SPREAD-THE-WORK
SCHEMES
I HAVE REFERRED to various union make-work and featherbed
practices. These practices, and the public toleration of them,
spring from the same fundamental fallacy as the fear of
machines. This is the belief that a more efficient way of doing a
thing destroys jobs, and its necessary corollary that a less
efficient way of doing it creates them.
Allied to this fallacy is the belief that there is just a fixed
amount of work to be done in the world, and that, if we cannot
add to this work by thinking up more cumbersome ways of
doing it, at least we can think of devices for spreading it around
among as large a number of people as possible.
This error lies behind the minute subdivision of labor upon
which unions insist. In the building trades in large cities the
subdivision is notorious. Bricklayers are not allowed to use
stones for a chimney: that is the special work of stonemasons.
An electrician cannot rip out a board to fix a connection and put
it back again: that is the special job, no matter how simple it
may be, of the carpenters. A plumber will not remove or put
back a tile incident to fixing a leak in the shower: that is the job
of a tile-setter.
Furious "jurisdictional" strikes are fought among unions for
the exclusive right to do certain types of borderline jobs. In a
statement prepared by the American railroads for the
Attorney-General's Committee on Administrative Procedure,
the roads gave innumerable examples in which the National
Railroad Adjustment Board had decided that
each separate operation on the railroad, no matter
how minute, such as talking over a telephone or
spiking or unspiking a switch, is so far an exclusive
property of a particular class of employee that if an
employee of another class, in the course of his regular
duties, performs such operations he must not
only be paid an extra day's wages for doing so, but at
the same time the furloughed or unemployed members
of the class held to be entitled to perform the
operation must be paid a day's wages for not having
been called upon to perform it.
It is true that a few persons can profit at the expense of the
rest of us from this minute arbitrary subdivision of laborprovided
it happens in their case alone. But those who support
it as a general practice fail to see that it always raises production
costs; that it results on net balance in less work done and in
fewer goods produced. The householder who is forced to employ
two men to do the work of one has, it is true, given
employment to one extra man. But he has just that much less
money left over to spend on something that would employ
somebody else. Because his bathroom leak has been repaired at
double what it should have cost, he decides not to buy the new
sweater he wanted. "Labor" is no better off, because a day's
employment of an unneeded tile-setter has meant a day's
disemployment of a sweater knitter or machine handler. The
householder, however, is worse off. Instead of having a repaired
shower and a sweater, he has the shower and no sweater.
And if we count the sweater as part of the national wealth, the
country is short one sweater. This symbolizes the net result of
the effort to make extra work by arbitrary subdivision of labor.
62
But there are other schemes for "spreading the work," often
put forward by union spokesmen and legislators. The most
frequent of these is the proposal to shorten the working week,
usually by law. The belief that it would "spread the work" and
"give more jobs" was one of the main reasons behind the
inclusion of the penalty-overtime provision in the existing Federal
Wage-Hour Law. The previous legislation in the states,
forbidding the employment of women or minors for more, say,
than forty-eight hours a week, was based on the conviction that
longer hours were injurious to health and morale. Some of it
was based on the belief that longer hours were harmful to
efficiency. But the provision in the federal law, that an employer
must pay a worker a 50 percent premium above his
regular hourly rate of wages for all hours worked in any week
above forty, was not based primarily on the belief that fortyfive
hours a week, say, was injurious either to health or efficiency.
It was inserted partly in the hope of boosting the
worker's weekly income, and partly in the hope that, by discouraging
the employer from taking on anyone regularly for
more than forty hours a week, it would force him to employ
additional workers instead. At the time of writing this, there
are many schemes for "averting unemployment" by enacting a
thirty-hour week or a four-day week.
What is the actual effect of such plans, whether enforced by
individual unions or by legislation? It will clarify the problem if
we consider two cases. The first is a reduction in the standard
working week from forty hours to thirty without any change in
the hourly rate of pay. The second is a reduction in the working
week from forty hours to thirty, but with a sufficient increase in
hourly wage rates to maintain the same weekly pay for the
individual workers already employed.
