Is the Future of Work Hidden in Germany?

Over that past five years the United States has lived with high unemployment that rivals what this country experienced during the Great Depression. As we all hear in the news almost daily, there are now millions of long-term unemployed, many of whose jobs have disappeared and will most likely never return.

However, the picture in Germany today is very different. As New York Times op-ed contributor Glenn Hutchins observes:

In 2009, Germany suffered a more precipitous drop in gross domestic product than the United States, but it experienced almost no change in unemployment.

(see “Work Like a German,” March 14, 2014)

While unemployment almost doubled in the United States after the Wall Street meltdown, in Germany it hardly budged. Today German unemployment is actually lower than it was before the “Great Recession” and – even more impressively – long-term unemployment is virtually non-existent. How could that be?

Surely there are many factors, but Hutchins highlights a stark contrast in the way Germany and the United States cope with economic downturns. In the US, we leave it to businesses to cut costs when profits fall – and most of them do it by laying off employees. The aggregation of those decisions is clearly what produces high unemployment across the board as well as massive federal and state spending on unemployment compensation.

In contrast, German companies cut costs by reducing everyone’s hours – and their compensation of course. But those reductions in individuals’ earnings are mitigated by stipends from the German government that essentially bring incomes back to nearly normal. In other words, all German workers share in the pain of a downturn, but that pain is reduced dramatically by government investment (at a public sector cost that is will below US unemployment outlays per capita).

The net result is that the German economy doesn’t suffer anywhere near as much as in the U.S. during a downturn. All Germans can still afford to buy food, clothing, shelter, and many basic consumer products.

But there is an added, almost unnoticed bonus:  for most of the workforce fewer hours at work bring with it lower workplace stress, enhanced work-life balance, and more time for family and friends.

What a wonderful outcome! Why don’t we do something like that here in the United States?

Well, we do have some small examples of similar outcomes. There is no question that shorter work weeks do in fact produce significantly improved quality of life – to say nothing of potentially reducing the number of long-term unemployed individuals.

My good friend and colleague Patt Schwab, PhD, CSP (meet Patt at http://www.fundamentallyspeaking.com), recently told me about a friend of hers who works in a county financial office in the state of Washington. Patt’s friend and her friend’s husband, also a county employee, both had to go to a four-day work week when their hours were cut as a result of “furlough” days mandated by the county to reduce administrative costs (Patt is a professional speaker who talks about humor as a management tool) .

Yes, the shorter work week did reduce their income somewhat, but they are both now much happier and able to spend more time at home with their young children (and, not incidentally, reducing their child care costs). And because they have more free time they able to be more effective parents, friends, neighbors, and community contributors.

And Patt believes that this example of reduced working hours has improved her friends lives is just the tip of the proverbial iceberg. She is convinced we would all be better off with more free time. Consider these additional consequences for starters:

  • When people have more time during the “normal” work week to do things other than work full-time they can not only spend more time with their family, but they often “give back” to their communities by volunteering at local schools, churches, the Boy Scouts and Girl Scouts, and so on.
  • With significant numbers of people not commuting to their workplace each working day, both traffic and greenhouse gasses will be reduced as well.
  • When people work fewer hours and begin job-sharing they usually have to learn new skills; and they often discover there is now someone else who understands the challenges they are facing (it could be “Misery loves company,” but it can also become “Two heads are better than one” for solving tough problems).
  • Organizations that retain more workers also retain more experiential knowledge, and the job “smarts” are passed more easily to a wider network of individuals and teams.
  • Shorter work weeks and more leisure time can also enable older workers to extend their careers, continuing to earn some income rather than retiring completely. In some cases that might even enable them to delay going on Social Security and other earned benefit programs, thus helping reduce the federal deficit.

Even if the US isn’t ready to move to the German “Kurzarbeit” program of job sharing and low unemployment, this idea feels like something worth exploring more aggressively, and at a national level.

Let’s take charge of the future of work and make it work for all us. As Patt Schwab will be the first to tell you, reducing our work weeks is not a laughing matter.

What do you think? Do you have any experience with shorter work weeks? Could it work on a national level in the United States? Your comments are more than welcome.