Even if you are one of those strange people that loves their job, I am sure you wouldn’t
say no to some more flexibility around when you work.
The corporate response to the Covid pandemic has accelerated a trend of more people working
remotely, A trend which is quickly reducing the importance of rigid schedules and the
need to live near metropolitan centres.
This trend has coincided with a time when workers are demanding more from their employers
then ever before and in many cases, these demands are being met.
The fight for fewer working days is a battle as old as worker relations.
Just 100 years ago the five-day workweek was unthinkable for American laborers but in 1932
the states officially adopted the five-day work week to combat the unemployment crisis
caused by the stock crash and subsequent great depression of 1929.
We are currently amid another shakeup to our way of life, one that is on par with the severity
of the great depression.
So perhaps it’s time again to re-assess how we work, maybe it’s time again to look
at the surprisingly solid case for cutting down the days that the average American worker
devotes to labor.
There is a surprisingly solid case for a working week of just THREE days for most jobs.
And let me be clear, the benefits are not that people get to spend more time at home
with their kids, or have a better work life balance…
I don’t know if you have realized, but companies don’t give a shit about your wellbeing beyond
how it immediately affects your ability to work.
Unfortunately, those same companies are going to be the ones that decide our working arrangements,
so for the sake of this video I am going to leave all the personal fulfilment rubbish
to the side and just focus on demonstrating why shorter work weeks are good for businesses
and the economy.
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Before the five-day work week was officially adopted as the industry standard Henry Ford
gave it to his employees as a reward in 1926.
This came as a huge shock at a time when the standard was a six day work week with the
expectation of twelve hour days for most jobs.
Ford was still a ruthless businessman, so he wasn’t doing this out of the goodness
of his heart, his motivations were purely those of a pragmatic businessman.
The first benefit was that it would help with staff retention.
Building cars today is considered a blue-collar job but back in the 1920’s an auto worker
needed experience far beyond that of the average American.
Auto workers were the tech employees of their day.
Offering six days pay for five days work was a huge reason for valuable employees to stay
with Ford rather than going to work at any other car company.
It also meant that ford could hire experienced workers from other companies without needing
to offer a higher salary.
A line worker that has been building cars for years is going to be able to produce more
in five days than a rookie employee would produce in six.
The biggest benefit though was what these new working arrangements could do to businesses
beyond just his own.
"Business is the exchange of goods.
Goods are bought only as they meet needs.
Needs are filled only as they are felt.
They make themselves felt largely in leisure hours.
The man who worked fifteen and sixteen hours a day desired only a comer to be in and a
hunk of food.
He had no time to cultivate new needs.
No industry could ever be built up by filling his needs, because he had none but the most
primitive.”
"The people with a five-day week will consume more goods than the people with a six day
week.
People who have more leisure must have more clothes.
They must have a greater variety of food.
They must have more transportation facilities.
They naturally must have more service of various kinds.”
Ford knew that if he could prove that a five-day work week was possible then other businesses
would need to follow his lead or risk losing their best employees to his company.
If other businesses DID adopt the 40-hour week then people would have more time to buy
things, things like Ford Motor Cars.
It was a win-win either way.
There are companies today that might be in the same kind of win-win position, tech companies
being the most obvious.
The classic FAANG companies depend on armies of highly skilled programmers to maintain
their operations and push out new product offerings.
The demand for these employees is strong which is why developers at these companies make
an easy six figure income.
These companies were amongst the first to fully embrace a work from home model at the
outset of the pandemic and a big reason for this is that they could.
By its very nature software development is done entirely on computers and these companies
already had the infrastructure in place to allow their employees to work from anywhere
in the world.
It’s obviously a lot harder for someone like a realtor to work remotely.
But working from home for the same number of hours is very different from working just
three days a week right?
Well yes obviously, but it’s still a step in the right direction.
Tech companies have seen that they can get away with paying their employees less if they
work remotely, and this pay cut is often worthwhile for the employees too because it allows them
to work away from expensive tech hubs like New York, Seattle and San Fran.
It’s also becoming an expected perk for tech employees.
The demand for programmers outweighs the supply throwing a remote work cherry on top has become
almost essential for attracting an maintaining talent.
A three-day work week would achieve the same thing, but turned up to eleven.
Let’s look at a pros and cons list for a company like Netflix.
The biggest con is the lost man hours.
If people are working 40% fewer days, then the company should expect 40% less output.
That means projects will take almost twice as long to complete and issues will take twice
as long to solve right?
Wrong.
To start with the company could rightfully demand extra hours be worked on the three
days that people are in.
I would gladly work ten-hour days if it meant I only had to work three days a week a community
poll I ran last week has shown that most of you agree with me.
A thirty hour week is still a reduction in man hours but there is a good chance that
those hours will be more productive.
There are fixed and variable hours of productivity during a working day, a typical 40 hour work
week spread out over five days will have five daily team meetings, five lunch breaks, five
morning coffee runs, basically five of everything that takes staff away from their primary responsibilities.
A thirty-hour work week spread out over three days will still have these distractions, but
it will have less of them.