Let us take the first case. We assume that the working week is
cut from forty hours to thirty, with no change in hourly pay. If
there is substantial unemployment when this plan is put into
effect, the plan will no doubt provide additional jobs. We
cannot assume that it will provide sufficient additional jobs,
however, to maintain the same payrolls and the same number of
man-hours as before, unless we make the unlikely assumptions
63
that in each industry there has been exactly the same percentage
of unemployment and that the new men and women
employed are no less efficient at their special tasks on the
average than those who had already been employed. But suppose
we do make these assumptions. Suppose we do assume
that the right number of additional workers of each skill is
available, and that the new workers do not raise production
costs. What will be the result of reducing the working week
from forty hours to thirty (without any increase in hourly pay)?
Though more workers will be employed, each will be working
fewer hours, and there will, therefore, be no net increase in
man-hours. It is unlikely that there will be any significant
increase in production. Total payrolls and "purchasing power"
will be no larger. All that will have happened, even under the
most favorable assumptions (which would seldom be realized)
is that the workers previously employed will subsidize, in
effect, the workers previously unemployed. For in order that
the new workers will individually receive three-fourths as
many dollars a week as the old workers used to receive, the old
workers will themselves now individually receive only threefourths
as many dollars a week as previously. It is true that the
old workers will now work fewer hours; but this purchase of
more leisure at a high price is presumably not a decision they
have made for its own sake: it is a sacrifice made to provide others
with jobs.
The labor union leaders who demand shorter weeks to
"spread the work" usually recognize this, and therefore they
put the proposal forward in a form in which everyone is supposed
to eat his cake and have it too. Reduce the working week
from forty hours to thirty, they tell us, to provide more jobs;
but compensate for the shorter week by increasing the hourly
rate of pay by 33.33 percent. The workers employed, say, were
previously getting an average of $226 a week for forty hours
work; in order that they may still get $226 for only thirty hours
work, the hourly rate of pay must be advanced to an average of
more than $7.53.
What would be the consequences of such a plan? The first
and most obvious consequence would be to raise costs of production.
If we assume that the workers, when previously employed
for forty hours, were getting less than the level of
production costs, prices and profits made possible, then they
could have got the hourly increase without reducing the length
of the working week. They could, in other words, have worked
the same number of hours and got their total weekly incomes
increased by one-third, instead of merely getting, as they are
under the new thirty-hour week, the same weekly income as
before. But if, under the forty-hour week, the workers were
already getting as high a wage as the level of production costs
and prices made possible (and the very unemployment they are
trying to cure may be a sign that they were already getting even
more than this), then the increase in production costs as a result
of the 33.33 percent increase in hourly wage rates will be much
greater than the existing state of prices, production and costs
can stand.
The result of the higher wage rate, therefore, will be a much
greater unemployment than before. The least efficient firms
will be thrown out of business, and the least efficient workers
will be thrown out of jobs. Production will be reduced all
around the circle. Higher production costs and scarcer supplies
will tend to raise prices, so that workers can buy less with the
same dollar wages; on the other hand, the increased unemployment
will shrink demand and hence tend to lower prices.
What ultimately happens to the prices of goods will depend
upon what monetary policies are then followed. But if a policy
of monetary inflation is pursued, to enable prices to rise so that
the increased hourly wages can be paid, this will merely be a
disguised way of reducing real wage rates, so that these will
return, in terms of the amount of goods they can purchase, to
the same real rate as before. The result would then be the same
as if the working week had been reduced without an increase in
hourly wage rates. And the results of that have already been
discussed.
The spread-the-work schemes, in brief, rest on the same sort
of illusion that we have been considering. The people who
support such schemes think only of the employment they
might provide for particular persons or groups; they do not
stop to consider what their whole effect would be on everybody.
The spread-the-work schemes rest also, as we began by
pointing out, on the false assumption that there is just a fixed
amount of work to be done. There could be no greater fallacy.
There is no limit to the amount of work to be done as long as any
human need or wish that work could fill remains unsatisfied. In
a modern exchange economy, the most work will be done when
prices, costs and wages are in the best relations with each other.
