less than the U.S., but only because Swedes worked the least in this group in the 1970s and have since drifted towards the middle.

American work is obtained by an unusually brutal labor market, with only meager support for the unemployed, and virtually nothing for people who have dropped out of the labor market. Take unemployment insurance, or payments to workers who lose their job. This varies considerably across countries, both in funding and in institutional structure, but one way to take a quick glance to see how much income drops during a period of unemployment. Figure 6 shows a comparison among peer nations.⁴

The supposed aim of making unemployment brutally unpleasant is to horsewhip people into the labor market, but many simply give up altogether instead.⁵

The United States presents three major challenges to working parents. First, since raising a child takes so much time, energy, and money, parents have little time to work. Second, even when a child is old enough to be placed with a nanny or in daycare, this can be prohibitively expensive. Third, compounding both other problems, is the fact that prime childbearing years are in young adulthood—when people are starting their careers and their salaries are usually at their lowest point.

These obstacles were more manageable in previous ages when it was feasible to support a family on one middle-class salary. But since the 1970s, both parents generally have had to work if a family is to remain solvent—even those who are quite far up into the upper-middle class. Additionally, of course, many women rightly want an equal chance at jobs and career success.

That’s why other countries have put welfare institutions in place to assist with parenthood. Part of the typical approach is paid family leave, in which new parents receive public benefits while they take time off work to care for an infant, and some sort of daycare subsidy to cover the time between infancy and school age.

The United States is virtually alone among all nations in providing no paid leave policy at the national level. Table 1 shows a comparison of selected peer nations (with some institutional details omitted for the sake of brevity).⁶

Retirement failure

Retirement in the United States has traditionally rested on three pillars: Social Security, pensions, and private savings. The latter became particularly important starting in 1978 with the partly-accidental creation of the 401(k) tax benefit, which incentivizes workers to save and invest by allowing them to defer taxes in those accounts until after they retire.⁷

All three of these pillars are in various states of disrepair. Social Security was cut as part of a 1983 reform bill which reduced benefits and advanced the age at which full benefits can be claimed.⁸ Pension payments relative to previous income, meanwhile, are in the United States considerably below the average among wealthy nations.⁹

Additionally, the average figure here tends to overstate the generosity of Social Security for poorer retirees. Where many OECD countries have a flat pension baseline that all retirees get, the Social Security old-age pension in the U.S. has no minimum benefit, so seniors with low or no earnings history receive no benefits.

Meanwhile, defined-benefit pensions have declined substantially, and 401(k)s have proved to be an awesome policy disaster. Instead of enabling middle-class savers to build up their nest eggs, the vast bulk of 401(k) assets are accounted for by the wealthy.¹⁰

Using the Survey of Consumer Finances from the Federal Reserve, I calculated that 40 percent of households aged 50–64 have nothing at all in a personal retirement account. Two-thirds in that age group have less than one year of income saved up in retirement accounts.

Some commentators argue that we should not look only at explicit retirement assets but also at overall net worth for these purposes. I do this in Figure 9 below. Around 30 percent of households between the ages of 50 and 64 have a net worth that is less than 1 year of income. Three-quarters of households have net worths that are less than 7 times their income, which is the amount retirement advisors commonly say 55-year-olds need to have achieved to secure their retirement.¹¹

Meanwhile, 401(k) accounts are generally complicated and burdensome to navigate. Many eligible workers refuse to enroll due to procrastination or fear of the vast industry of financial swindlers spawned by these credits whose business model is tricking people into high-fee plans.¹²

Finally, there is evidence that large swathes of the population simply cannot afford to save more than they currently are. Early withdrawals from 401(k) accounts mean steep tax penalties, but many have done it anyway, especially when times are hard. A Federal Reserve study found that at the bottom of the Great Recession in 2010, early withdrawals from people under 55 were nearly half the size of contributions.¹³

Taken together, America’s retirement institutions are failing U.S. seniors. A huge fraction of the over-65 population simply cannot afford to retire—employment rates among this population have increased sharply recently, rising from 12.8 percent in 2000 to 18.6 percent in 2016.¹⁴ Bankruptcies are also skyrocketing among this cohort, more than doubling between 1991 and 2018.¹⁵

The American employment rate among prime working-age people is considerably below the developed world standard. But its employment rate among people over age 65 is the opposite—as Figure 10 shows, dramatically above peer OECD countries:

Not only does America fail to provide jobs to many people who could take them and need them, it also fails to retire a significant proportion of its senior population.

