Why aren't Americans working as hard as they used to?

Yes, we still work more than almost anyone else — especially the Europeans, with their long vacations and 35-hour work weeks — but the gap is closing. Not only are Americans working fewer hours per week, but people in other wealthy nations are working more. At this rate, we'll soon be working as hard as the French.

Je plaisante! As it turns out, this phenomenon may be best explained by the decline of men in the workforce rather than a general rise in American indolence. Still, the implications for the U.S. economy, and the federal budget, are profound.

Right after World War II, it was the Europeans who worked harder than everyone else. But as they rebuilt their economies and constructed huge welfare states, their working hours fell. They now work much less than the rest of the world. Americans' working hours also declined in the 1950s, but started to increase in the 1960s and accelerate in the 1980s and 90s before leveling out and then falling in the 2010s. Meanwhile, Europeans started working more in the 2010s. The gap between the U.S. and other rich countries has been cut in half.

A new paper explores why this might be. It suggests that one reason might be the expansion of Medicaid in the U.S.: In 1970, the program covered about 20 million people, or roughly 10% of the population; by 2020, those figures were 100 million and 30%. Medicaid can be a disincentive to work, because if someone on Medicaid takes a job or just works more hours, they could lose their health benefits or have to pay more for them. Some research estimates that Medicaid income limits can act as a 100% tax on work.

At any rate, this decline in working hours is turning into a problem. Some older Americans are shut out of the labor market because of age discrimination or lack of suitable jobs. Meanwhile, some part-time workers can't find full-time, reliable work. What's unclear is whether these trends are getting worse, or will get better in coming decades as technology offers people more ways to work for themselves.

A more concrete concern is that this phenomenon of working less is concentrated among men and lower-income Americans. It used to be that those with higher incomes worked very little, but in the 20th century that changed: Now higher earners work more hours than people who earn less. As for the gender gap, according to the American Time Use Survey, working hours for men and women who have jobs has been fairly stable since 2003. The drop in overall working hours comes mostly from people who don't work, especially men. It's clear that a lot of this trend is driven by men leaving the work force.

Fewer men are in the labor force in Europe, too. But that's because of earlier retirement and longer life expectancy. In 2020, only 8% of European men ages 25 to 54 were out of the labor force, compared to 11% in the U.S. Youth unemployment tends to be higher in Europe, but at least there is a trend of working more, while the U.S. is going in the wrong direction.

It is worth noting that Americans still work more than Europeans. On average, other rich countries work 92 hours for every 100 Americans do. And if the American welfare state has become more generous, in most of Europe it is even more generous. It's possible to structure benefits in a way that encourages work, of course. But the larger point is that none of this is sustainable.

Both America and Europe have aging populations that will be increasingly expensive to care for. And if people are working less, that means there will be less tax revenue to pay for those benefits. Europe has taken a step in the right direction, but it still has much further to go. Meanwhile, between growing its welfare state and shrinking its working hours, the U.S. may be accelerating its reckoning, too.

(COMMENT, BELOW)

Allison Schrager, a Bloomberg columnist, is a senior fellow at the Manhattan Institute and a contributing editor of City Journal.

Previously:
• $100,000 in Social Security benefits is too much
• The Laffer Curve is no longer a punch line
• Yes, Americans are saving enough for retirement
• Is free trade worth the cost in lives lost?
• Mamdani's New York is flirting with fiscal nihilism
• America's human capital is eroding
• Musk is wrong about AI and retirement --- You still need to save
• Go ahead and resent boomers but for the right reasons
• Raiding your 401(k) to buy a house should be an option
• Americans are living in the worst of all tax worlds
• Think of college like you would a junk bond
• The economy needs a little bit of unfairness
• The pension revolution is better for savers
• Affordability isn't a hoax. It's not a crisis for most, either
• America gets retirement wrong. Can Vanguard fix that?
• The American middle class is shrinking, and that's OK
• Want to buy a home? It's OK to wait till you're 40
• Mamdani is benefiting from New York City's changing workforce
• How can an economy this good feel this bad?
• Why boomers have more money than everyone else
• Democratize private investment?
• Lab-grown diamonds are testing the power of markets
• Inflation ate your free lunch, but you're still better off
• Good debt? Bad debt? There's no such thing
• Megabills didn't break the economy before and won't now
• America's broken politics is breaking economics, too
• A college degree is no longer a risk-free investment
• Break up Columbia? Maybe, and the rest of the Ivy League, too
• Even Dems might like MAGA accounts
• Reality Check about possibile volatility in trade war
• Is this really how American exceptionalism ends?
• The free-market conservative is a vanishing breed
• Shareholder capitalism is back
• Europe's risk aversion comes with consequences
• The Oxford curriculum that American universities need
• Private equity won't diversify your portfolio
• The era of declining interest rates may have come to an end, and many investors don't seem to realize it
• This one weird trick could save the U.S. economy
• The Fed's damage to the housing market may last years
• The future of unions looks very different
• To bring back the office, bring back lunch
• Does it really matter who gets into Harvard?
• Our pensions shouldn't be used to juice the economy
• A soft landing won't mean the economy is safe
• The 30-year mortgage is saving the U.S. economy … or is it?
• The one true secret to successful investing
• Less work, more burn-out
• When did risk become a bad word in the U.S.?
• AI-proofing your career starts in college
• Biden has to learn the same lesson as SVB
• Say it with Rubio: Changing clocks is stupid
• Sure, we'll return to the office in 2023 but not to stores
• How to manage the biggest risk of all: Uncertainty
• If you think U.S. pensions are safe, just wait
• Harry and Meghan and the perils of superstar culture
• Norman Rockwell's economy is never coming back
• Burned by crypto? Don't learn the wrong lesson
• Quiet Quitters are looking in the wrong place for meaningful work
• America's MBAs are the latest skeptics of capitalism
• Generation Z is getting a harsh lesson in stock risk
• The biggest threat to the U.S. economy is policymakers
• Buck up, boomers. You're still better off than your parents
• How to manage the biggest risk of all: uncertainty
• Startup boom is the kind of risk-taking Americans need
• Gen Z is too compliant to achieve greatness
• A bigger child tax credit isn't the poverty solution we need
• Finding your power in a higher-priced world
• The Biden administration's plans to double the tax rate on capital gains will prove costly to all Americans, not just the wealthy
• WARNING: Feel Good Now --- Pay Later: Stimulus is crammed with goodies but makes no economic sense
• The 'Stakeholder' Fallacy: Joe Biden's vision of capitalism is a recipe for failure