The video is here. Recommended.
I agree with most of what he says, and to the extent that I differ I am probably wrong.
He frames the question in terms of Keynes’ prediction that by 2030 we would see a work week of about 15 hours. My thoughts:
1. As William Gibson said, the future is here, it is just not evenly distributed. Tyler says, correctly, that the elderly have grabbed a huge share of any increase in leisure. But “elderly” is not some different social class. It is us when we get to be that age.
2. Suppose that the median adult male in 1930 started working at age 16 and worked until he died, and that the median adult male today starts working at age 20, retires at age 60, and dies at age 80. Take those 20 years of leisure and spread them across the working ages of 20-60, and that amounts to 1/3 of a year of leisure. If you think that you have about 100 hours a week to allocate (otherwise you are engaged in required activities like sleeping), 1/3 of a week is about 33 hours. So maybe you can say that we’ve taken about 33 hours off the typical work week, but we’ve decided to save those 33 hours for when we’re old. So if you worked 60 hours in Keynes’ day, now in effect you work 27 hours, and he is not so far off.
3. Note that the natural distribution of leisure might be quite different, but the eligibility rules for Medicare and Social Security are a major influence.
4. Another point Tyler makes that I would have made also is that the disutility of work has fallen. My guess is that Keynes did not foresee this or take it into account.
5. In fact, one of Tyler’s claims, which I do not dispute, is that for many people the utility of work is actually positive. In any event, if you gave people the wealth they have in 2016 but they faced the composition of jobs that existed in 1930, I bet a lot fewer people would choose to work full time.
6. Tyler points out that one factor increasing reported work hours is women substituting market work for home production. Again, I agree. In a variation on (5), suppose you offered a modern working woman a chance to earn her current wage for doing housework and child care as it was done in 1930. How many women would take you up on that? I’m guessing not many.
7. Tyler predicts that more people will work more hours going forward. His reasoning is that in cross-section, we observe the highest earners tending to work more hours. If that same pattern holds in time series, and earnings go up, then we should see more hours of work.
I think that is a dubious inference. The “one percent” are different not just in terms of ability but also in terms of preferences. They choose wealth-maximization with more gusto than the rest of us.
There are plenty of reasons to choose something other than the wealth-maximizing career path. In my case, I have inexpensive tastes. I also have a low tolerance for interpersonal stress. Others may have a low tolerance for risk. Some may have a strong attachment to living in a location that does not offer the highest nominal salary.
There are many margins along which people can adjust to higher wealth. I do not think that we can extrapolate from the behavior of the “one percent” to predict how the rest of us will choose.
Related: Timothy Taylor on what is a good job.
A good job has what economists have called an element of “gift exchange,” which means that a motivated worker stands ready to offer some extra effort and energy beyond the bare minimum, while a motivated employer stands ready to offer their workers at all skill levels some extra pay, training, and support beyond the bare minimum.
As I commented on MR, there seems an obvious reason to me that people are taking increased leisure at the beginning and ends of their careers but rarely in the middle — namely that workers realize expressing a preference for leisure is taken as a signal of being a less-driven, less-ambitious worker. And employers reasonably believe that offering more leisure rather than higher salaries is likely to attract just that wrong sort of employee. So that suggests that the 40-hour week is here to stay indefinitely, regardless of how much wealthier we become.
There is one condition under which 7 might come true, if people could earn money from what they do for leisure.
I note here the same thing I have noted elsewhere – which doesn’t really contradict any of the above.
1. Many jobs, especially in the upper echelon, are “all or nothing” – you generally cannot choose to be a CEO who works 1/2 time for 1/2 the pay. I assert there are quite a number of jobs where you either “go all out” and get paid a great deal, or you are fired.
2. A surprizing number of jobs require “constant practice” – you don’t want a surgeon who chooses to work 1/2 time for 1/2 the gross pay, because there are all sorts of studies that say surgeons who do a lot of something to it better. Likewise for computer programmers – it’s basically a full time job just to stay current.
These things would seem to enforce the “work hard in the middle have leisure at the ends” model.
I see (2) as central to understanding the issues — a life cycle approach is required. I also agree that the disutility of work is much lower today than previously, though this is essentially the same as an even larger increase in income and makes the lack of a clear substitution effect even more surprising.
Thinking similarly to Bryan Willman above, it may be that our peak earning potential is more compressed, perhaps because of rapid obsolescence of knowledge. Nowadays, top workers are like shooting stars with productivity profiles of professional athletes.
It was a really great talk. Following from your points 4 and 5, towards the end of the talk, Tyler argues against status being a central cause of the effect, but I’m not so sure. Another aspect of our all or nothing economy is the slow decline in the employment-population ratio in recent years. While I think he makes a strong case that the utility effect is low, I’m not so sure that his case for the substitution effect being the cause is as strong.
Another thought — I’m not entirely convinced of the ‘decreasing disutility of work’ argument. Yes, fewer people do physically demanding labor, that’s true. But among the professional classes, the nature of work has arguably gotten worse — more demanding & competitive and less genteel. 50 years ago, when professionals went home, they went home. There were no 24×7 electronic tethers. ‘Bankers hours’ used to be a real thing. Physicians used to enjoy a great deal more independence and autonomy than they do now. Tenured university professors used to face mandatory retirement ages because the jobs were so agreeable that their institutions knew they’d be in no hurry to retire willingly. Business executives had their ‘three-martini lunches’. People at the top of the income distribution are clearly much wealthier than generations ago, but it doesn’t seem at all clear that their work is less stressful and more pleasant.