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Keith Rankin: Labour Pains

Labour Pains

Keith Rankin, 25 October 2001

Last Monday was Labour Day, supposedly a holiday, and a day to reflect on the balance between paid work and its relationship to the other aspects of life.

Labour Day is no longer much of a holiday. The self-employed and shift workers still worked. It was a good shopping day, so shop workers worked, eager for extra pay. And our new red-topped wheelie bins were emptied. (It was just a pity that so few of us were told to put out our petite rubbish bins. The big bins never used to be collected on Labour day.)

Those of us who were not working on Monday just cut the hedges or the edges, mowed the lawns, or cleaned the holiday house. Mothers performed childcare while still paying for the childcare that they would have consumed on a normal Monday. There's nothing like leisure to keep us busy! Indeed in the 1960s, we were reputed to need a 5-day working week simply to recover from the exertions of the week-end. Just 4 days to recover from a 3-day weekend doesn't cut the mustard.

Why do so many of us spend so much of our time working for pay? It's not so much the small increase in the average hours of paid work per paid worker that matters. It's more the variation between workers that matters. But, most of all, what matters is the huge total increase in the amount of time that parents must be away from their families (and each other) in order to provide for their families.

In the 1950s, the proportion of persons aged 15-64 in the population was at an historical low, thanks to the retiring 1870s' and 1880s' baby boomers, the deaths from two world wars, the departure of New Zealand women with American husbands, and, not least, the large number of children.

In addition, an historically large proportion of those of working age were not in paid employment in the 1950s. Many working age women were caring for their children (and/or their parents) fulltime. Many more young men and women were fulltime students than in the 1920s and 1930s. And men were retiring younger than they did before World War II.

So, in 1950s' New Zealand, the total hours worked (for pay) divided by the total hours lived was at an all time low. In the 1960s, we assumed that computer-aided productivity gains would further dramatically reduce total hours worked per total hours lived. How wrong we were.

In the 1990s, an historically large proportion of the population was aged 15-64. While the total number of hours worked by men as a proportion of the male population was not much different to what it was in the 1950s, many more men who wanted paid work were unemployed or underemployed. Male wage rates, adjusted for inflation, were much the same in the 1990s as they were in the 1950s.

With females, the picture is much more dramatic. There was something like a 5-fold increase of paid hours worked by women as a proportion of hours lived by females of all ages.

The picture today appears to be one of an out-of-control addiction to work. But of course, it's not that we like work more than we did in the 1950s. We work more now because the monetary rewards for work are so low. The labour market is unusual in that we supply more labour when the price of labour is low, and we supply less labour when the price is high.

Demographics play a role in setting the price of labour. So when, as in the 1950s, the supply of labour was low, the price of labour (the wage rate) was high. When the wage rate was high, we could support a family of three with a total of 40 hours of paid work per week. So that's all the paid work a family did, fulfilling Samuel Parnell's dream of a balanced life; the dream that was commemorated last weekend.

Economists call the phenomenon of working more when incomes are low "the added worker effect". Often remarked upon in the 1930s, the added worker effect has not been a fashionable explanation of our modern work practices, presumably because it suggests that the rise of female employment has little to do with the emancipation of women and much to do with the need to pay the bills. Historically, added workers were mainly women who entered the workforce when male breadwinners lost their jobs or could no longer earn enough to pay the bills.

The huge growth in female employment in New Zealand in the years 1984 to 1987 was a good example of the added-worker effect. At that time there was both a huge rise in mortgage interest rates and rises in the sizes of mortgages that households were having to take on. Two-income households had become the norm, by necessity.

It's the same today. We work long hours to pay the mortgage, or other debts. The lower our wage rates are, the more hours we must work in order to achieve our target incomes. Ironically, we now queue up to work on Labour Day. The extra pay gained from working a statutory holiday pays that overdue bill.

The cost is that, for too many of us, the balance has gone out of our lives. In order to escape financial poverty, we reluctantly endure time poverty.

The cycle will turn. As employable workers become more scarce in the 2010s, wage rates will rise, people will earn more from fewer hours. Productivity (output per hour worked) will increase substantially (as it did in the 1950s). Workers will have more free time in 2025 than they do today, despite the burden of supporting the baby boom generation in retirement.

© 2001 Keith Rankin

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