To Whom Go The Spoils?
Don't be naive about the path to a four day work week.
In 1930, the great economist John Maynard Keynes famously predicted that by 2030, thanks to general increases in prosperity and efficiency, people would only be working about 15 hours a week. By that date, he said, the real problem facing the average working man would be “how to occupy the leisure, which science and compound interest will have won for him.”
I suppose things could still turn around in the next seven years, but it’s safe to say that Keynes was completely wrong. Real GDP per person has grown by more than 500% since 1930, but workers are still clocking close to 40 hours a week on average. Our nation has gotten richer, but our nation’s businesses have not used that newfound wealth as an opportunity to reduce the amount of time we all spend working. As we enter a new age of tech-fueled utopianism, this time based on the promise of AI, it is useful to remember how Keynes—a smart man!!—got this rosy guess so, so wrong.
To be brief: capitalism doesn’t work like that. Or, more precisely, the modern American version of shareholder capitalism doesn’t work like that for the workers. For the owners of capital, for the investment class, you can rest assured that the 15 hour work week can and has come true—there are plenty of multimillionaires whose wealth is fully invested and who spend most of their time fucking around doing whatever they want. If you had started investing in Berkshire Hathaway 50 years ago, fully reaping the upward climb of efficiency-fueled American capital appreciation, you could indeed have bought yourself a life of leisure in recent decades. Yet that great benefit of increased corporate productivity and profitability has not, shall we say, trickled down to the workers, the majority of people, who do the work.
What’s the major malfunction? Well folks, this feels like the time to bust out the trusty old STORY OF AMERICA CHART:
Thank you, EPI. Worker productivity and worker wages, which rose in tandem for decades creating shared prosperity after WW2, decoupled beginning in the Reagan era. Productivity kept increasing—and that productivity kept producing more wealth—but wage growth suddenly went flat. So who got all that wealth, that once went to wages? The investors got it. Trillions of dollars worth. And here we are. This chart is just one of many showing different facets of the post-Reagan rise of economic inequality, which has fucked this country but good.
Not news, of course. I bring this up only because we are now about to get a chance to tap this sign for another iteration of overly-optimistic declarations of the sunny future that new technology will unleash, which will eventually leave its fervent advocates scratching their heads about why everything didn’t turn out as utopianly as they thought.
Politico’s labor newsletter yesterday was an update on the state of quest for a four day work week. It is a fine idea. It is a logical idea. It is, in fact, the same idea that Keynes had a century ago: we take our immense productivity gains and collectively invest them in increasing our own leisure time. Experiments around the world have shown that workers can be just as productive in four days of work as they are in five, which will come to no surprise to anyone who has ever worked an office job. In many industries that do not involve direct on-demand customer service, tens of millions of workers could have their quality of life meaningfully improved by doing the same amount of work for the same amount of pay in 80% of the time.
And there is a new, tangible reason why this issue is on the rise now: as AI becomes ever more advanced, it becomes ever more plausible for companies to use AI to do a lot of the time-consuming busywork that humans do now, and the enormous amount of time that this technology can save could be applied directly to shortening the work week. So in many or most “knowledge” industries, it is very probable that a company could, with the help of AI, continue to increase productivity, while shortening the work week of employees, without cutting wages. Here, it seems, is the most positive and humane use case possible for AI, laid out all pretty right in front of us. There is an entire 4 Day Workweek Campaign, endorsed by a host of progressive economists and policymakers and enlightened-business-executive types, that is advocating for exactly this path.
It is tempting to view this as a question of morality, as an opportunity to collectively make a more-enlightened rather than less-enlightened choice for our future. Should we have a four day work week? Sure. Will we? No—at least not like this. Why am I so fucking negative, over here? Because to think of this as some PR campaign that we can win by convincing companies that this is in our collective self interest is to misunderstand the nature of the system that we are living in. The only people capable of deluding themselves into the belief that shareholder capitalism can operate with the aim of collective good are those who have already achieved so much success in that system that they are fully insulated from its reality.
It is certain that AI will unleash vast productivity gains, enabling the automation of once time-intensive tasks. Now, think of all of the stakeholders of corporations: Investors, executives, employees, suppliers, the community, etc. To whom should these productivity benefits go? The four day work week evangelist types will say: To the workers, who can be delivered a better quality of life without really costing corporations any more than they are paying now! But to the people that matter in our system—the investors, and by extension the executives who manage firms for the benefit of investors and are therefore allowed to share in the riches—an increase in productivity is not a surprise Christmas present to be delivered to a worker in need. Such an increase is the equivalent of profits. Profits go to investors. That’s how it works. The nature of a modern corporation is not “Let’s see how we can divide the proceeds of this business most fairly.” It is “This business is a machine designed to maximize profits for investors.” The maximum possible exploitation of the labor force is a built-in part of that system. That is what maximizes profits! That is what we have seen for the past 40 years: It doesn’t matter how much more productive work forces become; their productivity does not change the logic that says that the greatest benefit for investors can be had by minimizing labor costs while extracting the maximum amount of work. Why would a modern, efficient company choose to distribute its productivity gains in the form of a four day work when they could, instead, reserve those productivity gains for investors, by laying workers off, to decrease labor costs, or by having everyone continue working just as much, so that the AI produced a gain on top of what currently exists? That is what they will do. Do not fool yourself. Do not be naive. Companies don’t give shit away for free. That’s not how this machine works.
