To rest or not to rest, as you like it

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The laid-back Australian work ethic – reflected in cultural throw-away lines like “too easy” and “she’ll be right mate” – may make some of us wince, but it’s probably on the whole healthier than the masochistic American work ethic of “get on the treadmill and go full-throttle until you wear out.”

I like living in a country where few people are walking around with psychological, physical, or social dysfunctions brought about by work. I would also readily support universal compliance with a few cultural norms that have clear economic benefits. Speaking English, wearing clothing, and refraining from attacking other people violently in the street come to mind. But what about norms around how much one works, either on the intensive or the extensive margin? Should we use government or company policy to push people into compliance with prevalent social norms around work, and thereby encourage uniformity on work-related choices?

First let’s consider the extensive margin. There is a strong case to be made for encouraging universal adherence to the idea that performing regular productive labor is a desirable goal. When state welfare is seen by everyone as a last resort, then everyone wishes to avoid it, thereby helping to keep the government’s budget in balance and at the same time boosting the positive psychological effects of having a job for the job-holding majority. This is not to say that welfare receipt should be dehumanizing, or that the level of welfare should be set below the poverty line. But a moderately generous state welfare system cannot be sustained economically if it is viewed as an acceptable long-term survival strategy by able-bodied citizens. So yes, we should use the tools at our disposal to make it psychologically unpleasant to be on welfare and we should widely advertise this unpleasantness, not for the immediate benefit of those on welfare, but in order to promote a healthy and sustainable society.

On the intensive margin, we already allow flexibility in terms of hours of work per week, and this flexibility is heavily exploited by the working population as any glance at part-time/full-time employment figures will show. This allows those with caring duties or lower stamina to work at a pace that suits them, enabling them to contribute productive paid labor, thereby both bolstering their self-esteem and contributing to the visible economy.

For those working full-time however, there is a striking rigidity about the number of vacation days that they must take per year. In the university sector for example, there is a requirement that full-time workers take 20 days of vacation per year. If one does not, then not only an argument about reducing the University’s pent-up IOU towards the worker, but also serious social shaming, is brought to bear.

Is it really optimal to push into uniformity the year-to-year work-intensity choices of full-time workers?

Casual observation suggests that some full-time workers live for their work, whereas others work to live. Some have little use for more than a week or two of vacation per year, whereas others barely make it through 48 35-hour weeks of work per year without serious losses in productivity. Moreover, people’s preferences and constraints in this area change with the lifecycle, with full-time workers who are parents of small children facing a very different optimization problem than single 20-year-old men. Economists see such diversity as an opportunity for gains from trade, so the natural question is how to open up this potential market.

One simple solution would graft a market onto the present system. Federal laws and union-negotiated contracts mandate that a certain number of vacation days per year must be allocated to each worker, which seems a reasonable way to level starting endowments. Yet, some workers would value money more highly than more days off, whereas some would rather have more days off than more money. So, we could allow anonymous trades in some fraction of allocated vacation days (say, half) to occur at market-determined prices, paid through automatic pay adjustments, within salary bands at large employers. Different industries might place different caps on the total amount of extra vacation that could be bought, in order to ensure smooth work processes.

The presumption that workers “don’t know what’s good for them” and would always take more money rather than some vacation is not only patronizing to workers, but senseless given the logic of diminishing marginal utility. As in the case of cap-and-trade pollution markets and babysitting clubs, rather than trying to standardize people’s choices around how much to work, we could simply let the market decide how much a day of vacation is worth.

5 Responses to "To rest or not to rest, as you like it"
  1. It’s fairly flexible at our workplace, you can negotiate extra leave with reduced pay (eg 48/52 means you get 8 weeks leave a year) and you can cash leave in if you have too much.

    This seems much simpler than a market.

    This has the advantage that an employee negotiates with management on their leave. As a manager, I wouldn’t be too keen on employees trading leave with other employees. I want to approve how much my staff have – after all I am charged with delivery and making sure we have enough staff on board at any one time. This isn’t a power trip for me (though it is for some), it’s a reflection of a manager’s responsibilities.

    Jon

    • Hi Jon,

      Agreed that pre-existing flexibility obviates the need for a market.

      I would also add though that a manager already faces the problem of coordinating staff leave so that no periods of the year are understaffed. The market option does not introduce this as a new management problem. Given that the total number of person-days available in a given salary band would stay the same, the parameters simply change slightly. The type of danger you may foresee is that all staff in a particular functional area opt to go for six weeks rather than four weeks of vacation per year. Yet even then, all plans about exactly when to take leave would presumably be hammered out with management in advance (as they are now), minimizing the possibility of negative surprises in regard to workflow.

  2. It is weird how all jobs in Australia seem to have the minimum mandated 20 days and no more of vacation. Unlike the UK say where employers seem to compete on number of vacation days as well as on salary and other conditions.

  3. It seems to be assumed among the econorati that work is only valuable if it is income-attracting. I know a number of people who wish that the work they do was more income-attracting than it is. There are thousands of creative people who earn money so that they can work, rather than work so that they can earn money.

    This did not happen today because there is a market for girls doing headstands: http://www.flickr.com/photos/newtown_grafitti/8079374587/sizes/o/in/photostream/

  4. Hi Gigi.

    The thought just occurred to me that productivity may have been affected by the additional amount of time needed to manage GST collection and BAS reporting.

    At the time it was suggested that this was the sort of information that businesses should be collecting and so would lead to improvements in SME management. But I recall the onerous nature of this data collection and accountant feeding and management on my one man consulting business.

    So 2 questions I guess.

    1) Are SMEs better managed now than pre-GST?
    2) Has anyone studied the loss in productivity caused by GST/BAS collection?

    maybe

    3) Is there a simpler pre-confirmed BAS or GST system that would allow business owners to say “Yes that is about right for me, I will just pay this govenment determined/sanctioned estimated amount for my industry and revenue and then I won’t to worry about endless data collection and reporting this year?

    If nothing else, these seem like good research topics for students and academics.

    Best Regards

    Richard Clark

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