Why we work less: rich people goofing off
The Ottawa Citizen
By William Watson
I’ll bet you wouldn’t think a journal called the International Productivity Monitor, which is put out by Ottawa’s Centre for the Study of Living Standards, could produce anything remotely interesting. But it does, often. The latest example is an article by three economists at Toronto’s Institute for Competitiveness and Prosperity that tries to explain the prosperity gap between Canada and the United States, which is now running at about $9,000 a year per man, woman and child. (Probably not the kids’ fault).
Part of our problem is that when Canadians are working, we’re less productive than Americans. One’s tempted to assume that’s because we spend so much time around the water cooler discussing whether Quebec or the Quebecois or the Quebecer is a nation, either within Canada, within a united Canada, all on its own or simply with fries.
In fact, the reason for the hourly output difference seems to be that Americans are more educated, work with more and smarter machines and have the good sense not to be nearly so spread out geographically.
But lower production when we’re working is only part of the problem. How much we work also counts. As former Quebec premier Lucien Bouchard has been complaining recently—usually while away from his own desk, incidentally—we, especially Qubecers, work less than Americans do. The three Toronto economists inform us Canadians work 157 fewer hours a year, which is roughly four weeks—an entire month. If you take off work a month more than your neighbour, well, don’t be shocked if your income is lower.
Does making more money matter? Maybe not, if you value quality time with your kids and so on. But if you’re running tax-financed health care and education systems, you can’t be indifferent to the fact that your people are spending so much time at leisure, which can’t be taxed. (Or can’t it? Higher taxes on beer, popcorn, couches, televisions and so on would punish leisure fiends.)
What’s really interesting in the numbers, though, is that people who work full-time --defined as working 30 hours or more a week—work pretty much the same hours: 43.02 hours per week here vs. 43.73 hours per week in the United States. Granted, that 0.71-hours-per-week difference works out to 35 or so hours in a year, but that’s only one week’s difference, not four. Where does the rest of the difference come from?
From the fact that, although the U.S. has more official holidays per year, in any given week Canadians are more likely to be away from work than Americans are. At any time 7.9 per cent of us are absent, versus only 4.1 per cent of Americans. The difference works out to two weeks per year, one week for vacation and another half each to illness and “personal responsibilities.” If we’re sicklier than Americans, we’re bound to make less money. But are we really sicklier or, because of higher unionization and more elaborate labour market regulation, do we have more generous sick-day rules—as well as an anti-work ethic that now says if you don’t take your “sick days,” there’s something wrong with you?
Another difference is that we have more part-time workers than the U.S. does and more than a quarter of our part-timers say they prefer to work full-time compared with just over 11 per cent in the U.S. (Of course, you’d love to be able to test that by actually offering them more work.)
Beyond that, there’s the problem that our overachievers aren’t as overachieving as over-achieving Americans. A 2003 survey found that Ontarians’ and Americans’ attitudes to work were essentially the same—with one exception. “In Ontario, 48 per cent of respondents with a graduate degree agreed that they were willing to work three out of five nights a week to improve their standard of living” while 63 per cent of their U.S. counterparts were. Similarly only 25 per cent of Ontarians with a graduate degree said they would work three out of four weekends, versus 45 per cent of Americans with a graduate degree.
In a correlation exercise, the Toronto economists argue that higher Canadian taxes don’t explain more than 10 per cent of the difference between hours worked per year in the two countries.
But they looked at average tax rates across provinces and states. If the problem is that upper-income Canadians aren’t working hard enough—people such as Mr. Bouchard and company—substantially higher Canadian taxes at the top end of the income ladder may well be the reason.
William Watson teaches economics at McGill University.