This is not to say that a four day work week is unachievable. It will be achievable the same way that every other meaningful gain for workers is going to be achievable: through worker power. Companies must be forced to do these things. They cannot be convinced to do these things via appeals to their better nature. That is like begging a killer robot drone not to shoot you because you’re a nice guy. It doesn’t care. That is not one of its inputs. The first step to dealing successfully with malicious machines is not to be suckered into believing that they have a conscience.
This is all rather general, I know. But it is worth nipping this childish, shiny hopefulness in the bud before people squander years on it until they realize it won’t work. Corporate America has not funneled all productivity gains into its own pockets for 40 years only to stop tomorrow because they think it would be nice for you to have an extra day at home with the kids. I don’t want to hear another minute of this bullshit! Look at the chart! Positive change for working people doesn’t happen like that. We know how it does happen: power. And we know how that happens: organized labor. So if you want a four day work week, build your union into a force strong enough to demand one. If you want a new iPhone, ask the tech utopians. If you want something decent for humanity, ask your union.
Also
Related: Keep on Looking For Those “Corporate Values,” I’m Sure They’ll Turn Up One Day. Also related: Corporations Do Not Have Any Rights That We Don’t Give Them.
I was in San Francisco this weekend covering a fight for Defector, one of the few good websites other than this one. You can read that piece here if you enjoy boxing writing. Unfortunately I got wrecked with the flu while I was here so I couldn’t do quite as much roaming the streets as I normally like. Life: sometimes it’s like that, no?
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Spot on. This is small potatoes, but I just think of my local CVS, where they replaced most of the cashiers with machines. Did they pass on the savings to customers? (Which would be fair, since we're now doing the labor of checking out and bagging items.) Of course not. The prices haven't gone down; if anything, they've gone up. Meanwhile, those machines just don't work -- you press all the buttons you're supposed to, and it still freezes. Oftentimes, multiple machines have issues at once -- there's an irritating chorus of soulless robo-voices barking, "Help is on the way," and the one employee they still have on hand to deal with these issues has to run back and forth fixing them while customers wait. This is progress? Again, just a small example, but this is what's happening across the board -- squeeze workers, make customers do the work for free (I mean, every customer-service call center now?), make a poorer product or experience, make things shitty for everyone but the investors.
Somewhere along the line we missed the fact that workers are, in fact, investors in the companies they work for. Sure, most workers don't pony up a few billion dollars here and there but what else can workers invest in if they're working 40-50 hours per week?
Managers / executives often have compensation contingent on stock performance or comprised of equity. What if workers were paid, in part, with equity? Say maybe 10, 15, or 20%? They'd have an incentive to figure out better ways to work. Given the massive capitalizations of large companies, equity payments wouldn't really be dilutive. Shit, companies take windfalls all the time and use them for stock buybacks. Sadly, some companies did this with funds related to bailouts and/or COVID relief.
I don't begrudge business founders profiting from their efforts. They've often taken significant personal risks to become successful. But few of them became successful all by their lonesome. And I get why early employees at places like Google end up with life altering wealth. 20+ years ago I left a pretty high paying job to join a startup. My salary was barely 1/3 of my previous job. But I believed in what the company was doing and I believed in my co-workers. I worked long hours but rarely resented the demand. Did I become rich? Nope. We got caught in the dynamics of Y2K and the path to success was no longer dependent on working hard towards the original goal. It was now to reduce short term losses, especially of the VC investors. I lost hundreds of thousands of dollars. Would I do it again? Sure.
One big downside of the late 1980-1990s finance and tech boom was the distortion of expectations where you could hit a home run by having equity in the "right" company. For years tech firms suppressed cash comp while offering some equity. That paid off for relatively few people but became the expectation for many more. Eventually employees wised up that being paid scullery wages wasn't paying off, at which point equity became a much smaller component for everyone except executives and outside investors.
I've seen this issue with one of my kids. He's been very successful by almost any measure but spends too much effort debating between the relative merits of vestable shares in a job offer. He's got a good reason - he's an accomplished artist who'd like to just "do art" and sees his current work as the means to being able to "do art" full time.
I've gotten far afield here but to return to my premise, the distinction between workers and investors has been distorted by the perception that workers have no aspirations beyond "the job" and that their contributions of time and effort don't equate to the value of "investors" with deep pockets.
The more I wrote here the more I realized just how fucked up our entire view of the value of work is in this country / age. Thanks for making me think.