Companies would really be looking at the difference between 31 hours and 25 hours on task.
Those hours are also going to be more productive because people just work better once they
are in the groove of getting stuff done.
Let’s be honest with each other the first and last hours in an office are not time of
peak performance, a three day work week also cuts down on these lazy hours.
It gets even better for the workers themselves because there are wasted hours in a working
day that aren’t bourn by the employer.
The average American commutes thirty minutes back and forth from their job, when you add
in time to get ready for work and catch up once you get home it can easily add up to
another ten hours per week which would be cut down to six in a three-day work week model.
The days that you DO work would suck, but they would probably suck less knowing that
you could get away with doing nothing but relaxing and sleeping when you got home, the
chores can wait for one of your four days off.
Again, we don’t really care about the individual experience here unless it directly benefits
the company offering the three day work week.
So the con of lost man hours remains, but it’s not nearly as bad as you would expect.
The other big con would be lost opportunities due to downtime.
The Monday to Friday work week exists because almost all professional jobs involve dealing
with other companies on similar schedules.
A business-to-business company would lose two days’ worth of potential deals if they
gave their staff Thursday and Friday off.
A company that provides an ongoing service could also find this change extremely hard
to make.
If a CFO calls up their bank to extend their line of credit by another 20 million dollars
on a Thursday, they are going to have taken their business elsewhere by Monday morning
when the three day banker gets back into the office.
There are ways to mitigate this, have half your staff work money to Wednesday and the
other half work Wednesday to Friday, but that would admittedly work out to be more expensive
than just having everybody work five days per week.
There are SOME industries where these working hours would actually be a benefit though.
Working from 9-7 means that staff would still be available to talk to potential customers
who have just finished working a traditional 9-5, so it is more viable for end consumer
focused companies.
It would also have no impact on tech companies since most of their workers are focused on
in house projects which require very little interaction external stakeholders.
Of course, any issues that did exist would slowly be eliminated as more and more companies
got onboard with the three-day work week, but this is still going in the cons column
because businesses don’t care if they change the world if it pushes them into bankruptcy
first.
So what about the pro’s?
We have already seen how important remote work has become for attracting valuable talent
to companies and a three-day work week would no doubt be an even bigger draw.
We were using Netflix as an example so let’s start with them.
If they rolled out the three-day work week for their HQ staff.
They would be flooded with applications from people looking to jump ship from other companies
in the valley.
Netflix would be able to pick and choose the very best programmers, producers and managers
without offering higher salaries.
In the short-term other companies in similar industries would almost be forced to follow
suit.
Over the course of a few years even companies outside of the tech sphere would be pressured
to do the same.
Top students would be incentivized to go into tech for it’s work life balance and fields
like finance, law and medicine would either have to offer similar arrangements or offer
more money to ensure that they still attract new graduates.
Some roles really would need the to maintain the working hours, in my experience investment
banks would probably just offer higher salaries, and that’s fine, but average companies that
want to attract average workers will probably do what companies do best and take the cheaper
option.
That leads us on to the next big advantage, this arrangement will be cheaper.
There are huge costs involved in running an office every day.
Rent is the big one but the pandemic has shown that it might not be worth paying.
Companies have been on a spree of downsizing their office spaces as most professional work
gets done from home.
A three-day work week could have the same effect on rents.
Companies would have offices that would lay empty for a majority of the time which gives
them some options.
They can rent out the office to another business, but that would really depend on what a three
day work week looks like.
If it’s staggered then this office sharing could work really well, but if people decide
the new week is Tuesday to Thursday, then obviously the demand won’t be there from
Friday to Monday.
But even if businesses can’t cut down on rent directly there are other variable costs
involved in running an office.
Cleaners would have to come in three nights a week instead of 5, electrical consumption
will be cut, and even the wear and tear on things like elevators would be almost cut
in half.
We don’t really think about these costs, but they can add up to tens of thousands of
dollars a month for even a small inner-city office.
Assuming your company doesn’t pay for your work-related electricity and internet working
from home has already pushed a lot of these costs onto the workers, a three day work week
would reduce them even further.
So, a three-day work week does mean losing some manhours, but the benefits are really
starting to add up here, but probably not enough for a big company to take the risk
just yet.
Unless we think back to the lessons of Ford in the 1920’s.
The greatest advantage to the businesses that could make this change today is the growth
of their services.
If you had four days off you would probably end up watching a lot more Netflix, playing
a lot more video games and mindlessly scrolling through a lot more Facebook posts.
You can lie to yourself and say that you would use this extra time to exercise or start painting
but even that would involve paying for a gym subscription or an easel.
People with more time have more time to spend money, more time to watch ads, more time to
hand over all of their precious data.
A three-day work week would provide a massive upside to the very same companies who are
best suited to being the first to offer this to their employees.
Now if all of this optimism has made you feel sick then let me bring you right back to reality
with my video on why none of this will ever come true and you will likely never retire
at all.
A big thanks again to story blocks as well as my channel members and patrons on patreon
for making it possible for everybody to keep on learning How Money Works.