The Problem with a Mandatory 32-Hour Workweek

Why Bernie Sanders’ 32-hour workweek would be a disaster.

In a more rational, educated world, people would mostly dismiss the economic ideas of people like Bernie Sanders out of hand. After all, the man is a socialist who held a few entry-level jobs before becoming a career politician. There’s also very little evidence to suggest Bernie Sanders knows anything of significance about business or economics. Do we even believe that the man could successfully manage a shift at Wal-Mart or CVS? Of course, not.

Yet and still, Bernie Sanders has an idea. A very, very bad idea:

People tend to judge a lot of terrible economic policies like this on a very superficial level (“Oooh, more time off would be nice!”) without considering any of the deeper ramifications, but the consequences don’t disappear just because people don’t consider them.

For example, in Minneapolis, they arbitrarily decided to apply the minimum wage to independent contractors who voluntarily chose to work for Lyft and Uber. Although drivers can make significantly more than the minimum wage working for those companies, there’s no guarantee that they will. Some drivers are on at bad times, are in bad locations, have bad ratings, or have bad luck. The company’s economic model just doesn’t work if they’re paying those people even if they don’t serve any customers. Still, like Bernie Sanders, the city council of Minnesota didn’t care about all the ins and outs of those businesses. They just insisted that they get their way. The result?

Of course, we’ve also seen many liberal cities turn a blind eye to shoplifting. They reason that it’s not worth ruining anyone’s future over a little shoplifting and these companies should just eat the losses. It hasn’t worked out so well in many places:

We could even talk about the minimum wage (which I’ve written about here). Fortunately, the number of people in the United States getting the minimum wage is tiny. It’s usually estimated at somewhere between 1 and 1.5% of the population, so it doesn’t have a huge impact on the economy. However, there is a connection between the minimum wage and employers embracing automation. These headlines are, at least in part, a consequence of the minimum wage and the threat that it will be raised:

The point is, it’s very easy for know-nothing politicians like Bernie Sanders to try to score political points by cutting businesses off at the knees, but there are real-world consequences that go far beyond a bunch of fatcats not getting a bonus big enough to buy a yacht this year.

For one thing, UNLIKE the minimum wage, a mandatory 32-hour workweek would be likely to impact a large percentage of American workers. However, LIKE raising the minimum wage it could likely put a lot of employers in a situation where they were being asked to pay at least some of their workers more than they were worth. After all, if you cut someone’s hours by 20%, it would be reasonable to expect that they would produce 20% less than they did before.

Sure, there would be cases where that wasn’t true, but there would also be a lot of cases where this would cost an employer MORE than 20% of the worker’s value since businesses would have to either pay the worker overtime to do the same job they did before or hire new employees to do the jobs their old employees were once doing. It’s certainly not as efficient if you need three people to do a job that two people used to do.

So, what choices would a business have in that situation? They would be roughly akin to the choices businesses would have if there were a massive increase in the minimum wage:

So, what happens when the minimum wage is raised? Well, businesses have to adjust. There are a number of ways they can do that. They may…

A) Leave the position empty.

B) Hire a better-quality employee and give him the work of two mediocre employees.

C) Spread the workload out to multiple employees.

D) Replace the worker with some type of automation or new equipment.

E) Hire people in another country to work remotely or move the business there.

F) Pay the mediocre worker more and pass the cost on to the public.

Undoubtedly, if Bernie Sanders gets his way, you’d see millions of jobs leave the country because this bill isn’t just mandating a 32-hour workweek, it’s essentially mandating a 20% increase in pay. After all, if you work 20% less and get paid the same, that means your pay just went up 20%. Many corporations would undoubtedly do the math, decide American workers were getting too expensive, and move a lot of their jobs to countries with cheaper workforces.

We can never forget that yes, America does have a lot of advantages, but American corporations and workers are also in a never-ending competition with other nations all over the world. Take it from someone who was once laid off from a tech support job because they moved our call center to Canada and who later hired Indian workers to do some remote jobs for their American business. If an American worker costs too much compared to foreigners, his job can disappear in an instant.

As a side note, this bill would also quite naturally lead to rampant inflation. If corporations are forced to pay 20% more for their workers, there are a number of ways they can respond to that, but the most likely one is raising their costs by 20%.

If costs go up by 20% across much of the economy, then even the people who weren’t impacted by the bill would be forced to raise their prices to cover the new expenses they’re facing. In other words, there’s a good chance we’d essentially be talking about a government-mandated 20% increase in inflation. If this bill passes, you better stock up because prices are about to surge again.

All for what exactly?

So the cranky, old socialist dum-dum can tell everyone he’s, “looking out for the little guy” whose job gets shipped to India as a result? It’s so foolish.

At the end of the day, there’s nothing intrinsically wrong with a corporation having a 32-hour work week. In fact, if he so desired and, well, had any idea what he was doing at all, Bernie Sanders could start a corporation right now and offer a 32-hour work week that paid the same wages people typically got for working 40 hours.

Actually, ANYBODY can do that if they like – and guess what? If it works and turns out to be profitable, other companies will copy it. In fact, nobody is stopping liberal companies like Ben & Jerry’s, BlackRock, or Facebook from doing that right now. However, if corporations aren’t willingly doing it, what does it tell you? It tells you they believe it’s a less competitive and less profitable business model than the one they already have.

Mandating that your country’s corporations become less competitive while allowing socialists to start micromanaging how much workers get paid seems like a great way to make a rich nation poor. Tell you what. Let Bernie Sanders run a successful business and let the clowns in DC balance the budget, THEN MAYBE we should start paying more attention to their ideas about how to restructure our entire economy.

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