It's hard work being a left-wing kook these days. On top of anti-globalization demonstrations and antiwar protests, there is always some new issue to organize.
This month, it is "Take Back Your Time Day," scheduled for Oct. 24. Originated by the rabidly left-wing Center for Religion, Ethics and Social Policy at Cornell University, the goal of this effort is to force employers to give workers more paid time off. In part, the organizers hope to create jobs by dividing up the available work among more people.
Before my left-wing friends start planning what to do with the extra time they will gain if work hours are restricted, they should look at what is going on in France. That country reduced maximum work time to 39 hours per week in 1982 and 35 hours in 1998. Of course, the socialist government mandated that workers receive the same weekly wages. Government inspectors were sent around to businesses to make sure that employees left for home after putting in their 35 hours.
The action was taken to increase jobs. France has long had an unemployment rate far higher than the United States. It is now 9.6 percent there versus 6.1 percent here. The socialists figured that there was only so much work to do, so if people were only allowed to work 35 hours per week, rather that 40 hours, then this meant that eight workers would be needed to do the work that seven workers did previously.
Economists call this the "lump of labor" fallacy. It is wrong because work is not homogeneous, either geographically or in terms of skills. Nor is the demand for labor fixed. Most importantly, it is a function of the price. If unions raise the wage rate above the market-clearing level, then unemployment is going to rise. Similarly, if government mandates a rise in wage rates, as France did by reducing hours at the same weekly wage, then you are also going to see higher unemployment.
Consequently, it is not surprising that the French action reduced employment, rather than raising it, as was its intention. Writing in the December 2002 issue of the prestigious Journal of Political Economy, economists Bruno Crepon and Francis Kramarz looked at the first reduction in work hours in 1982. Their unambiguous conclusion: "Changes in the legal standard workweek led to employment losses, contrary to the initial goal of these policies."