Time for a pop quiz. Who is more efficient, the Americans or the French?
Obviously, it must be the Americans. They spend more time at work than the citizens of any other industrial country. And they have the GDP to show for it: $37,500 (U.S.) for every American. That’s 35 per cent more than the French (at $27,700 per capita).
But hang on. The average employee in France spends less time on the job than workers in any other country in the industrialized world. That’s 270 fewer hours a year than the average American — and there are fewer French employed in the first place: about 41 per cent of the total population (including children and older people), versus 48 per cent in America.
Crunch the numbers, and it turns out that for every hour spent working, the French produce slightly more value-added than the Americans. In fact, most of Europe has higher productivity than the United States — contrary to the old stereotype about “rigid,” inefficient Europe.
So the French work less, but they work more productively.
As a result, they have high incomes, yet spend a lot more time protesting, dining out and making love (not necessarily in that order).
Now that’s what I call efficient.
There’s a natural tendency to confuse how well off you are, with how much “stuff” you have. Stuff is visible, and has a price tag.
Time, on the other hand, is invisible and apparently free.
Every ranking of countries according to GDP produced per capita falls into this trap, by implicitly assuming that the value of time is zero. (In fact, the older I get, the more I realize time is priceless, not worthless.) Last week’s report on working hours by Ontario’s Institute for Competitiveness and Prosperity fell into the same trap, in a big way.
The Institute warned that “Ontarians work three-and-a-half fewer weeks annually than U.S. peers at a cost of $3,700 per capita in prosperity.” There’s that word: prosperity, defined as GDP per capita.
If you work longer, hence boosting your GDP per capita, then by definition you are more prosperous. The most prosperous nation of all would be the one that can find a way to keep people working 24 hours a day, seven days a week.
The report is worth reading. Like past reports from this agency, it is well-documented, original, and transparent. It carefully avoids explicitly urging Ontarians to get off their lazy behinds and start working like Americans. But the implication is clear, as are some of the policy recommendations (such as relaxing legal restrictions on super-long working hours).
Some of the report’s empirical findings are explosive, and subject to competing interpretations. For example, the Institute estimates that shorter working hours account for more than 60 per cent of the total gap in GDP per capita between Ontario and comparable states — the most of all the factors the Institute has considered. In other words, most of the much-discussed “prosperity” gap between Canada and the U.S. is due simply to the fact that employed Americans work longer. That’s not my idea of “prosperity.”
The Institute also reports that Ontario’s shorter hours are mostly due to a combination of stronger regulations and more unionization. (The United States, remember, is the only advanced country in the world that doesn’t require employers to provide any annual vacation whatsoever.)
One-quarter of Ontario’s shorter working hours reflects higher involuntary part-time employment: individuals who would like to work more, but can’t find full-time work. This is one case in which longer hours would indeed be beneficial. Helping people get the full-time jobs they want will require prolonged labour market tightness, and limits on employers’ ability to use precarious part-time jobs as a substitute for regular full-time employment.
In reality, true prosperity requires stuff and time.
The Institute’s statement could just as easily have read, “Americans work three-and-a-half more weeks annually than Ontario peers at a cost of poorer health, broken families, forgone fun and other dimensions of prosperity.” Canada’s working hours are halfway between France and America. There is absolutely nothing in the Institute’s report that proves we should become more like the Americans — and some glimmers that perhaps we should, in fact, become more like the French.
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