The Retired Investor: Four-Day Workweek

The American work culture has shifted radically since COVID-19. The idea that there is more in life than work is catching on among many workers. Working from home, quiet quitting, and "missing Mondays" are all symptoms of this change as is a four-day workweek.

 

Most full-time workers and job seekers, when asked, say a four-day workweek is at the top of their wish list. That is what a recent study by Bankrate, a consumer financial services company, discovered. Fully 81 percent of 2,367 adults polled, supported such a move, and 89 percent of workers were willing to make sacrifices to achieve that goal. Those surveyed said they would work longer hours, change jobs, take a pay cut, have fewer vacation days, switch industries, and even sacrifice advancement for the chance to reduce their days of toil.

 

At the same time, more than half of American employers offer, or plan to offer, a four-day workweek, according to a poll of 976 business leaders by ResumeBuilder.com. In that survey, 20  percent of those businesses already offer a four-day week and another 41 percent are planning to implement a similar week at least on a trial basis.

 

Several large trials are already occurring both here and abroad to explore the possibilities of a shortened work week. Studies have shown that for those who have implemented the change employees are happier, have less burnout, and it is also easier to attract new talent. In a Canadian trial, researchers found that revenue increased by 15 percent in many of the 41 companies that decided to continue with the approach after the trial ended.

 

Some large private-sector companies in the U.S. including Shopify, and even Amazon and Microsoft, are experimenting with a shorter workweek. California, Massachusetts, Missouri, Pennsylvania, Texas, and possibly Vermont have introduced legislation to reduce the standard workweek as well.

 

You would think that with this much support from both employee and employer, why hasn't it happened already?

 

The facts are that the lion's share of U.S. companies and organizations still operate under a five-day work schedule. It happens to also be a labor law and has been for more than 80 years. Changing that would require a large adjustment and require a great deal of planning. Just think for a moment about how downsizing the working week might impact you. Everything from taking the kids to school, to when you go grocery shopping might change.

 

From the perspective of your company, there is a lot that needs to be assessed. Staffing needs, concerns over productivity gains or losses, increased costs, and complex changes to operations are all legitimate concerns. None of those issues can be overcome quickly. Experts estimate a complete changeover could take five years or more.

 

Back in 1926, Henry Ford was credited for standardizing the five-day workweek (down from six) in response to pressure from the labor movement. Unions have long been instrumental in fighting for most of today's worker benefits like weekends off, overtime, and health benefits.

 

In 1940, an amendment to the Fair Labor Standards Act mandated pay for any time worked beyond 40 hours per week. Since then, not much has changed in labor laws.

 

While remote workers, office jockeys, and the salaried bunch are lobbying for a change in the workweek, the United Auto Workers are putting the four-day workweek on the map for hourly workers. Today's striking autoworkers union, in addition to wanting better pay and benefits, are asking for a four-day workweek. The deal they want is to put in a 32-hour week and get paid for 40 hours. In addition, anything clocked over the 32-hour limit would count as overtime.

 

Part of the union's effort is due to the auto industry's transition from building gas-powered vehicles to electric. It takes less time to assemble EVs on the line, so assembly workers wouldn't necessarily see their weekly take-home pay take a hit.

 

Most labor experts do not expect the UAW will win on that demand. And not all workers want a reduction in their hours worked anyway. Hourly workers across many industries are fighting for more, not less, hours to work. It is a sad fact in this country that many employers actively try to keep workers' hours under certain thresholds to avoid paying fringe benefits. It would take a concerted effort by labor unions, corporate executives, and politicians to pull off something like a four-day workweek. Nonetheless, the idea is gathering steam across the nation, and at some point, we should expect it to become a fact, possibly in my lifetime.

 

Bill Schmick is the founding partner of Onota Partners, Inc., in the Berkshires. His forecasts and opinions are purely his own and do not necessarily represent the views of Onota Partners Inc. (OPI). None of his commentary is or should be considered investment advice. Direct your inquiries to Bill at 1-413-347-2401 or email him at bill@schmicksretiredinvestor.com.