What these relations are we shall later consider.
SCHEMES
I HAVE REFERRED to various union make-work and featherbed
practices. These practices, and the public toleration of them,
spring from the same fundamental fallacy as the fear of
machines. This is the belief that a more efficient way of doing a
thing destroys jobs, and its necessary corollary that a less
efficient way of doing it creates them.
Allied to this fallacy is the belief that there is just a fixed
amount of work to be done in the world, and that, if we cannot
add to this work by thinking up more cumbersome ways of
doing it, at least we can think of devices for spreading it around
among as large a number of people as possible.
This error lies behind the minute subdivision of labor upon
which unions insist. In the building trades in large cities the
subdivision is notorious. Bricklayers are not allowed to use
stones for a chimney: that is the special work of stonemasons.
An electrician cannot rip out a board to fix a connection and put
it back again: that is the special job, no matter how simple it
may be, of the carpenters. A plumber will not remove or put
back a tile incident to fixing a leak in the shower: that is the job
of a tile-setter.
Furious "jurisdictional" strikes are fought among unions for
the exclusive right to do certain types of borderline jobs. In a
statement prepared by the American railroads for the
Attorney-General's Committee on Administrative Procedure,
the roads gave innumerable examples in which the National
Railroad Adjustment Board had decided that
each separate operation on the railroad, no matter
how minute, such as talking over a telephone or
spiking or unspiking a switch, is so far an exclusive
property of a particular class of employee that if an
employee of another class, in the course of his regular
duties, performs such operations he must not
only be paid an extra day's wages for doing so, but at
the same time the furloughed or unemployed members
of the class held to be entitled to perform the
operation must be paid a day's wages for not having
been called upon to perform it.
It is true that a few persons can profit at the expense of the
rest of us from this minute arbitrary subdivision of laborprovided
it happens in their case alone. But those who support
it as a general practice fail to see that it always raises production
costs; that it results on net balance in less work done and in
fewer goods produced. The householder who is forced to employ
two men to do the work of one has, it is true, given
employment to one extra man. But he has just that much less
money left over to spend on something that would employ
somebody else. Because his bathroom leak has been repaired at
double what it should have cost, he decides not to buy the new
sweater he wanted. "Labor" is no better off, because a day's
employment of an unneeded tile-setter has meant a day's
disemployment of a sweater knitter or machine handler. The
householder, however, is worse off. Instead of having a repaired
shower and a sweater, he has the shower and no sweater.
And if we count the sweater as part of the national wealth, the
country is short one sweater. This symbolizes the net result of
the effort to make extra work by arbitrary subdivision of labor.
62
But there are other schemes for "spreading the work," often
put forward by union spokesmen and legislators. The most
frequent of these is the proposal to shorten the working week,
usually by law. The belief that it would "spread the work" and
"give more jobs" was one of the main reasons behind the
inclusion of the penalty-overtime provision in the existing Federal
Wage-Hour Law. The previous legislation in the states,
forbidding the employment of women or minors for more, say,
than forty-eight hours a week, was based on the conviction that
longer hours were injurious to health and morale. Some of it
was based on the belief that longer hours were harmful to
efficiency. But the provision in the federal law, that an employer
must pay a worker a 50 percent premium above his
regular hourly rate of wages for all hours worked in any week
above forty, was not based primarily on the belief that fortyfive
hours a week, say, was injurious either to health or efficiency.
It was inserted partly in the hope of boosting the
worker's weekly income, and partly in the hope that, by discouraging
the employer from taking on anyone regularly for
more than forty hours a week, it would force him to employ
additional workers instead. At the time of writing this, there
are many schemes for "averting unemployment" by enacting a
thirty-hour week or a four-day week.
What is the actual effect of such plans, whether enforced by
individual unions or by legislation? It will clarify the problem if
we consider two cases. The first is a reduction in the standard
working week from forty hours to thirty without any change in
the hourly rate of pay. The second is a reduction in the working
week from forty hours to thirty, but with a sufficient increase in
hourly wage rates to maintain the same weekly pay for the
individual workers already employed.
