Ep 82 - The 4 Day Work Week: Smarter or Harder?

[00:00:00] And we're live! Welcome to another episode of Comp and Coffee. I'm joined by Ruth this week. Ruth is just the two of us. How is your spring proceeding, Ruth, there in England?

[00:00:30] Well, it's great so far. We have finally turned to warmer weather here in the UK. And of course, been enjoying a number of four-day weeks over this month. We've had three four-day weeks here in the UK.

[00:00:43] Yes. And still, it feels like you are just as productive as ever, is it not? I think that's what perhaps we're going to talk about today. Well, what's interesting is same here in the United States. So this happens to be while

[00:00:54] we're recording this, it's Memorial Day week. So we just had Memorial Day. So we're obviously in the middle of a four-day week and this is a season of a lot of four-day weeks, right? Many companies actually in summertime even offer half-day Fridays or Friday off days.

[00:01:09] We thought it might be kind of fun to talk a little bit about this whole concept of can you accomplish the same amount in four... One of the things I worry about a little bit,

[00:01:18] Ruth, just to be honest, full disclosure. What happens to me in a four-day week is all my meetings get packed. Five days of meetings get packed into four days. Have you noticed this little nuance? And I don't know what to do about that. I don't know if there's

[00:01:31] a way to make that better, but it's just sort of a... I feel like it's more intense in those four days. But I still, to your point, I think I still accomplish the same amount of stuff.

[00:01:40] Yeah. No, I think for a period of time worked 80% or four days a week. And I did often feel I was trying to cram five days into four. So I think today we're going to talk about some

[00:01:51] of the pilots that have been happening on four-day weeks around the world and how they've been making that exact problem work. This issue of are we simply compressing four days work into five? So yeah, let's get into it, Russ.

[00:02:06] Yeah. I feel like... And I feel like the government's been trying to do that because you just said you had three four-day weeks this month. Correct. What are those? Well, in the UK, obviously where I'm based, we normally have a long weekend

[00:02:20] at the beginning and at the end of May. So the one at the beginning of May is Labor Day. And then the one that we just had is a spring bank holiday. I think it's called... It's a

[00:02:31] legacy religious holiday, which was related to Whitsun, but now mainly known as the spring bank holiday, which I think is the same for you guys other than yours is also Memorial Day. Yes. And that's what's interesting. So one thing it feels like is governments are helping

[00:02:48] maybe relieve all the hard work everyone's doing by creating a lot more end of week, beginning of week holidays. But there does seem to be a concerted effort now, a groundswell, I guess, of initiatives both in various countries and actually globally

[00:03:06] to try to make the four-day workweek sort of a thing. And we thought we might jump in to talk about that. Now, my understanding, and I do not profess to be an expert on the four-day

[00:03:18] workweek initiative, but there's a website, I think it's being led by this group called the four-day workweek or four-day week, I think, which is what they're called. And it's fourdayweek.com, the number four day week.com. And they were founded a few years ago, 2019 now.

[00:03:34] And they've started these pilot programs in the US, UK, Ireland, Australia, New Zealand. And they're just rolling it out everywhere. And their fundamental concept, I do like numbers and it seems like it's 180, 100, meaning that employees should be still

[00:03:54] receiving when you adopt this new format, employees will still receive 100% of their pay for 80% of their time worked, but the goal is to still have 100% of the productivity targets. So in other words, same pay, same outcomes, less work. Am I summarizing that correctly, Ruth?

[00:04:14] Yeah, I think that's concurs with what I've read about these projects. Yeah. And I find this fascinating, and I think it's really interesting, and I'm sure it got accelerated over COVID, but why do you think this is resonating? Because it feels like it's getting a lot of

[00:04:28] acceleration. You're hearing about a lot more. Why do you think this thing has taken off? It's interesting because the organization four day week started in 2019, obviously pre-COVID, but most of the bigger pilots that we're now seeing being rolled out have happened in the last

[00:04:45] 18 months really or to two years. And I think as you rightly point out, it was a reflection of the pandemic. It really changed the way we worked overnight, increased access to workplace flexibility that many of us had been chasing prior to the pandemic. And I think many employees

[00:05:03] just adjusted their lives to that new level of flexibility and are increasingly unlikely to want to go back to traditional ways of working. And we see that in some of our research data and many

[00:05:13] of the research projects that I look at in terms of remote work and employers to some degree have lost their power here. And it's very much an ongoing debate. I think this is also related to

[00:05:26] employee burnout because I think that's the other key issue, remote work being the first, but employee burnout was another thing that we saw accelerate during COVID. You had certain sectors of the economy who were working exponentially hard in order to try and

[00:05:41] keep things going. They were key workers. And so we saw a lot of spike in employee burnout. We saw a lot of people leaving the workforce due to issues related to workplace stress, as well as caring responsibilities and things like that. So there's, you know,

[00:05:59] the generally the chronic stress levels went up in the workforce. And I think that is another reason why people are looking at this four day wait, sorry, four day week concept, as in, you know,

