I like Timon’s provocative monthly proposals very much! Not necessarily because I agree with them (I don’t) but they are always inspiring.
Timon is arguing that a reduction in individual working time would on the one hand increase total employment and at the same time increase the marginal product of labor and hence wages. So my first question would be: Why not restrict individual working time radically, let’s say to one hour per day. According to Timon’s logic that should radically increase employment and wages. Something must be wrong here.
I don’t know why Timon thinks cutting individual working time increases the marginal product of labor. I thought that the MPL depends on total hours worked not on who works them. It is not clear to me why the MPL should rise if you have 8 people working 35 hours instead of 7 people working 40 hours per week.
Moreover, if it were true that dividing working time among more people would increase productivity, why isn’t it already done? Surely profit-seeking employers wouldn’t miss out on the opportunity of getting more output with the same total work hours.
If the working-time reduction didn’t raise productivity, there wouldn’t be any effect on total employment when measured in hours worked. If MPL stays the same, a firm who used to employ 7 people for 40 hours now hires one more when individual working-time is cut to 35. But total hours worked will stay at 280. Only if the marginal product is raised will the firm increase its demand for work hours.
You might say that what counts from a welfare perspective is the number of people employed rather than the number of hours they work. But I doubt it. If there is no effect on MPL and hence on wages, going from 40 hours per week to 35 results in fewer unemployed workers, which increases the income of those hitherto unemployed, but it also results in lower income for all others. Aggregate income wouldn’t change since total hours worked wouldn’t change. What happens is a mere redistribution from those currently working to those currently unemployed.
Timon goes on to say that “less loaded workers are healthier and more likely to invest in their training and education.” Well, that may be right given the same income. But the workers whose working time is cut, will have lower income. So they will have less money to spend on health care and education.
In short, I doubt that individual working-time reduction would increase productivity. If it doesn’t increase productivity, it will raise the number of people employed, but not the number of hours worked. So its only effect is income redistribution within the working class. Is that the kind of redistribution Timon wants?