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Shorter Workweek in a Tough Economy

by Claudia N. Lombardo

According to economist Dean Baker, President Barack Obama’s own economic team believes the President’s stimulus package will have no effect on unemployment — currently at 10 percent — two years from now. The announcement caught the attention of many employers, already worried about having to make future layoffs, and has initiated discussions about shortening the workweek to keep the unemployment rate from rising.

Four-Day Workweeks: Legal and Practical Guidance for Employers

History of the shorter workweek
The concept of a shorter workweek isn’t new. In 1926, Henry Ford announced that he would use a five-day workweek (as opposed to six) without reducing employees’ pay. During the Great Depression, President Herbert Hoover called for a reduction in work hours in lieu of layoffs. Later, President Franklin D. Roosevelt enacted the Fair Labor Standards Act of 1938 (FLSA), establishing the five- day, 40-hour workweek for a broad segment of workers.

The momentum slowed in the 1950s when the government equated longer work hours with the arms race and the defeat of communism. The last national effort occurred in the 1970s, when Representative John Conyers (D-Michigan), responding to the oil crisis, introduced a bill that would shorten the workweek to 35 hours. The bill received little support and ultimately failed. For more information on the history of the shorter workweek, visit www.shorterworkweek.com/history&arguments.html.

Renewed debate
The economic downturn that began in 2008 resurrected the debate. In a nutshell, the idea is this: If an employer cuts its standard workweek — from 40 hours to 32 hours, for example — its employees lose wages but gain job security, and the employer is able to cut its operational costs.

For example, Brevard Community College (BCC) in Florida established a four-day workweek and saved the school $267,000 in energy costs for one year. The savings allowed the school to hire 10 full-time faculty members. To learn more about how BCC made a reduced workweek work to its advantage, visit www.cnn.com/2008/LIVING/worklife/08/12/shorter.workweek/index.html.

Given the current state of the economy and the less-than-optimistic forecast for the near future, employers may have to find creative ways to mitigate the effects of the financial crisis. With most American families just one health catastrophe away from bankruptcy, more free time in exchange for a pay cut and retention of health insurance is preferable to a layoff. Of course, that assumes that employees working fewer than 40 hours are eligible for benefits.

Productivity concerns
A big concern for employers, particularly in a failing economy, is whether shortening the workweek reduces productivity. Employers may wonder how their company will continue producing at the same level with a reduction in employee hours.

Interestingly enough, according to Aaron Newton, author of “The 4 Day Work Week: Working to Live, Not Living to Work,” a recent survey of more than 10,000 workers revealed that on average, people spend more than two hours each day on personal matters (e.g., surfing the Web or calling friends) while at work. That adds up to 10 hours a week.

The study shows that a four-day workweek wouldn’t necessarily reduce production if the focus remains on work. In fact, author David Roberts writes in his article, “All In A Days Work,”that France, with a 35-hour workweek, creates a greater gross domestic product per work hour than the United States, as does Norway, with its population working 26 percent fewer hours a year than Americans. In short, these statistics suggest that the number of hours worked is a poor indicator of productivity.

Softening the blow
As an employer, it’s not easy cutting staff salaries in exchange for more hours away from work because many workers prefer a paycheck based on five days’ pay. To soften the blow, reassure employees that they will retain the same benefits they previously enjoyed and remind them of the money they’re saving.

For example, according to Aaron Newton, in 2007, 80 percent of the 133 million workers in the United States drove to work. The average commute was about 16 miles each way. A four-day workweek can save the 80 percent of Americans who drive 32 miles to and from work the money they would have spent on fuel. Then there’s childcare. In 2007, Americans were paying between $3,000 and $15,000 for childcare each year. Those costs could be reduced by 20 percent under a four-day workweek.

Bottom line
The benefits discussed in this article are not exhaustive. If you’re interested in “going green,” there are numerous resources available on the environmental benefits of a shorter workweek. Your business is unique, and the best person to determine whether a shorter workweek is right for you, your employees, and your patrons is you. In the end, shortening the workweek may just be the creative approach you need to navigate through these tough economic times.

Claudia N. Lombardo is an attorney with Axley Brynelson, LLP. She can be reached at (608) 283-6744.