Relevant and even prescient commentary on news, politics and the economy.

The Sixty Hour Weeks of the Leisure Class

A typical excuse for widening income inequality is that the ‘job creators’ actually work oh so much harder than the ‘job takers’. That while the latter simply leave work at 4 or 5 PM, the former are just getting started and in fact routinely put in 50-70 hour workweeks. Now I hasten to add that there are certainly people who work month in and month out 60-100 hours a week. I have a very talented and successful young relative that has earned six figure salaries since his 20s doing exactly that. But he works in the heavy transportation sector (trains and trucking) and everyone from top executives to over the road truckers do tend to put in long hours.

My question is more for New York, London and Frankfurt based financial professionals, the traders that boast that they could just take our measly jobs and do them better, faster, with two hands tied behind their backs, who don’t even have time for bathroom breaks because they are focused like lasers on their terminals. You know the guys who kill what they eat and eat what they kill. To them I have to ask: who exactly is keeping those restaurants, craft cocktail bars, and racket ball courts busy? Exactly how do you fit in time to keep your golf game up? To spend that week at Vail? Or to accept your bosses invitation to spend a weekend at his place in the Hamptons? How does your BOSS find the time to actually enjoy that yacht? His ski trips to St. Moritz? Who exactly is is that is keeping business humming at Ruth’s Christ Steak House? Who is the customer base at all those golf resorts The Donald is building and marketing? Okay that is not just one question.

When Thorstein Veblen wrote The Theory of the Leisure Class (1899) there was certainly a lot of controversy about his thesis, but little I think about the existence of a Leisure Class in the Gilded Age. American Millionaires and British Aristocrats alike entertained on a lavish scale, frequented higher end resorts like Monte Carlo, perhaps maintained stables of polo ponies, played golf, sailed on yachts and all without even a hint of a pretense that they were working the same 70 hour weeks typical of miners and farmers who were producing their wealth. Indeed the whole point of being wealthy for most of this class was precisely to be able to pursue Leisure Class activities and lifestyles.

And I would argue that this is still true in the New Gilded Age. The wealthy and particularly the ultra-wealthy of our day are still enjoying that same range of leisure activities and that same level of excess consumption but in some respect seem oddly ashamed of it all. Which is why they ‘explain’ that “I worked hard for my money, I worked hours that you moochers never dreamed of, etc, etc”. Which doesn’t explain how they found time to maintain a Plus 2 handicap.

I bring this up of course in the context of JEB explaining that the key to 4% GDP growth is just people working more hours. With the unstated addition “like me and the rest of the job creators”. Well I want to call bullshit. The idea that the 1% on average just work harder than everyone else is belied by the fact that they even have yachts and weekend homes in the Hamptons and bottle clubs and third homes at Aspen and Vail.

Tags: , , Comments (68) | |

Consumption inequality and income inequality

From the same post at Taxprofblog, a different study presents data and definitions on a related issue, but focused on income, which is a somewhat separate and overlapping conversation:

Orazio Attanasio (University College London, Department of Economics), Erik Hurst (University of Chicago, Booth School of Business) & Luigi Pistaferri (Stanford University, Department of Economics), The Evolution of Income, Consumption, and Leisure Inequality in the US, 1980-2010 (NBER):

Recent research has documented that income inequality in the United States has increased dramatically over the prior three decades. There has been less of a consensus, however, on whether the increase in income inequality was matched by an equally large increase in consumption inequality. Most researchers have studied this question using data from the Consumer Expenditure Survey (CE)


 

All of our different methods yield similar results. We find that consumption inequality within the U.S. between 1980 and 2010 has increased by nearly the same amount as income inequality

Tags: , , Comments (4) | |

Do the 1% Work Harder Than the 99%?

Taxprofblog offers two studies on income and leisure that should spark some discussion.  I have split the two studies out to two posts at Angry Bear as they are somewhat different conversations:

Income Inequality and Leisure Inequality: Do the 1% Work Harder Than the 99%?

Wall Street Journal Wealth Report, Do the Wealthy Work Harder Than the Rest?, by Robert Frank:

A new study [below] offers evidence that higher-educated (and therefore higher-earning) Americans do indeed spend more time working and less time on leisure than poorer income groups. In fact, while income inequality may be growing, “leisure inequality” – time spent on enjoyment – is growing as a mirror image, with the low earners gaining leisure and the high earners losing.


The more surprising discovery, however, is a corresponding leisure gap has opened up between the highly-educated and less-educated. Low-educated men saw their leisure hours grow to 39.1 hours in 2003-2007, from 36.6 hours in 1985. Highly-educated men saw their leisure hours shrink to 33.2 hours from 34.4 hours. … A similar pattern emerged for women. Low-educated women saw their leisure time grow to 35.2 hours a week from 35 hours. High-educated women saw their leisure time decrease to 30.3 hours from 32.2 hours. … (The study defines leisure as time spend watching TV, socializing, playing games, talking on the phone, reading personal email, enjoying entertainment and hobbies and other activities.) …

Tags: , , Comments (17) | |