Microsoft’s Reduced Workweek Increased Productivity by 40%
Wednesday, November 6, 2019
GREG WILPERT: Welcome to The Real News Network. I’m Greg Wilpert in Arlington, Virginia.
Last weekend, the software company, Microsoft, announced the results of a month-long experiment in which the company’s workweek was reduced to four days of work last August in Japan. At the end of this experiment, Microsoft found that productivity had increased by 40%, electricity consumption dropped by 23% and paper usage dropped by a whopping 59%. These results are particularly important for countries such as Japan, where overwork is considered to be a national problem. However, international statistics show that the number of average hours worked per year in the United States is actually higher than in Japan. In 2016, it was 1,783 hours per year in the United States and 1,713 for Japan. That’s 70 hours less in Japan than the United States. Labor unions in many countries have long put, reducing the number of hours work per week as one of the top priorities to improve quality of life and reduce unemployment.
But employers and governments often argue that doing so would mean a loss in national competitiveness. In contrast, in the United States, the US labor movement has not made the length of the workweek much of an issue since it won the 40-hour workweek in 1938 as part of the New Deal. Joining me now to explore the significance of the Microsoft experiment is Richard Wolff, he is Professor Emerita of Economics at the University of Massachusetts Amherst and at the New School University. He’s the author of many books including Capitalism’s Crisis Deepens: Essays on the Global Economic Meltdown. Thanks for joining us again, Richard.
RICHARD WOLFF: Glad to be here, Greg.
GREG WILPERT: So let’s start with a brief look at the history of the workweek. If we take a look at the graph of the evolution of the workweek, we can see that it declined from over 70 hours per week in 1872 to around 40 hours per week in the 1940s and 1950s for most countries around the world. Then it has held steady basically ever since then. First I just wanted to ask you, why did it drop between the 1870s and 1940s and why did it stop dropping after that?
RICHARD WOLFF: Well, I think the simplest answer is that for working people, particularly by the 1870s one of the single most important issues as it had been in other countries, or at least a 100 years even before that was the length of the working day. It was exhausting. It was not uncommon to have 14, 12, 10 hour days as the norm, usually six days a week making people have no opportunity or much family life or much home life. Nowadays, in Europe, there’s a big movement called work-life balance.
The demand of workers again, to have a life that isn’t all focused on work, and I think you had that struggle it was successful at a time when the labor movement was on the rise, roughly 1870 reaching a peak in 1940 but with the decline of the labor movement after that, particularly here in the United States with the anti-communist purges that got rid of all the militants in the labor movement, you very badly weakened the labor movement that’s why it’s been on decline for the last 50 odd years, and I think there you have the crucial struggle element that was defeated in the working class. And so the increase in time off, the reduction in work hours stops pretty much after the 1940s and is now only slowly returning and more as I say in Europe than in the United States.
GREG WILPERT: Now, as I mentioned earlier, reducing the workweek and as you had mentioned too, is a goal that labor unions around the world have prioritized but not in the US. Now, it hasn’t really advanced that much, although you’re saying that it’s become more of an issue now. But one of the main arguments that employers tend to use it against the reduction of the workweek, reducing it basically from five days a week to four, which is what many movements actually have been demanding, is that they argue that in this era of intense international competition, companies in countries with a reduced workweek would lose out. That they would be less competitive compared to those especially, of course, if they have to pay the same salaries, which is oftentimes the demand of the unions, at least outside of the United States. So what do you think of that argument that countries that would introduce a reduction in the workweek without reducing pay, that they would lose out?
RICHARD WOLFF Well, I’d have to smile. Corporations want to make more profits. The problem is, and thanks in part to the labor movement and to the left, the expressed statement, “We want to do something because it makes us more money,” is not an acceptable part of the national language. So you have to come up with something else that sounds reasonable to explain why you’re doing something. So you don’t say, “We don’t want to cut the working day because we want to make more profits out of our workers by squeezing more out of them for more hours.” because that doesn’t sound good and, “We don’t want to cut workers’ wages because we want more profits,” that doesn’t sound good either. So here’s what you say instead, “It’s good for our country and makes us more competitive.” Look, if you wanted to be more competitive, what you have to do is drop your prices.
If you produce things at a lower price, the rest of the world will buy more of it. There’re lots of ways for corporations to reduce their prices, here’s one that would suggest, lower your profits, give less salaries to your executive, reduce the dividends you pay and that will allow you to lower the prices and be more competitive. Guess what? They don’t do any of those things because they don’t want to because the issue isn’t competitiveness. It’s profits and that has to be put first and foremost because that’s how to win the population to the side of a reduced workweek.
