Matt Richtel in The New York Times reports:
Even as layoffs are reaching historic levels, some employers have found an alternative to slashing their work force. They’re nipping and tucking it instead.
A growing number of employers, hoping to avoid or limit layoffs, are introducing four-day workweeks, unpaid vacations and voluntary or enforced furloughs, along with wage freezes, pension cuts and flexible work schedules. These employers are still cutting labor costs, but hanging onto the labor.
People in these circumstances will still have most of their income, and also a lot of additional free time. A potential economic boon for firms offering inexpensive entertainments. Similarly, I suppose we’ll see people shifting from things that save time but cost money (prepared meals) to things that take time but save money (cooking at home).
This is also a reminder that American workers pull longer hours than do workers in most other rich countries (a lot of middle-income countries’ workforces work longer than ours) as seen in this chart of aggregate annual hours worked:
The recession, obviously, is not a good thing. But I think it might be a good thing if when we pull out of it, we switch to a different equilibrium in which people work somewhat less and earn somewhat less. There’s a lot of evidence to suggest it would make people happier, and some good reason to think it would be better for the environment.