Hours at Work-the Long View

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Sometimes people work so hard that they have to be reminded to take time to relax. Even after the commute home, most workers face a set of domestic chores because their spouse also works. There simply is not enough time to live the tranquil, domestic life that we expect.

Or are we just a bunch of crybabies? Although people may feel that work is cutting into their leisure time, the evidence suggests that it just isn't so. "I never would have guessed that hours worked per person would have remained so consistent over the years," says Ellen McGrattan, an analyst at the Federal Reserve Bank of Minneapolis. "Although a number of factors that can have an effect on the time devoted to work has changed markedly, work hours have remained remarkably stable since 1950." McGrattan and Richard Rogerson, an economist from the University of Pennsylvania, investigated decennial census data to determine how changes in economic and demographic factors affected work effort. Their findings were published in the Winter 1998 issue of the Quarterly Review of the Federal Reserve Bank of Minneapolis. The basic conclusion of their research is that although many factors affecting work effort have changed drastically, the changes have canceled each other out.

Economists have pondered over the consistency of work hours, especially in the face of rising real wages. Clearly, inflation-adjusted compensation per hour has risen over the years, yet hours worked per person have not. Previously, this anomaly was explained by theorizing that higher wages often induced people to spend less time at work, since they didn't need to be there as long to make the same amount of income.

The McGrattan/Rogerson study suggests that another economic factor may account for the stickiness in work hours. They point out that a tripling of Social Security benefits could have induced some people to retire on schedule, thus keeping a lid on total hours worked in the economy.

Demographic factors may also explain why work effort remains constant even while wages rise. Dramatic declines in the fertility rate since 1960 could account forreduced work effort. Smaller families may mean less need for both spouses to work.

McGrattan and Rogerson also consider how changes in family structure may have impacted hours worked. Over time, a shrinking portion of the population has been married with a spouse present. This shift in family structure could account for less time spent working outside the home.

The time spent at work outside the home plays an important role in our Index of Well-Being. We subtract the average weekly hours spent at work from 168 (the number of hours in a week) to arrive at an estimate of leisure time available. In February 1998, non-work hours edged up to 126.0 from 125.9 in January. Leisure hours and per-capita recreation spending form the leisure component of the Well-Being Index. This component advanced 0.28 percent in February.

The overall Index of Well-Being rose 0.19 percent to a level of 104.09 in February. This figure implies that the typical American is 4.09 percent better off than in April 1990, the base month for the Index. The Index has now risen for three months in a row.

Aside from the leisure component, the income and employment component drove ahead 0.29 percent and the consumer attitudes component surged 7.56 percent. On the downside was the productivity and technology component, slipping 0.05 percent. The social and physical environment component was down, 0.86 percent, due to rising crime and divorce rates.

Homeownership is part of the traditional American dream, and many immigrants are making that dream a reality. Native- and foreign-born citizens are equally likely to own their homes, according to the Census Bureau. In 1996, 67 percent of native- and foreign-born citizens were homeowners, compared with 33 percent of non-citizens.

Length of stay has been defined by the Census Bureau as the principal reason that immigrant citizens purchase homes. Immigrants who arrived in the 1950s have the highest homeownership rates of either native- of foreign-born citizens-80 percent own their home. Immigrants who arrived in the 1990s have the lowest homeownership rates, at 36 percent.

Married immigrant couples have higher homeownership rates than other types of immigrant families. The immigrant desire for homeownership may in fact be stronger than the native-born desire. In three of four census regions, the foreign-born population has a higher homeownership rate than the native-born population.

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