• The 4 day work week

    The concept of a 4 day work week has been gaining steam of late. For example, German workers recently won the right to work a 4 day week if they so choose. Anecdotally, I’ve been noticing articles about it appearing every so often and it’s certainly coming up during conversations with a higher frequency than usual (working “0.8”).

    I’m not going to get into the potential economic and social implications of a shorter work week but I have been wondering why the shift is taking place.

    The obvious reason is that most people prefer leisure to work, but that has always been the case. So something must have changed, with the most obvious candidate being the economic environment: households are faring well, so many people are happy to trade a day of work for an additional day of leisure. The data support that theory, with unemployment in much of the world approaching record-lows (in the United States it just hit its lowest level since 1969).

    In the midst of a recession, for example, I would expect worker desire for a 4 day work week to be low (conversely, employer demand for a 4 day week would rise). But if the labour market is tight, wages are relatively high and good workers are tough to keep, increased worker demand for a 4 day week makes a lot of sense.

    So I thought as a purely speculative exercise I would check Google’s search trends for two topics, “4 day week” and “unemployment benefits”. Here are the results:

    Google trends 4 day work week

    Correlation is not causation and I suspect that the 2008 spike was caused by the opposite force to what we are seeing today. That is, employers trying to cut costs without firing workers or reducing wages were instead offering employees a 4 day week.

    So what does the recent spike in searches for a 4 day work week mean, if anything? One possibility is employees, aware that a 4 day week is an option given it was offered to them during the last recession, are using the strong labour market to negotiate for more leisure. Perhaps the extra family time that a 4 day week spurs employee productivity, making it mutually beneficial for the worker and employer. It could be some combination of those two and many other forces.

    Whatever the case may be, the sceptic in me sees the increased demand for a 4 day work week as a “top of the cycle” moment. I hope I’m wrong.

  • Daylight savings time

    This weekend much of Australia’s Eastern seaboard will switch to daylight savings time (DST). Being in Western Australia where it is not practiced (it was defeated in a compulsory 2009 referendum), the only annoyance is making sure I’m adding 3 hours instead of the usual 2 to the time difference.

    Nevertheless, I am subjected to the debate whenever I browse my favourite news sites, turn on the TV or listen to the radio. The usual arguments cited are energy conservation, more time outdoors, reduced traffic accidents during rush hour, and even crime prevention. These are understandably hard to quantify, with a quick search revealing a U.S. Department of Transportation (1975, 1% saving) and a separate U.S. Department of Energy study (2008, 0.03%) showing small reductions in energy consumption. However, the findings have been disputed, e.g. Matthew Kotchen and Laura Grant found in 2011 that DST actually increased energy consumption by 1%.

    Then there are the rent seekers who tend to come out of the woodwork whenever policy that might benefit them is proposed, e.g. the golf industry, which has lobbied for DST in the past. In 1986 it estimated DST was worth up to US$400 million annually in extra sales and fees (that’s nearly US$1 billion in today’s dollars).

    In terms of costs, from what I can gather the most quantifiable cost comes from an increase in fatalities, especially on roads, following the switch to/from daylight savings:

    “The sleep deprivation on the Monday following shift to DST in the spring results in a small increase in fatal accidents. The behavioral adaptation anticipating the longer day on Sunday of the shift from DST in the fall leads to an increased number of accidents suggesting an increase in late night (early Sunday morning) driving when traffic related fatalities are high possibly related to alcohol consumption and driving while sleepy.”

    Others have argued that our circadian body clocks never adjust to daylight saving time, causing minor jet lag with all of the associated costs.

    Ultimately, the costs and benefits are relatively small and difficult to quantify. In such a situation I tend to err towards the principle of primum non nocere, or first do no harm, and advise against DST.

  • Creative destruction and the NBN

    One of my many concerns about Australia’s National Broadband Network (NBN) was the toll it would take on future innovation and competition. A legislated monopoly, entrepreneurs would be forbidden from competing with it, eliminating potential consumer benefits before they can even be discovered. Fortunately for Australians, I was wrong:

    “Lightening Broadband is connecting homes and businesses using microwave links capable of delivering both 100 Mbps download and upload speeds. That’s better than the comparable NBN Tier 100, which offers 90 Mbps download and 30 Mbps upload speeds.”

    “Another telco start-up, DGtek is offering its customers a full fibre alternative service … [it] uses Gigabit Passive Optical Networks (GPON) and runs it directly into tightly packed homes with the dense population of inner Melbourne. As a sweetener, DGtek offers free internet service to government organisations – such as schools and hospitals – in areas they service.”

    “iiNet in Canberra has launched its Very-high-bit-rate Digital Subscriber Line (VDSL2) as its own superfast network. According to iiNet, it is made up of fibre and copper and provides a faster connection than ADSL and most NBN plans.”

    Then there’s the competition from an area I did forecast, namely 5G wireless broadband:

    “Optus and Telstra are both launching 5G services in 2019. This represents a quantum leap in wireless technology that could win away millions of current and potential NBN customers.”

    The total accounting cost of the NBN is already over $50 billion. With competition on all fronts preventing it from monopoly pricing, and its mandate of cross-subsidisation (e.g., rural households) driving up costs, that figure will only grow.

    At this stage - nearly 10 years after its inception - there’s an almost certain chance that the taxpayer will see a negative return on its NBN investment.

    As the situation worsens, something will give; that’s just how politics works, and the NBN is a political beast. The easy (and wrong) option would be to regulate or tax the NBN’s competition away. The more difficult (and better) option would be to remove the NBN’s legislated fixed-line monopoly altogether and sell it off, owning the loss and salvaging whatever we can from the carcass.

  • Keeping it simple

    Welcome to my blog!

    Some background: I used to run an independent economic research firm, Pixelics, but recently accepted a role at the Department of Treasury in Western Australia. Running both at the same time - and avoiding conflicts - took up too much time, so I decided it was best for all involved to close Pixelics down.

    In its place I created EconByte, a rebranded revival of my former blog, Dismal Musings, itself a domain I previously used for a pump.io node. I plan to write on a wide range of subjects, basically anything that I find interesting to which I can add my two cents.

    For the technically inclined, this website is entirely open source, has no database and is compiled with Jekyll, a Ruby-based static site generator. It uses a modified version of Monochrome, a mobile-first minimalist Jekyll theme.

    Why Jekyll? Having run my former business on CraftCMS I really wanted something a bit simpler to update, so of course it had to be a static, database- and bloat-free content management system (looking at you, WordPress). That left Jekyll, Hugo and Pelican, with my decision made purely on the fact that Jekyll plays best with GitHub, which is where this site is hosted free of charge.

    New posts will appear directly on this website. If you would rather receive updates via email, I have a free newsletter. If you prefer using a reader, there’s also an Atom feed.

    That’s all for now. Once I’ve ironed out all of the kinks (I’ve never used Jekyll before) I plan to post about once a week.