Illness often limits our ability to work, and virtually everyone gets sick occasionally. To prevent such routine occurrences leading to the loss of a job—and employees from coming to work sick and infecting their co-workers—sensible countries require some paid sick leave for most workers.

But not the United States, which lags well behind even middle-income countries in this arena. As a World Policy Center meta-analysis¹⁶ details, the U.S. and South Korea are the only OECD countries without any national sick leave program.

Today, a handful of individual U.S. states do have a sick leave program—but most are pathetically meager, and even the most generous are still not as good as the most advanced peer nations. Table 2, for example, compares the California¹⁷ system, the new Massachusetts¹⁸ system (which was hugely upgraded in late 2018), and that of Norway:¹⁹

Supposedly liberal California is about 5 percent of the way to a first-class system, even setting aside its onerous qualification procedure. Massachusetts will be in the same league as peer nations if it is fully implemented (it will not actually start collecting revenue until mid-2019, and benefits will not be disbursed until 2021). But even then, it will only cover about 2 percent of the U.S. population.

Finally, there is just plain old time off work. Most countries have holidays of some kind to commemorate religious (or quasi-religious) celebrations, important historical events, or seasonal markers. Then, following the usual pattern of nations purchasing better lives for their citizenry as they become wealthier, most rich nations have added a paid leave requirement for workers.

The details, eligibility requirements, and funding systems vary enormously between countries. But the general trend, shown in Figure 11,²⁰ is clear: As usual the U.S. is far, far behind peer nations. It does at least have some public holidays, but unlike every other wealthy nation, no statutory leave whatsoever.

For most of recorded human history, the vast majority of people have been peasants, providing the food that supported all the various priests, nobles, or kings. It meant a lot of hard manual labor, with diseases and childbirth taking a heavy additional toll. But farming techniques changed very gradually, if at all—any peasant could count on his children growing the same crops in more or less the same way he did.

All that changed with the Industrial Revolution. For the first time in history, the world saw spectacular and sustained increases in economic productivity—that is, more production with less work, in manufacturing and farming alike. This caused tremendous social upheaval, as new efficient factories drove millions of individual manufacturers out of business. Peasants were driven off the land and into polluted cities in Europe, while India and China were forcibly deindustrialized by imports brought in at gunpoint—leading directly to devastating famines.

However, the worst of that disruption has long since passed in rich countries. America has today piled up well over two centuries’ worth of consistent productivity increases. Modern U.S. workers are dozens of times more productive than those of the 18th century.

Status quo apologists like Steven Pinker argue²⁷ that liberal capitalism more or less automatically produces broad quality of life improvements. But the above analysis proves that the productive resources developed by economic advancement provide only the potential for improvement—they must be actively harnessed by state policy to actually benefit the broad population.

Indeed, this is not even the first time America has been forced to learn this lesson. For nearly the whole of the 19th century, as the U.S. economy exploded in productivity, the average height and lifespan of American citizens fell steadily—not bottoming out until the 1890s.²⁸ It took strict regulations in sanitation, food purity, workplace safety, and many other areas during the Progressive Era and the New Deal for those potential improvements to be realized. In this and in many other respects, America today is re-learning the lessons of a century ago.

However, America’s current pathetically backward labor system is, in a way, a blessing. It is not necessary to innovate new institutional forms or experiment in untested policy areas, as it was back in the early 1900s. Copy-pasting proven models from wiser nations, and learning from America’s own history, is mostly all that is needed. With just a few such reforms, the American worker could be living a life of near-incomprehensible luxury.