Keeping up is getting us down

THE MOST astonishing revelations in Michael Moore’s “Sicko” have nothing to do with healthcare. They’re about vacation time. French vacation time, to be precise.

Sitting at a restaurant table with a bunch of American ex-pats in Paris, Moore is treated to a jaw-dropping recitation of the perks of social democracy: 30 days of vacation time, unlimited sick days, full child care, social workers who come to help new parents adjust to the strains and challenges of child-rearing. Walking out of the theater, I heard more envious mutterings about this scene than any other.

“Why can’t we have that?” my fellow moviegoers asked.

The first possibility is that we already do. Maybe that perfidious Michael Moore is just lying in service of his French paymasters. But sadly, no. A recent report by Rebecca Ray and John Schmitt of the Center for Economic and Policy Research suggests that Moore is, if anything, understating his case. “The United States,” they write, “is the only advanced economy in the world that does not guarantee its workers paid vacation.” Take notice of that word “only.” Every other advanced economy offers a government guarantee of paid vacation to its workforce. Britain assures its workforce of 20 days of guaranteed, compensated leave. Germany gives 24. And France gives, yes, 30.

We guarantee zero. Absolutely none. That’s why one out of 10 full-time American employees, and more than six out of 10 part-time employees, get no vacation. And even among workers with paid vacation benefits, the average number of days enjoyed is a mere 12. In other words, even those of us who are lucky enough to get some vacation typically receive just over a third of what the French are guaranteed.

This is strange. Of all these countries, the United States is, by far, the richest. And you would think that, as our wealth grew and our productivity increased, a certain amount of our resources would go into, well, us. Into leisure. Into time off. You would think that we’d take advantage of the fact that we can create more wealth in less time to wrest back some of those hours for ourselves and our families.

But instead, the exact opposite has happened. The average American man today works 100 more hours a year than he did in the 1970s, according to Cornell University economist Robert Frank. That’s 2 1/2 weeks of added labor. The average woman works 200 more hours -- that’s five added weeks. And those hours are coming from somewhere: from time with our kids, our friends, our spouses, even our bed. The typical American, according to the Bureau of Labor Statistics, sleeps one to two hours less a night than his or her parents did.

This would all be fine if it were what we wanted. But that doesn’t seem to be the case. One famous 1996 study asked associates at major law firms which world they’d prefer: The one they resided in, or one in which they took a 10% pay cut in return for a 10% reduction in hours worked. They overwhelmingly preferred the latter. Elsewhere, economists have given individuals sets of choices pitting leisure against goods. Leisure doesn’t always win out, but it is certainly competitive. Yet we’re pumping ever more hours into work, seeking ever-higher incomes to fund ever-greater consumption. Why?

A possible answer can be found in Frank’s work. He argues that the U.S. economy has set its incentives up so as to systematically underemphasize leisure and overemphasize consumption. Much of what we purchase are called “positional goods” -- goods whose value is measured in relation to the purchases of others. Take housing. Would you rather live in a land where you had a 4,000-square-foot house and everyone else had a 6,000-square-foot house, or one in which you had a 3,000-square-foot house and everyone else had a 2,000-square-foot house? Given this choice, studies show that most respondents pick the latter.

Being concerned with one’s relative position rather than one’s absolute position is not irrational or merely motivated by envy. In order to retain your relative standard of living, you need to keep up with the purchases of others in your income bracket. Retaining your relative position also ensures that you don’t send the wrong signals when a client comes over for dinner. Houses, cars, clothing -- they all help send those signals. And because the rich in this country keep getting richer, we’re caught in what Frank calls “expenditure cascades” in an effort to keep up with them. Their purchases raise the bar for the group right below them, which in turn increases the needs of the next income set, and so on.

This makes the purchase of positional goods more pressing and urgent than non-positional goods. And so they “crowd out” their less context-contingent cousins. People want to spend less time at work, but they also want to retain and improve their standard of living relative to their neighbors -- and the latter triumphs, time and again.

This isn’t because people are stupid, or irrational, or don’t know what they want. Rather, it’s because the incentives are all fouled up. Frank calls it a “smart for one, dumb for all” problem, but it’s really just a classic failure of collective action. An individual would be made worse off were he to unilaterally opt out of the positional competition. But we would all be better off if we decided collectively to ratchet down the economic one-upmanship and instead devote a bit more time and resources to the leisure goods we claim to desire.

Here in the sweltering D.C. summer, there’s nothing worse than wearing a necktie when the thermometer reads 95 and the humidity is so thick you could swim laps. But on your own, there’s not much you can do about this state of affairs. If you’re the only one who shows up dressed down, you’ll look bad for it. But if your office, or meeting, were to collectively decide to ease the dress code, all would be better off.

This is what the European Union just did, imposing new regulations on its bureaucrats barring ties in the summer. Cutting down on air-conditioning costs was the rationale, but centralized action was the only way to end the practice. Otherwise, every individual would still have had the incentive to show his commitment by dressing in a tie. Only the collective could remove that spur.

So too with vacations. Very few individual workers in the United States can ask for four weeks of vacation. It is not only outside the benefits of their job but far outside the culture of our workplace. The incentives for most every individual, particularly if they want to keep their position and amass a reputation as a good employee, is to abide by those norms.

But if the crowd outside “Sicko” was any indication, most people would love a substantial increase in vacation time. This is what other advanced nations have pursued, using the government’s role as an enforcer of collective sentiment to legislate the preferences that individuals could not, on their own, enact.

In this country, we’ve left it to the individuals, and thus the average American worker only takes 13 days of vacation a year, and many get none. We could do better, but that would require sidestepping American individualism for a moment and engaging in some American collectivism.