Are We Moving Towards a Four-day Workweek in the United States? | Iwan Barankay

The History of the Four-day Workweek

Dan Loney: Let’s talk about the idea of the four-day workweek. After everything we’ve gone through during the pandemic and working remotely, should we be surprised that we’re seeing more ideas like this come into the mix?

Iwan Barankay: I think it’s very interesting because employees have gained a little bit more bargaining power because the labor market was very favorable for employees. Employers often had a hard time finding and retaining their employees because they were switching jobs, so that gave them a bit more leverage. And that perhaps has brought up more ideas on how to accommodate the needs of employees in terms of work/life balance and other obligations they have.

The four-day workweek is an interesting idea, although it has been around a little bit. Just to provide a bit of historical context, the four-day actually was tried on a large scale in Germany by Volkswagen after reunification. With reunification, people discovered that most of the industry, most of the capital in East Germany was not competitive, so that led to massive restructuring. Many of the Western companies bought their counterparts in East Germany, then they had to rebuild how they were doing everything.

In the past, you might say, “Let’s just fire people, and then when we want to hire again, we can bring them back.” But that transition is very, very costly. Firing and then finding and training them again is very expensive. They found the situation where they said, “Currently we don’t have as much work because we cut the work back to four days.” In Germany, it was almost at the same pay. The pay did not shrink by 20%. It shrank by a little bit, but not by 20%. Volkswagen then went back to the full week at some point.

Loney: But the idea of the four-day workweek now is a little bit different because the expectations are probably different for what you would get from an employee.

Barankay: The workplace is a funny space because there is work that has to be done, and companies think about what work they need and how many people they need for that. But people who are in the workplace are thinking about their careers. And careers are essentially tournaments. The way you get a promotion is to be good, but also to be better than your peers. In the experience of the four-day workweek, that led to a dynamic of many people actually taking work home because they not only wanted to get their work done, but they wanted to excel. They were contractually obligated to leave, because these were union jobs at Volkswagen, and they continued to work at home so that they could win in this tournament.

That led to pressure among their peers to do the same, something like a contagion effect. And that led to a view by many employees that this was actually quite more stressful because the expectations of performance remained the same. They were not really adjusted to the fact that they had 20% less time to work, and that put more pressure and more stress onto the employees.

That was just one historical experience that I think is relevant to bear in mind. There have been now some new forays into this. There were a couple of researchers who partnered with some companies and looked at the data. They reported that when we switch to a four-day workweek, the productivity was the same or even better. And when they looked more closely, they found that perhaps people spend less time on less efficient and less effective workplace practices. In particular, they highlighted that the meetings were not so productive anyway, and they actually spent less time in meetings.

I think it’s worthwhile to reflect a little bit about what the modern workplace is like, because it’s not that you hire people to just plug things together on an assembly line. Those jobs, especially with ChatGPT, are perhaps those that will be replaced by programs or by machines anyway. Most of the jobs that require a human input and where value is created are what we would call complex or nonroutine jobs. One particular type of job — and here’s a bit of a jargon from computer science — is called “irreducible complexity.” These are jobs that are complicated, and whenever there’s a change in the circumstances, you really have to think about how to optimally spend your time.

Think about this for you, Dan. Every day you have to think about how much time you want to spend on emails, how much time you want to spend on meetings and talking to other people, and how much time you want to spend in the studio, right? In the end, you want to figure out what makes you happiest and most productive.

But when there’s a shock in the economy, a change in circumstances, this asks you to rethink how you spend your entire week. And it’s very laborious to do that. This is why it might look like people in organizations are not productive when they’re sitting around and talking to each other. But what happens in those circumstances is that they reflect on their work with their colleagues, they learn from each other, they learn from them what they tried and what worked better in the current situation. They actually update their algorithm on how to spend their time and how hard to work on certain tasks.

My concern here is that there is a bit of a simplified view of what the workplace really looks like. When we say, “Oh, just be effective,” and “Crank your work out,” and “Get it done, and then you can go home and spend time with your children or learn another language or start a charity,” or whatever people are doing in their spare time. I don’t think that’s really the correct view of what a value-creation job looks like. That’s the balance that I’m thinking here.

What Does Implementing a Four-Day Workweek Look Like?

Loney: What the employee thinks is the right mix of duties and responsibilities could clash at times with what the middle manager or the C-suite believes is the proper level.

Barankay: Absolutely. When I thought about this new interest in the four-day workweek and what it does to the workplace and spending your time more efficiently, I have to think about my marriage or everybody’s marriage, where there’s one thing where you agree on what to do, and then you do it. My wife works on our taxes, and I perhaps fix dinner and whatnot. This is a very good separation of tasks. But there are also these moments where we just casually sit together and think about what we want to do and how we want to spend our time. And this is where we come to an understanding.

