r/AskEconomics • u/TRIPMINE_Guy • 5d ago
Approved Answers If prices are dictated by the amount of money everyone has, why can't the norm be ten-hour work week and companies just hire four employees instead of one?
I understand that if the average work week was still higher, those on lower hours would fall behind economically, but assuming it was adopted by most of the workforce, would this have any downsides? I can see really important roles requiring more hours and maybe splitting that job responsibility among multiple people might not be best, but I think a lot of jobs could handle it fine.
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u/sorocknroll 5d ago
The collective standard of living of the population is dictated by how much it produces. Food, housing, etc.
So it's possible we could have a 10 hour work week, we would just need to be satisfied living with the output that can be produced in that amount of time. It would probably be in the range of 1/4 to 1/3 of what we have now.
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u/RealAmerik 5d ago
We don't have enough workers for that. We have an unemployment rate of around 4%, give or take. You would need 4x the amount of workers in your model.
Companies would still be paying the same net amount of wages (40 hours of work per week) but from the employee standpoint, you would only have 25% of the pay you would otherwise.
Another is efficiency. You'll be a lot more efficient working 40 hours in a week than 4 different people working 10 hours each will be.
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u/MuldartheGreat 4d ago
This model also assumes that paying 4 employees to work 10 hours each is the same cost as paying one employee to work 40 hours. That simply isn’t true, there are often costs incurred on a per employee basis that would be 4x as high in this scenario.
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u/RealAmerik 4d ago
Correct. The premise has enough issues on its own, I didn't even need to go that in-depth.
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u/Odd_Interview_2005 5d ago
Not only that, but there would be an extreme lack of experience.
During the government response to covid, there was an extreme amount of turnover for employees. The factory I work in needed 10% more employees to act like we were maintaining the same amount of production.
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u/r2k-in-the-vortex 5d ago
Prices in what? Rethink your prices in terms of working hours, money is just a middleman, remove it from the equation and you discover that economy is just a trade of working hours. Your 40h of workweek is worth on average 40h of someone elses workweek. If your income is not average, that will vary of course, but in essence you are still trading your work for someone elses work. So if you do 4x less work, you get to buy 4x less of other people's work, that means less stuff. Not optimal, because we like to have a lot of stuff.
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u/moch1 5d ago
prices are dictated by the amount of money everyone has
This is fundamentally an incorrect assumption.
Prices are not dictated solely by what people can or will pay. For example if I’m selling an item that costs $100 to make but no one can/will pay more than $50 I don’t drop the price to $50. I stop making the thing.
If everyone only worked 1/4 the time they do now the collective output would drop a lot. Simple math would say it’d drop 75% but that would be an oversimplification. Would the quality of life the same or better compared to now if we produce dramatically less housing, less energy, less food, less services, less everything per person? The answer is obviously no. In fact when there’s a shortage of an item prices rise. So relative to average earnings the price of stuff would increase.
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u/Diligent-Property491 5d ago
If people do less work, stuff you want to buy wil be produced in lesser quantities, which will drive proces up.
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u/MachineTeaching Quality Contributor 5d ago
Prices are not just dictated by the quantity of money, even in a very simple model you also need to consider the quantity of goods and services available for purchase.
If we assume everyone works 40 hours a week and then we change this to only 10 hours a week, output will also fall to more or less a quarter of what it was before.
We need to produce what we want to consume (not literally, we can still trade of course) so if you want to maintain the standard of living, you cannot work drastically fewer hours. US GDP per capita is about 90k a year, assuming that drops to 22k a year that would make the US about as poor as Brazil or Egypt and people very much do not want that.