I was reading Adam Davidson’s “On Money” column in the New York Times Magazine this morning. While the article offers a fascinating peek into the seemingly contradictory world of the Army’s War College, as a solution for what ails the middle class the article falls short.
"The period of increasing inequality in the United States (1973-present) has now eclipsed the post-war boom that we had come to think of as “normal.”"
While the disappearance of the middle manager is no doubt a part of the story, the bigger news is the effect of the concentration of capital ownership and technology on inequality and employment. Thomas Piketty and others have meticulously documented the natural tendency of returns to capital to exceed income growth, as well as the increasing concentration of capital ownership of the past few decades. And academics like Andrew McAfee and Erik Brynjolfsson have uncovered evidence that technology is now simultaneously increasing productivity, while lowering overall employment.
These trends should force us to call into question two long-held notions: first that there should be a rigid distinction between owners and workers, and second that the 40 hour workweek is akin to a law of nature.
What if equity were more broadly shared with employees so more of us could share in the benefits — and responsibilities — of ownership? And what if we used future productivity gains, not just to pay more, but to give people more free time: for example by providing more vacation time, paid leave or even working less hours overall?
Answers to these questions may be more obvious than we think.
In the United States we have a robust experience with “employee-ownership:” forms of broad-based equity sharing in firms. Today, nearly 13 million workers own equity in their companies through Employee Stock Ownership Plans.Research shows that these firms are not only more successful, but they also hire more, pay better, tend to layoff workers less and provide stronger retirement benefits.
"There is an urgent need for new thinking: thinking outside of the 40-hour-workweek box, and beyond the outdated paradigm of “owners” versus “workers.”"
What about working less? In 1890 the average worker in manufacturing worked 100 hours a week. It wasn’t until 1940 that 40 hours became standard. And while Americans worked less, their real wages went up. For much of the twentieth century productivity gains supported both increased wages and more free time — and lower unemployment for a growing population.
The period of increasing inequality in the United States (1973-present) has now eclipsed the post-war boom that we had come to think of as “normal.” And the story of inequality isn’t just a story of wages or wealth, but also of stressed out and overworked middle- and professional-class families. Too often we’re asked to choose between career and family, economic security and personal fulfillment. There is an urgent need for new thinking: thinking outside of the 40-hour-workweek box, and beyond the outdated paradigm of “owners” versus “workers.”
