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Shorter Working Hours: New Priorities

by William McGaughey

As an advocate of shorter working hours, I have long thought that the main goal ought to be to amend the Fair Labor Standards Act to reduce the standard workweek from 40 to 32 hours. That way, we could have a four-day workweek, with three-day weekends every week.

Now it seems that a more reasonable goal would be to ensure that everyone has a 40-hour workweek. There are at least two serious impediments toward that goal.

1. Overtime pay going to the employee:

First, the Fair Labor Standards Act, as it is presently written, provides that the half-time pay associated with overtime work be paid to the employee. The employee earns 150 percent of his or her normal hourly wage in working overtime. Such an arrangement creates an obvious incentive for workers to work those extra hours. Overtime becomes something sought by employees rather than a deterrent to offering or accepting work beyond the standard number of weekly hours.

I would contend that this provision in the Fair Labor Standards Act derailed organized labor’s traditional quest of shorter work hours. Why is it that, after a century of agitation for shorter hours, labor unions stopped pursuing that goal in the late 1930 and 1940s? A clear reason is that Depression-era working people did not want shorter hours in preference to higher pay. They wanted to work those highly paid overtime hours.

Now, of course, it is the employer who schedules the hours of work; and employers still have a disincentive to schedule overtime work because they must pay 150% of the normal hourly pay. However, employers also set the hourly wage. The provision of regular opportunities for overtime work may actually depress the normal hourly wage. So long as employers can dangle the “carrot” of overtime opportunities in front of the employees’ eyes, the employees will not notice or care so much that their regular wage is not as high as it might be. Combining regular and overtime work, their total wage would average about the same on an hourly basis. If overtime is built into the system, employers can reduce labor costs more quickly by cutting back to a normal schedule (because the more highly paid hours would be eliminated first) and employees would be unlikely to complain.

The solution I see is that, if overtime work is scheduled, the extra half-time premium be taxed away by the government so that such work becomes disagreeable both to the employer and to the employee asked to work overtime. Overtime pay would then become the disincentive to long-hours work that the Fair Labor Standards Act intended it to be.

2. Lack of coverage for managerial and professional employees:

The Fair Labor Standards Act has provided a host of exemptions for occupational groups. The most notable category of exemption was for “bona fide executive, administrative, and professional” employees. Conceptually, blue-collar hourly workers get overtime pay while white-collar salaried workers do not. The latter get a flat amount of pay per month (or time period) no matter how many hours they work.

Quite obviously, this arrangement can be abused. If the employer changes an employee’s job title but keeps job content the same, the worker can be deprived of overtime pay. Rules and regulations have been implement to reduce instances of such abuse. I would argue, however, that even the bona fide executive, administrative, and professional employees should have reasonable working hours; and if their bosses will not allow it, such hours should be imposed by law.

Without getting into a detailed proposal to accomplish this goal, I would like to refer to information included in two recent articles in the New York Times.

An article in the business section of the Sunday New York Times on May 31, 2015, titled “The Problem with Work is Overwork” by Claire Cain Miller reports that an unnamed global consulting firm asked professors at the Harvard business school to do a study to find out why so many of its female employees quit the firm or failed to be promoted. Were its employment policies friendly enough to women?

The report concluded that “the problem was not women’s competing demands but that ‘two orthodoxies remain unchallenged: the necessity of long work hours and the inescapability of women’s stalled advancement.’” Employees at this particular firm averaged 60 to 65 hours per week. Stereotypically women were supposed to attend to family matters more than men. However, while females were more apt to take advantage of flexible work policies, they suffered with respect to promotion if they did.

Mary Blair-Loy, a sociologist at the University of California, San Diego, said: “It’s not really about business; it’s about fundamental identity and masculinity. Men are required by the culture to be these superheroes, to fulfill this devotion and single-minded commitment to work. Women have an out because they have an external definition of morality or leading the good life, which is being devoted to their children.”

