Why the rich now have less leisure than the poor

 

Apr 19th 2014

FOR most of human history rich people had the most leisure. In “Downton Abbey”, a drama about the British upper classes of the early 20th century, one aloof aristocrat has never heard of the term “weekend”: for her, every day is filled with leisure. On the flip side, the poor have typically slogged. Hans-Joachim Voth, an economic historian at the University of Zurich, shows that in 1800 the average English worker laboured for 64 hours a week. “In the 19th century you could tell how poor somebody was by how long they worked,” says Mr Voth.

In today’s advanced economies things are different. Overall working hours have fallen over the past century. But the rich have begun to work longer hours than the poor. In 1965 men with a college degree, who tend to be richer, had a bit more leisure time than men who had only completed high school. But by 2005 the college-educated had eight hours less of it a week than the high-school grads. Figures from the American Time Use Survey, released last year, show that Americans with a bachelor’s degree or above work two hours more each day than those without a high-school diploma. Other research shows that the share of college-educated American men regularly working more than 50 hours a week rose from 24% in 1979 to 28% in 2006, but fell for high-school dropouts. The rich, it seems, are no longer the class of leisure.

There are a number of explanations. One has to do with what economists call the “substitution effect”. Higher wages make leisure more expensive: if people take time off they give up more money. Since the 1980s the salaries of those at the top have risen strongly, while those below the median have stagnated or fallen. Thus rising inequality encourages the rich to work more and the poor to work less.

The “winner-takes-all” nature of modern economies may amplify the substitution effect. The scale of the global market means businesses that innovate tend to reap huge gains (think of YouTube, Apple and Goldman Sachs). The returns for beating your competitors can be enormous. Research from Peter Kuhn of the University of California, Santa Barbara, and Fernando Lozano of Pomona College shows that the same is true for highly skilled workers. Although they do not immediately get overtime pay for “extra” hours, the most successful workers, often the ones putting in the most hours, may reap gains from winner-takes-all markets. Whereas in the early 1980s a man working 55 hours a week earned 11% more than a man putting in 40 hours in the same type of occupation, that gap had increased to 25% by the turn of the millennium.

Economists tend to assume that the substitution effect must at some stage be countered by an “income effect”: as higher wages allow people to satisfy more of their material needs, they forgo extra work and instead choose more leisure. A billionaire who can afford his own island has little incentive to work that extra hour. But new social mores may have flipped the income effect on its head.

The status of work and leisure in the rich world has changed since the days of “Downton Abbey”. Back in 1899 Thorstein Veblen, an American economist who dabbled in sociology, offered his take on things. He argued that leisure was a “badge of honour”. Rich people could get others to do the dirty, repetitive work—what Veblen called “industry”. Yet Veblen’s leisure class was not idle. Rather they engaged in “exploit”: challenging and creative activities such as writing, philanthropy and debating.

Veblen’s theory needs updating, according to a recent paper from researchers at Oxford University*. Work in advanced economies has become more knowledge-intensive and intellectual. There are fewer really dull jobs, like lift-operating, and more glamorous ones, like fashion design. That means more people than ever can enjoy “exploit” at the office. Work has come to offer the sort of pleasures that rich people used to seek in their time off. On the flip side, leisure is no longer a sign of social power. Instead it symbolises uselessness and unemployment.

The evidence backs up the sociological theory. The occupations in which people are least happy are manual and service jobs requiring little skill. Job satisfaction tends to increase with the prestige of the occupation. Research by Arlie Russell Hochschild of the University of California, Berkeley, suggests that as work becomes more intellectually stimulating, people start to enjoy it more than home life. “I come to work to relax,” one interviewee tells Ms Hochschild. And wealthy people often feel that lingering at home is a waste of time. A study in 2006 revealed that Americans with a household income of more than $100,000 indulged in 40% less “passive leisure” (such as watching TV) than those earning less than $20,000.

Condemned to relax

What about less educated workers? Increasing leisure time probably reflects a deterioration in their employment prospects as low-skill and manual jobs have withered. Since the 1980s, high-school dropouts have fared badly in the labour market. In 1965 the unemployment rate of American high-school graduates was 2.9 percentage points higher than for those with a bachelor’s degree or more. Today it is 8.4 points higher. “Less educated people are not necessarily buying their way into leisure,” explains Erik Hurst of the University of Chicago. “Some of that time off work may be involuntary.” There may also be change in the income effect for those on low wages. Information technology, by opening a vast world of high-quality and cheap home entertainment, means that low-earners do not need to work as long to enjoy a reasonably satisfying leisure.