Wednesday, December 22, 2010

Can Reducing The Standard Work Week Reduce Unemployment?

Jeff Nielson proposes a solution to structural unemployment by reducing the standard work week from five days to four days. For 200 years, a shorter work week has helped restructure the labor market. See the following article from The Street.

This piece is dedicated to explaining the concept of structural unemployment in such painful simplicity that each and every person who reads it will, in turn, be able to explain it to our esteemed leaders and experts.

No treatise for "dummies" would be complete without starting with a simple definition. In the case of "structural unemployment," the definition is the epitome of simplicity: structural unemployment is unemployment caused by a faulty structure of the labor market. Before my critics accuse me of circular reasoning, or simply semantics, let me defend myself.

With any simple term, we cannot define it without encountering the trap of needing to define it in terms of itself -- or simply borrow a close synonym, and do the same thing. Thus, anyone trying to define "big" would inevitably find themselves forced to use terms like "large," or "greater than," and be subject to identical criticisms.

With a term like structural unemployment, which is literally self-explanatory, we cannot possibly create a definition that does not involve "a problem with structure." Such a definition may seem pointless, and yet even this simple step is beyond our leaders and experts.

Consider this: We know what that none of these charlatans are capable of understanding the definition of structural unemployment any/every time we hear one of them attempt to formulate a "solution." These exercises in ineptitude fall into two categories: "job retraining" and/or "improving economic performance."

With respect to defining structural unemployment, let's take one more step down our road of simplicity. When I say that our labor markets have "faulty structures," we can instantly identify the precise nature of that structural problem (by definition): our economies are now structured to provide far too few jobs in comparison to the total number of workers. This may also seem maddeningly self-evident, but it too is beyond the grasp of the leaders and experts.

In an economy which, in absolute terms, simply produces far too few jobs, job-retraining by itself is nearly irrelevant. When you shuffle a deck of cards, you haven't "restructured" that deck in any meaningful sense. All you have done is changed the order, with respect to which cards come to the top of the deck first.

It does no good to simply "retrain" large numbers of workers when (for the most part) pushing one of these "retrained" workers back into the job market merely takes away the job of a current worker (who then goes to "the discard pile"). If we are not doing something to radically increase the total number of jobs, then we are merely pretending to address the problem (something at which our "leaders" excel).

Equally idiotic are those "experts" who claim that improved economic performance can solve our problems. Again, I fall back on simple definitions. "Improving economic performance" is a cyclical change. We can "improve the economy" for a while (exclusively by piling more debt onto our economies), but that is only a solution for "cyclical unemployment."

The entire reason that our leaders and experts put the word "structural" in front of the word "unemployment" is that this is not cyclical unemployment. By definition, this is unemployment which can never be solved through a cyclical up-cycle.

Up to this point, I have defined what "structural unemployment" is, what it is not, and how not to fix it. With three quarters of my task accomplished, this only leaves me with the solution. In keeping with the theme, my solution is the epitome of simplicity: We need to restructure our labor markets.

This time critics could rightfully accuse me of circular reasoning, and semantics -- if not for one point: We already have 200 years of economic history that tells us exactly how to restructure our labor markets. We must reduce the length of the work week.

I can already hear the clamor from business leaders and right-wing (i.e., brain-dead) economists: "It won't work," "it's too expensive," I don't even have to be psychic to know exactly what they will they say, because it's exactly what business leaders and right-wing economists were saying 200 years ago, when the "standard work-week" was seven days a week, 12 hours a day -- or roughly 80 hours per week, and our economies were suffering from (you guessed it) "structural unemployment."

And decades later, when it was proposed that we go from a 70-hour work week to a 60-hour work week, these enlightened pundits said exactly the same thing. And decades later, when we went from a 60-hour week to a 50-hour week, these rocket scientists made the same predictions. And decades later, when we went from a 50-hour week to a 40-hour these intellectual titans boldly made the same prediction. Now, today, decades later than we should have made the change to a four-day work week, I am proposing that we follow a 200-year old "formula" -- and yet I am utterly alone in the Western world.

The other way of looking at it is that the week is now split into two halves. In other words, all of the public and private infrastructure that currently functions on a five-day work work -- and sits idle nearly 30% of the year -- could now be utilized seven days a week by having a four-day shift and a three-day shift.

Keeping their 200 year-old "perfect record" intact, we can count on every business leader and right-wing economist to tell us that moving to a four-day work week (which would increase total job positions in our labor markets by more than 20% after factoring in the "multiplier effect") is "too expensive" and "will not work."

For those of you who actually manage to corner one of these evasive "leaders" or "experts," and who decide to try to explain structural unemployment to them (along with its solution), here are three skill-testing questions. Asking these three questions of the leader or expert present will allow you to determine whether to take the time to complete your explanation, or whether you could use your time more productively by explaining it to your "pet rock."
  • Keeping in mind that the last change in the work week was more than a half century ago, did the previous reductions in the work week make our economies stronger or weaker?
  • If your target isn't aware that our prosperity and our standard of living got somewhat better between 1800 and 1950, talk to your rock.
  • Do you have a better idea to fix structural unemployment?
As I explained before, if your target even opens his mouth to try to answer that question, talk to the rock.
  • Can you count backwards from seven to four?
We must recognize the distinct possibility that these "leaders" and "experts" are simply not capable of the "arithmetic" necessary to go from a five-day work week to a four-day work week. If your target gets stuck at "five," talk to the rock.

This article by Jeff Nielson has been republished from The Street, a site covering financial news, commentary, analysis, ratings, and business and investment content.

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