The problem of long work hours is not limited to consulting firms but seems generally to pervade the ranks of “highly skilled, highly paid professional services jobs like law, finance, consulting, and accounting,” the article said. A study by the Economic Policy Institute, based upon data from the Current Population Survey, found that the annual hours worked by Americans, on average, increased from 1,652 hours in 1975 to 1,836 hours in 2014. Male workers averaged 1,955 hours of work per year in 2014; and female workers, 1,711 hours. But the average hours of female workers had risen more sharply since 1975.

Given the results of this study, managers at the consulting firm “ rejected that conclusion (that long hours were taking a toll on both men and women). The firm’s representatives said that the goal (of the study) was to focus only on policies for women, and men were largely immune to these issues.”

In the current political environment, business firms get credit if they seem to be sensitive to women’s needs. However, the problem of overly long hours - which is really a modern form of slave labor - is taboo in business circles. It is only the super rich - people like Google’s Larry Page, Seattle billionaire Nick Hannauer, and Mexican billionaire Carlos Slim - who dare raise the question of the need to reduce working hours. They are not as focused on short-term financial results as CEOs on the make.

A story in the business section of the New York Times on June 2, 2015, titled “Reflections on Stress and Hours on Wall St.” told the story of a young analyst at the Goldman Sachs office in San Francisco named Sarvshreshth Gupta who was found dead in the parking lot next to his apartment after working a string of long hours. Evidently he had jumped or fallen from an upper story.

Mr. Gupta had called his father in India the day before his death saying: “It is too much. I have not slept for two days, have a client meeting tomorrow morning, have to complete a presentation, my V.P. is annoyed, and I am working alone in my office.” When his father advised him to take 15 days off and come home, Gupta replied “They will not allow (it).”

The article said that “Mr. Gupta’s death (was) one of numerous unexpected deaths or suicides of young bankers over the last year ... Just last week, Thomas J. Hughes, a 29-year-old banker at Moeis & Company, was found dead with drugs in his system after falling from a building in Manhattan. ‘The only explanation is that I know he’s been working very hard and has been under a lot of pressure,’ Mr. Hughes’ father told the Daily Mail ...

“According to the National Occupational Mortality Surveillance, individuals who work in financial services are 1.5 times more likely to commit suicide than the national average. The highest suicide rates in the United States are among doctors, dentists, and veterinarians ... (In financial services) young analysts are expected to work 80 to 100 hours a week.”

Young professional employees do not get a lot of sympathy in today’s political culture. Shorter work hours is considered a labor issue and the labor movement is built on opposition to the managerial (or professional) class. Class warfare remains the paradigm of struggle for better working conditions. But it is also obvious that the older professional workers who manage these firms are taking advantage of the younger workers and something needs to be done to help these people, if only to reduce their suicide risk.

Even those who do not sympathize with the highly paid young professionals should recognize these facts: First, if hours are reduced in professional and managerial ranks, it will open up the opportunity for more people to fill those highly paid positions. Second, the “hazing” process involved with long-hours work creates a class of future managers who lack sympathy for newcomers to the firm because they themselves had to go through the same process. The better alternative is to stop such practices in their track so that future generations will not be victimized.

Since Goldman Sachs and similar firms control Congress and the White House, it is unlikely that the human needs of young, highly paid managers and professionals will be taken seriously by policy makers within the federal government. Still, it may be useful to make an appeal on their behalf.

I think traditional leftists should take up the cause because the model of class warfare is changing, from blue-collar vs. white-collar workers to something along generational lines. (And I am an older guy who thinks that today’s young generation of Americans is being short-changed.) Conservatives should also support this since it would increase personal freedom. Except for the upper-tier exploiters, we are all in the same boat.

Therefore, the policy recommendation here is to eliminate or sharply curtain the exemption from overtime pay for managerial and professional employees in the Fair Labor Standards Act.

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