Let us take the first case. We assume that the working week is
cut from forty hours to thirty, with no change in hourly pay. If
there is substantial unemployment when this plan is put into
effect, the plan will no doubt provide additional jobs. We
cannot assume that it will provide sufficient additional jobs,
however, to maintain the same payrolls and the same number of
man-hours as before, unless we make the unlikely assumptions
63
that in each industry there has been exactly the same percentage
of unemployment and that the new men and women
employed are no less efficient at their special tasks on the
average than those who had already been employed. But suppose
we do make these assumptions. Suppose we do assume
that the right number of additional workers of each skill is
available, and that the new workers do not raise production
costs. What will be the result of reducing the working week
from forty hours to thirty (without any increase in hourly pay)?
Though more workers will be employed, each will be working
fewer hours, and there will, therefore, be no net increase in
man-hours. It is unlikely that there will be any significant
increase in production. Total payrolls and "purchasing power"
will be no larger. All that will have happened, even under the
most favorable assumptions (which would seldom be realized)
is that the workers previously employed will subsidize, in
effect, the workers previously unemployed. For in order that
the new workers will individually receive three-fourths as
many dollars a week as the old workers used to receive, the old
workers will themselves now individually receive only threefourths
as many dollars a week as previously. It is true that the
old workers will now work fewer hours; but this purchase of
more leisure at a high price is presumably not a decision they
have made for its own sake: it is a sacrifice made to provide others
with jobs.
The labor union leaders who demand shorter weeks to
"spread the work" usually recognize this, and therefore they
put the proposal forward in a form in which everyone is supposed
to eat his cake and have it too. Reduce the working week
from forty hours to thirty, they tell us, to provide more jobs;
but compensate for the shorter week by increasing the hourly
rate of pay by 33.33 percent. The workers employed, say, were
previously getting an average of $226 a week for forty hours
work; in order that they may still get $226 for only thirty hours
work, the hourly rate of pay must be advanced to an average of
more than $7.53.
What would be the consequences of such a plan? The first
and most obvious consequence would be to raise costs of production.
If we assume that the workers, when previously employed
for forty hours, were getting less than the level of
production costs, prices and profits made possible, then they
could have got the hourly increase without reducing the length
of the working week. They could, in other words, have worked
the same number of hours and got their total weekly incomes
increased by one-third, instead of merely getting, as they are
under the new thirty-hour week, the same weekly income as
before. But if, under the forty-hour week, the workers were
already getting as high a wage as the level of production costs
and prices made possible (and the very unemployment they are
trying to cure may be a sign that they were already getting even
more than this), then the increase in production costs as a result
of the 33.33 percent increase in hourly wage rates will be much
greater than the existing state of prices, production and costs
can stand.
The result of the higher wage rate, therefore, will be a much
greater unemployment than before. The least efficient firms
will be thrown out of business, and the least efficient workers
will be thrown out of jobs. Production will be reduced all
around the circle. Higher production costs and scarcer supplies
will tend to raise prices, so that workers can buy less with the
same dollar wages; on the other hand, the increased unemployment
will shrink demand and hence tend to lower prices.
What ultimately happens to the prices of goods will depend
upon what monetary policies are then followed. But if a policy
of monetary inflation is pursued, to enable prices to rise so that
the increased hourly wages can be paid, this will merely be a
disguised way of reducing real wage rates, so that these will
return, in terms of the amount of goods they can purchase, to
the same real rate as before. The result would then be the same
as if the working week had been reduced without an increase in
hourly wage rates. And the results of that have already been
discussed.
The spread-the-work schemes, in brief, rest on the same sort
of illusion that we have been considering. The people who
support such schemes think only of the employment they
might provide for particular persons or groups; they do not
stop to consider what their whole effect would be on everybody.
The spread-the-work schemes rest also, as we began by
pointing out, on the false assumption that there is just a fixed
amount of work to be done. There could be no greater fallacy.
There is no limit to the amount of work to be done as long as any
human need or wish that work could fill remains unsatisfied. In
a modern exchange economy, the most work will be done when
prices, costs and wages are in the best relations with each other.
What these relations are we shall later consider.
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