Richer by Less Work?

June 11, 1962

The demand of David Dubinsky, head of the International Ladies Garment Workers, and of George Meany, head of the AFL-CIO, for a cut in the standard workweek from 40 to 35 hours is senseless from the workers’ point of view.

Without overtime, it would reduce national production by one-eighth, or 12½ percent. Therefore it would reduce real income and “purchasing power” by 12½ percent. If wage rates were not changed to compensate, it would reduce the money-wages of all presently employed workers by 12½ percent. It would not force the employment of 14.3 percent more workers, if only because there are not that many unemployed. Moreover, the percentage of unemployment is different in every industry and locality. Even if the cut in the workweek did force the employment of presently idle workers, presently employed workers would in effect be paying their wages.

That is why the union leaders insist that there must be a compensating hourly wage increase to bring present workers the same take-home pay. This wage increase would have to be more than 14 percent per hour. Putting aside the question of how the union leaders propose to achieve this uniform hourly increase—by law, by Presidential directive, or by individual strikes and “collective bargaining,” the result of achieving it would be to bring on massive unemployment. If, to remedy this unemployment, union leaders demanded enough monetary inflation to raise prices also by some 14 percent, the present workers would in effect take a cut in real weekly wages of 12½ percent.

CRUDE FALLACIES

The union leaders’ demand, in brief, rests on the crudest fallacies. It assumes that there is only a fixed amount of work to be done, and that hours per person must be cut to spread this fixed amount of work around. The union leaders refuse to recognize that even our present unemployment is caused by excessive hourly wage rates in certain lines. The reductio ad absurdum has been put forward by Walter Reuther, who suggests that the greater the percentage of unemployment, the more the workweek must be cut and overtime rates doubled to compensate This would make the unemployment greater and greater.

Administration officials have called attention to some of the absurdities in the proposal. Walter Heller, chairman of the President’s Council of Economic Advisers, points out it would “undercut the sources of economic growth quite apart from the cost-push effect that this would have on prices.” Secretary Goldberg declares: “The result would be that our goods would be necessarily higher priced, would be less competitive both at home and abroad, and the result would be more unemployment instead of less.”

REVISE LABOR LAW

Other Administration officials make additional points: (1) A reduction of working hours of skilled labor would not spread work to unemployed that are not skilled. (2) When the workweek is shortened below 40 hours, many workers “moonlight”—i.e., go out and get a second job. (3) There is no evidence that a workweek of less than 40 hours increases efficiency. (4) In three-shift industries it is easier to schedule workers on an eight-hour day than on a seven-hour day, which is what the 35-hour week comes to.

But it is not enough to point out that a further forced 12½ percent cut in the standard workweek would be senseless from the workers’ point of view. Unions have the government-granted powers and immunities to force such cuts. The Ladies Garment Workers already have a 35-hour week. Electrical workers of New York City have forced a basic 25-hour week at $4.96 an hour and $7.44 for overtime. The situation will grow steadily worse (hurting workers most of all) unless we reconsider our labor legislation of the last 30 years.

Two revisions are basic. (1) We must stop compelling employers to “bargain” with specified unions no matter how exorbitant their demands. (2) We must stop allowing unions to enforce a strike by violence or the intimidation of mass picketing. This means revision of the Wagner-Taft-Hartley Act and of the Norris-LaGuardia Act.