GREG WILPERT: Now, I would just want to return actually to the Microsoft experiment, which actually also showed a 40% increase in productivity. Now, usually, productivity is measured per hour. So if the workweek was reduced by 20% from five to four, then presumably the actual per hour, well, I’m not sure exactly if that means 40% for the whole week or if it means per hour, but any case it’s a significant increase in productivity. So if that’s the case, then why doesn’t Microsoft actually institute this reduction in the workweek everywhere? They’ve just treated it as an experiment and then they return to the business as usual, but if it helps productivity, then they can’t be used? Also, that can be used as an argument for losing competitiveness. So why not institute it across the board and not just for Microsoft, but everywhere?
RICHARD WOLFF: Well, my suspicion is, I’m not privy to what goes on in the halls of Microsoft’s management, but my guess is the following. It really is an experiment. What they want to see is whether if they reduced the workweek by a formal amount, say from five days to four days, what will happen to the productivity of their labor? We have to be aware that these days, particularly in high-tech companies like Microsoft, they have come up with an enormous range of mechanisms to get more work out of their employees using the email, for example, way beyond the normal eight hour day using all kinds of technical communications mechanisms to get more labor, more attention, more work out of people. They may be trying to lower the workweek to make a simple test, “If we do that and give the worker a ‘day off,’ will we be better able to get away with all of the little indirect ways that we are profiting off of the intrusion upon their private life?”
And I think that’s probably more likely to be the sort of experiment they’re working with and if all of that turns out to be positive, in other words, they can get more out of the worker with a formal four days, then we will go in that direction and then it will be up to the workers to react by saying, hopefully soon, “Yes, we only go in for four days, but we are asked to do all kinds of tasks that used to be done in the office, in the factory, but are now being done at a distance through the very technology that these companies are developing.” If that were the case, then the working class won’t find itself anywhere further along, in again, what the Europeans are importantly calling a proper work-life balance, which is crucial and isn’t dependent on more than the literal number of days a week that you have to be at the workplace.
GREG WILPERT Right. Now, I would just want to throw up another graph, which shows the growing gap between wages and productivity since the 1970s. So already in the 1970s, I mean before the 1970s productivity had been increasing steadily, but wages are only increased up until the 1970s and then flat, then leveled off pretty much just like the workweek did. Now, what conclusions can we draw from this in terms of what this means? The combination, I mean of not only the workweek leveling off and the wages leveling off, even though productivity kept on increasing?
RICHARD WOLFF: Well, I think it’s a marvelous illustration of what we’ve been talking about. Productivity, crudely defined, is what the worker gives the employer. It’s how much output each man or woman gives to the employer to sell during the hour that they work. And the wage is the other way around. It’s what the employer gives to the employee for the hour of labor he or she puts in. So the gap between the two of them tells you about profits. Because if the productivity is above the wage and the worker is giving the employer more than vice versa, and that’s the source of all profits. So if after the 1970s productivity kept rising as your graph shows but wages leveled off and didn’t rise well there we have an explanation for the explosive stock market, which is where people with profits play in the last 40, 50 years.
The explosive growth of inequality. And you can see that it’s competitiveness and even if profit increase where all that the capitalist sector wanted, they should’ve and would’ve been satisfied with rising productivity and stagnant wages, but they weren’t. They pushed for even more by not allowing the workweek to go down so that there was no compensation to the workers for the fact that their wages for 40 years went nowhere in real-terms, even though their productivity kept rising. So you can see that the last 30 or 40 years have been a time of extreme exploitation, pulling more out of workers both by productivity and by no reduction in the workweek while giving the workers a flat wage, which means all of the gains of that productivity were not shared with the working class, the majority, but kept the ownership class, the employer class, which is a small minority and explains both the inequality we now have and all the social tension that those inequalities always produce.
GREG WILPERT: Okay, well we’re going to have to leave it there for now. I certainly think though that there’s a certainly an interesting issue to look at, especially for the labor unions and for them to put this on as something to look at it, especially the reduction in the workweek and the experiment that Microsoft conducted, but as I said, we’re going to leave it there for now. I was speaking to Richard Wolff, Professor Emerita of Economics at UMass Amherst and host of the YouTube program, Economic Update. Thanks again, Richard, for having joined us today.
RICHARD WOLFF: Thank you. My pleasure.
GREG WILPERT: And thank you for joining The Real News Network.
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