High Incomes in US Hang on Long Hours

AMERICANS still have the highest living standard in the world. One reason is that they work so hard.

The Germans have a reputation for industriousness. But American workers put in about six weeks more time per year on the job than their counterparts in Germany, a new study notes.

That hasn't always been the case. In the 1950s and '60s, Americans worked considerably fewer hours than Germans and other Europeans. Indeed, the United States led the industrial nations in reductions in hours worked. In the 1980s, however, German working hours dropped below those in the US.

On one occasion last year, German Chancellor Helmut Kohl dubbed his nation a ``collective leisure park.''

The study, done by economists Linda Bell of Haverford College in Haverford, Pa., and Richard Freeman of Harvard University, found that Americans work an average of 38 hours per week, compared with 36 hours per week for Germans. When the longer vacations and additional holidays of Germans are taken into account, however, Americans work, on average, 1,798 hours a year and Germans 1,554 hours. Americans are twice as likely to work Saturdays, three times as likely to work Sundays, and three times as likely to work seven days a week as are Germans.

US manufacturing workers put in 130 hours more per year than the average number of hours worked in the European member nations of the Organization for Economic Cooperation and Development, while German workers rack up 131 hours less than the average.

Nonetheless, many Americans want to work longer hours yet, notes the Bell-Freeman study for the National Bureau of Economic Research in Cambridge, Mass. Surveys find that the majority of workers in both the US and Germany are ``satisfied'' with their hours of work. But 33 percent of Americans would prefer to work longer hours for more pay, and 6 percent would prefer fewer hours for less pay. The comparable numbers for Germans are 14 percent and 10 percent.

Americans are more likely to report that they work hard ``even if it interferes with the rest of [their] lives'' than are Germans and other Europeans. Germans are more likely to respond that they work ``only as hard as they have to.'' Some 18 percent of Americans and 33 percent of Germans say they work just for the money. Asked if leisure was important to them, 40 percent of Americans said ``yes'' compared with 74 percent of Germans.

Why do Germans seem less work-oriented than their European and US counterparts?

Exploring this question, Professors Bell and Freeman note that average and marginal tax rates for a typical German production worker are roughly 30 percent higher than tax rates for a typical US production worker. This difference implies that the rewards in working extra hours are smaller in Germany, even at the same rate of pay. Further, German workers receive more generous social incomes in the form of welfare, health care, unemployment insurance (two years of benefits versus 52 weeks in the US), and subsidized college and university education or apprenticeship programs than workers in the US. This also should increase the demand for leisure in Germany compared with the US. But Bell and Freeman point out that other European nations have similar high marginal taxes and generous benefits and yet work longer hours than do the Germans.

The two conclude that high-earnings inequality in the US stimulates the demand for longer hours. ``The US wage-determining system may be closer to a tournament- or piece-rate wage system - you work hard to advance, to keep the good job, to keep from falling into a shallow safety net - whereas the German wage-determining system and social-benefits system is closer to a guaranteed annual income,'' they write. In the US labor market, the rewards for greater effort are large, and the penalties for slackening off are substantial. By contrast, in the highly unionized German labor market, which produces relatively low-earnings inequality across workers and imposes institutional laws that make employee dismissal difficult, the rewards and penalties related to greater or lesser effort are ``presumably less extreme.''

Production workers in US manufacturing get paid $3 an hour less than their German counterparts, if purchasing power of the money is considered. But longer hours offset the poorer pay.

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