Dialogue: All work and no play - but it won't be for long

KEITH RANKIN* says the balance between work and leisure is bound to tip back towards leisure - but not until society's demographics change.

Labour Day should be a time to reflect on the balance between paid work and other aspects of our lives.

But Labour Day is no longer much of a holiday. Last Monday, many self-employed and shift workers still worked. It was a good shopping day, so shop workers worked.

And our new wheelie bins were emptied on Labour Day. That never used to happen.

Those of us who were not working just cut the hedges or the edges, mowed the lawns or cleaned the holiday house. Parents of pre-schoolers performed childcare while still paying for the childcare that they would have used on a normal Monday.

There's nothing like leisure to keep us busy. Indeed, in the 1960s we were reputed to need a five-day working week simply to recover from the exertions of the weekend.

Why do so many of us spend so much of our time working for pay? It's not so much the small increase in the average hours of paid work for each paid worker that matters. It's more the variation between workers that matters.

But most of all what matters is the huge total increase in the amount of time that parents must be employed (and hence away from their families and each other) to provide for their families.

In the 1950s the proportion of people aged 15 to 64 in the population was at a historical low thanks to the retiring 1870s and 80s baby boomers, the deaths from two world wars and, not least, the large number of children.

In addition, a historically large proportion of those of working age were not in paid employment in the 1950s.

Many working-age women were caring for their children (and/or their parents and/or their husbands) full time.

Many more young men and women were full-time students than in the 1920s and 30s. And men were retiring younger than they did before the Second World War.

So in 1950s New Zealand, the total hours worked (for pay) divided by the total hours lived was at an all-time low. In the 1960s, we assumed that computer-aided productivity gains would further dramatically reduce total hours worked as a proportion of total hours lived. How wrong we were.

In the 1990s, a historically large proportion of the population was aged 15 to 64. While the total number of hours worked by men as a proportion of the male population was not much different from what it was in the 1950s, many more men who wanted paid work were unemployed or underemployed.

Male wage rates, adjusted for inflation, were much the same in the 1990s as they were in the 1950s.

With females, the picture was much more dramatic. There was something like a fivefold increase in paid hours worked by women as a proportion of hours lived by females of all ages.

The picture today appears to be one of an out-of-control addiction to work. It's not that we like work more than we did in the 1950s; we work more now because the monetary rewards for work are low.

The labour market is different from other markets in that we supply more labour when the price of labour is low, and we supply less labour when the price is high.

Demographics play a role in setting the price of labour. So when, as in the 1950s, the supply of labour was low, the price of labour (the wage rate) was high by the standards of previous decades.

When the wage rate was high, we could support a family of three with a total of 40 hours of paid work a week. So that's all the paid work a family did, fulfilling Samuel Parnell's dream of a balanced life. We commemorated that dream last weekend.

Economists call the phenomenon of working more when incomes are low "the added-worker effect". Often remarked upon in the 1930s, this effect has not been a fashionable explanation of our modern work practices, presumably because it suggests that the rise of female employment has little to do with the emancipation of women and much to do with the need to pay the bills.

Historically, added workers were mainly women who entered the workforce when male breadwinners lost their jobs or could no longer earn enough to pay the bills.

The huge growth in female employment in New Zealand from 1984 to 1987 was a good example of the added-worker effect. At that time there was both a huge rise in mortgage interest rates and rises in the sizes of mortgages that households were having to take on.

Real wages fell rapidly in 1984 and 1985. Two-income households had become the norm, by necessity.

It's the same today. If we can, we work long hours to pay the mortgage or other debts. The lower our wage rates are, the more hours we must work to achieve our target incomes.

Ironically, we now queue up to work on Labour Day. The extra pay gained from working a statutory holiday pays the overdue telephone bill.

The cost is that for too many of us, the balance has gone from our lives. To escape financial poverty, we reluctantly endure time poverty.

The cycle will turn. As employable workers become more scarce in the 2010s, wage rates will rise and people will earn more from fewer hours.

Productivity (output an hour worked) will increase substantially (as it did in the 1950s). People of working age will have more free time in 2025 than they do today, despite the burden of supporting the baby-boom generation in retirement.

* Keith Rankin teaches economics at Unitec.