Longer Weekends and Higher Wages? 5 Surprising Ways That Would Help Improve the Economy

Americans have been sold a big lie on the economy. 

We've been told, over and over, by politicians in both parties, that in order to have an economic recovery, we're all going to have to sacrifice. We're going to have to undergo brutal austerity measures that make our lives demonstrably worse for a while in order to get back to prosperity. We just have to accept wage and benefit cuts, high unemployment, and cutbacks to government services, because that's the only way we will recover from this crisis.

That's just not true.

It's an ideological position contradicting not just leftist economists, but even Republicans. It's a position that conveniently fits right in with the agenda of Big Business: slash public spending, force wages down, cut benefits, keep workers poor and desperate for any job they can get, and privatize government services and infrastructure for profit.

Worse than that, it won't work.

In fact, many economists have pointed out policies that would not only strengthen our economy in the long term, but in the short term make our lives actually more pleasant and livable.

Since the pursuit of happiness is actually enshrined in that Constitution conservatives love to tout, we've collected five suggestions for improving the economy that would also make our lives better right now.

1. Longer weekends, more vacations.

Annie Leonard pointed out at the New York Times that Americans work longer hours than people in any other industrialized nation. We work nearly nine weeks more than Western Europeans, and we get far fewer vacations.

Yet right now there aren't enough jobs to go around. So instead of continuing to squeeze the workers who are still employed for more hours, Dean Baker suggested that we spread those hours among more workers.

His idea, to subsidize shorter work-weeks with unemployment insurance benefits, would create an incentive for businesses not to lay off workers, but to cut their hours a little instead. His example, that a worker might put in 20 percent fewer hours but take only a 10 percent pay cut, would of course take some money from a worker's check, but at least compensate the worker with more free time.

This approach has actually been tried in Germany with great results. Labor economist Mark Price told me, “One of the most jarring statistics to come out of the Great Recession is that unemployment today is lower in Germany than when the recession began. The Germans suffered through a recession like everyone else did, but they absorbed the recession through reductions in working hours instead of through layoffs. Work-sharing arrangements allowed employers to cut hours in response to a decline in demand for their products and allowed workers who had their hours cut to supplement their pay with unemployment insurance benefits.”

Keeping workers with some income keeps them spending, and keeping them in the workplace means that as demand picks back up, their hours can be increased again easily.

Jeremy Grantham, the leader of Grantham Mayo Van Otterloo (GMO), one of the world's largest asset management firms, pointed out in his letter to investors [PDF] that the U.S. was great at “job destruction,” noting, “Where Dutch and German companies, among others, tried to protect their workers’ social capital by limiting firing, we protected short-term profits.”

(A recent article in Canadian magazine MacLeans also pointed out that Dutch workers, women in particular, often only work part-time to spend more time with their families—and that the Netherlands consistently ranks as one of the happiest nations on earth.)

Of course, part of the problem with the economy right now is that the workers who do have jobs aren't making enough money to keep spending, so any policy that saw those workers taking wage cuts could be problematic for recovery as well as for the people themselves. Therefore this idea works best for workers who already make a solidly middle-class salary; people barely making ends meet as it is would be little helped by additional cuts to their salaries. The policy worked in Germany and the Netherlands because salaries there tend to be higher.