Democrats are mutating their ‘free stuff’ strategy before our very eyes.
If a four-day workweek truly increased both worker satisfaction and revenue, then we would not need a law to enforce it.
F or much of my adult life, economic policy in the United States followed a pattern: Democrats promised voters government largesse, and Republicans who objected were characterized as heartless bigots. Certainly, the promise of free money is attractive to voters, especially those in the bottom half of the income pyramid who don’t have to pay income taxes for the free stuff.
President Biden, perhaps driven by his unpopularity, has taken the free-money strategy to extremes, from the Inflation Reduction Act to student-debt forgiveness. This might carry Democrats through the next election, but the fact is that the president has spent so much that there isn’t enough money left to continue this strategy for much longer. Their new strategy is coming into view.
First, the bad news for the free-stuff crowd. In January 2017, the Congressional Budget Office (CBO) looked ahead to 2024 and projected that the U.S. government would run about a trillion-dollar deficit while spending $5.5 trillion and raising $4.5 trillion. In February of 2024, the CBO projected that spending this year will be $6.4 trillion, and the government will raise $4.9 trillion. The tax cuts did not reduce revenue below the projections released before the Tax Cuts and Jobs Act in 2024.
Back in 2017, the CBO projected that debt held by the public this year would be $20 trillion. Today, it’s $27 trillion, and it is projected to climb to $48 trillion in a decade. With the fiscal situation so close to the edge, it is safe to say that the era of government-financed “free stuff” is over — or at least, should be over.
The predictable result is that giveaways without a direct fiscal consequence will take off. We can see that in California, for example, where the minimum wage for fast-food workers at chains with 60 or more locations nationwide has been lifted to $20 per hour.
This approach is likely to evolve quickly. A sign of where the Democratic Party is taking this is evident in the widely praised proposal from Bernie Sanders to pass a law limiting the workweek to four days while requiring that employers not reduce any salaries. The concept has “gathered steam,” according to the New York Times. Similarly, an NPR article cites a study and suggests that Sanders’s proposal is a delicious free lunch, saying that “employees came to work less stressed and more focused while revenues remained steady or increased” on the reduced workweek schedule.
Expect an avalanche of such proposals supported by alleged “academic” research.
As for the workweek, the 2023 study that has been cited extensively in the media was performed by researchers from Boston College, the University of Cambridge, and a self-described “progressive” think tank based in the U.K. called Autonomy. The study’s key finding is that 92 percent of the 61 surveyed companies (which were all in Britain) reported that they were continuing the four-day workweek after a six-month trial in 2022, and 18 companies said that this change would be permanent. For the 24 companies that supplied sufficient data, revenues on average went up 35 percent over a comparable period in a previous year.
How could the results be so positive? One sign is that the participating companies (11 percent of which were charities or non-profits) do not appear to have been randomly selected for the trial, but rather were “recruited.” In other words, the study examines the impact of the four-day workweek on companies that wanted to try it. A sign of possible sample-selection bias can be seen in a footnote disclosing that, “Initially, 70 companies had signed up to take part in the pilot — however, 9 of these did not begin the trial.” The most common reason for this was “a sense that the organization was not sufficiently prepared. . . . Other reasons include[d] difficulties measuring performance in some departments, struggles with the ‘great resignation,’ and two companies who decided shorter working hours were not right for them.” Of course, companies that really need workers to show up for the full five days would not have signed up in the first place.
The increase in revenue is difficult to trace in the poorly conducted research, but there must be a strong presumption that the 2022 study used prior years for the “control” period — but those were affected by Covid-19 lockdowns (which were phased out in the U.K. beginning in March 2021).
The irony of the study so dutifully cited in the media is that if its findings were replicated, and a four-day workweek truly increased both worker satisfaction and revenue, then we would not need a law to enforce it.
A standard textbook analysis would suggest that cutting worker hours by 20 percent will reduce labor input by perhaps that much, and further reduce output by about 10 percent. Looking ahead, it is reasonable — not heartless — to note that the same partisans who have pushed our government toward bankruptcy have organized their troops effectively to bankrupt everyone else.