If you take away this time where people can reflect and discuss what the important routines are, and where people can express their different visions about what work needs to be done, this just leads to a schism in the workplace, where there are the employers who pass on orders to their employees to execute them. In the end, that takes away a lot of the meaning and job satisfaction, and where people are disgruntled and don’t want to work in the workplace. That is not good for productivity and not good for innovation.

I think we have to be really careful to create a space where people can continuously improve and realign their visions in the workplace. When we squeeze them for time like this, I fear that this might be at a loss both for the employees, but also for the companies.

Loney: Do you have a formula for what it would take to make a four-day week work on all of these different fronts?

Barankay: Yes. I think we should not take away the time and space where people can hang out, where people can exchange ideas and learn from each other and align their vision with the different layers in the hierarchy. That is important. I think moving to a four-day workweek should not mean that we take away meeting time, and where people are just there and implement the work.

If there are people who say they can or only want to work four days a week, and the companies are happy with that, then basically we need to shrink all components of this. I have a worry that if we do this, then this might lead some companies to do away with all these people who want to work four days a week.

Going back to Germany, afterwards there was a very senior politician who took over one of the few competitive companies in East Germany, which is Zeiss Ikon, the lenses and optical measurement instruments. When people asked him about the four-day workweek, he said, “I don’t know. Maybe the future is that people are just working on Tuesdays.” Is that what we are going to do going forward? Obviously not. My concern is that people are shrinking down the jobs in a compartmentalized way that can be done in a four-day workweek. They might just as well subcontract them, because people who only show up for part of the week are much less integrated in the workplace, much harder to manage, and much harder to supervise. This is a slippery slope, and I think not what companies and employees actually want.

Is a Four-Day Workweek in the United States Possible?

Loney: Coming out of the pandemic, remote work has grown for a lot of people. You also have more focus on things like benefits. But there is potential with the option of ChatGPT to be able to get rid of employees.

Barankay: Yes, I think this is the big discussion now. We want to create a workplace where benefits are better. Having better benefits is very instrumental for large sections of the population, especially those who have a weaker social environment. Think, for instance, of single mothers. They really heavily depend on these benefits to be able participate in the labor force. There are lots of studies that show that these benefits are conducive in the long run for better productivity.

On the other hand, when companies see this, they might not hire workers and just subcontract them. Again, my worry is that if you subcontract, it is not the same as having an employee, because these persons are not really integrated in the routines and the culture of the workplace. They don’t have a say of shaping the workplace in the most effective way. Employees are at the forefront of the work. They know what the challenges are at the front lines. This feedback loop leads to better productivity. With a subcontractor, you don’t have that at all.

I think people need to think carefully about what they miss out on or what they lose when they move to a four-day workweek, or when they are moving to subcontracting. I think a four-day workweek is an intermediate step to just outsourcing and subcontracting, and not for a better workplace environment.

Loney: Realistically, we’re not talking about all jobs here. There are probably certain jobs that maybe would fit into that category and other jobs that would not.

Barankay: Yes. What are the jobs that would really work well for a four-day workweek? You might say jobs that are pretty routine, where you just do the job. It’s well-defined what the tasks are. It’s well-defined what has to be done. But it turns out, many people who actually push for the four-day workweek are not those people. The people who push for the four-day workweek are those who are quite competitive in the labor market. Perhaps they want to do another job on the side or another career development on the side. Those are people who have many of these nonroutine tasks. And they are not all that great to be translated to a four-day workweek.

Loney: What do you think is the potential for the four-day workweek being implemented here in the U.S.?

Barankay:  First of all, I think it’s great that companies and organizations always explore new ideas. As I said, we had experience in the past from a very different context. And sometimes ideas that were used in a different scenario can generate very unintended benefits in a new scenario. So, I think it’s fantastic to see this in the workplace in the U.S., that companies are always exploring new ideas, and I look forward to seeing what else we are going to learn.

What we have learned so far makes me a little bit worried. What we have learned so far is that people are just cutting out unproductive meeting time. That sounds, of course, very entertaining and resonates with a lot of people. But that leads me to say, “Well, then, perhaps you need to make the meetings better.” On the other hand, meetings are really important for value creation and reorganizations that have to happen continuously.

I look forward to what else we will learn as companies are exploring this. But if it’s the same as in Germany in 1993, I think it will be a transitory idea. It is a reflection of companies trying out things, perhaps employees pushing for it, but after a while they realize that this is just too complicated to coordinate, keeping track of who is in the office and when. And people perhaps want the simplicity of a 9-to-5 job that they can depend on.

Loney: There’s something to be said about how we have become entrenched in our patterns and our history here in the United States.

Barankay: Oh, absolutely, yes. You have the binary situation where either people stay in a certain pattern, or companies just immediately jump over to subcontracting. That is kind of the slippery slope I worry about, both for the employees and the organizations to move more into subcontracting.