[00:06:10] is it something that we can do in order to, you know, not only give people workplace flexibility, but also tackle that burnout and sort of wellbeing part of the equation. Yeah, it's really interesting. I found this fascinating too, because, and I want to jump

[00:06:27] into some of these studies because it sounds like there's some cool pilots happening, particularly overseas right now from overseas, my perspective, domestically from your perspective. But one of the things I find fascinating about this is it kind of reminds me of PTO policies. Like we felt that

[00:06:42] making more and more PTO gave people more power. And then we sort of realized at one point, well, if we just do unlimited PTO, like we basically essentially stopped tracking it. There's a bunch of advantages financially for companies, you don't have to have carry over anything else,

[00:06:56] but also people feel like they can take more, but it turns out when you don't micromanage it and monitor it, they actually don't. And I'm really curious about this because I feel like since we

[00:07:07] worked remotely for since 2020, now many folks have taken advantage of that and probably don't work traditional hours. They might work a little less here and there technically, if you were to count every minute, but they're still getting their work done. And so I kind of wonder if we're

[00:07:23] better off like not monitoring this too closely, because it may not, it may end up being a little more, more trouble than it's worth much like PTO. But I'm really curious. I'm curious how some of

[00:07:32] the early pilots have been going. I know one of the biggest pilots was in the UK right there in your backyard, Ruth has. What are some of the outcomes you guys are seeing over there? How's

[00:07:39] it working out? Yeah, it was one of the, you're right. It was one of the biggest pilots so far. There were 61 companies which covered about 3000 employees and it took place from June to December

[00:07:53] last year. And by all accounts, when you read all the write-ups, the trial has been declared a resounding success. 56 of those participating companies are continuing on with the four-day week experiment and they've all cited many benefits to the shorter working hours. Some of

[00:08:15] the before and after data shows, for example, that 39% of employees were less stressed. 71% had reduced levels of burnout and work-life balance also improved. So 54% of them said it was easier to balance work with household jobs and employees. And they were kind of more satisfied generally

[00:08:34] with their household finances, relationships and how their time was being managed. And they also saw the number of staff leaving these companies decreased significantly. So dropping by 57% over the trial period. Probably not a surprise if you were to offer someone, would you like to work

[00:08:52] four days a week and get paid for five? I think most people will probably say yes. Yes, please. It is interesting though, because just looking at that pilot, 61 companies and 3000 employees. So a

[00:09:04] lot of those companies were obviously smaller companies. And also, I look at a lot of research reports and we manage a lot of data here at PayScale. We're always thinking about the potential

[00:09:17] biases in those research studies and in the datasets that we look at. It's also worth pointing out that all of those who volunteered that data were also volunteers to join the scheme. So they're

[00:09:29] probably more likely to want to show that it worked. But yeah, generally very positive outcomes. But there's also been one in the US as well last year. Yeah. So the US and Ireland had a pilot study. I'm not sure why Ireland joined the US instead

[00:09:46] of England. Well, I probably know why. Anyway, I won't get into the politics of Ireland and England. I'm Irish by marriage, full disclosure. But there was a pilot, 33 companies from April of last year

[00:09:59] through October of last year. So basically Q2 and Q3 of last year. None of the companies that participated are going back to the five-day week. So they're all like, it is kind of a hard thing

[00:10:11] to unwind. So it doesn't surprise me. So there could be a bias there. Once you've started this, it's much harder to stop. But it's obviously working reasonably well or they have to change for outcome reasons. And similar results to what you just shared, Ruth. They're self-reporting that

[00:10:28] performance is up, burnout and stress is down, employee engagement seems better, people have better attitudes, more excited to come to work. And that's led, of course, so here in the States, this always happens. The government looks around and goes, hey, we should do, we should regulate

[00:10:42] this and make some more, make some official laws around this. And so it sounds like that's starting to happen. And I know you track all the laws very closely, Ruth. What are you seeing in terms

[00:10:53] of legislation here in the US? We've already seen a couple of bills proposed by California and Maryland. So I think California was the first. They proposed a bill probably, I think it

[00:11:03] was about April last year where they would change the definition of a standard work week from 40 to 32 hours. The companies that had more than 500 people and make them pay overtime for those additional hours worked, but that bill stalled. And then in January this year, Maryland put out a

[00:11:21] kind of concept of a state-sponsored experiment where employers with, who could put at least 30 employees onto a 32-hour week schedule would be able to benefit from state tax credits. But the sponsors of the House and Senate bills withdrew that legislation too,

[00:11:41] concerned that it would institutionalize the 32-hour week. So still some convincing to go, I think, of the general populace that this is the right thing to do. Yeah. There's a, you know,

[00:11:52] as you said that it just occurred to me, the cascade effect that has on the definition of a part-time employee and hourly employees and exempt and non-exempt employees. There's a whole bunch, whole industries around insurance and everything else that you really got to think

[00:12:05] through here. So that's, that is a sort of an interesting conundrum there. It doesn't surprise me that people sort of got a little nervous about that, but- Well, it's an economic climate at the

[00:12:17] moment, you know, I think where most people are kind of looking for economies of scale or they're looking to be productive with less people, this type of pilot or experiment is probably not

[00:12:28] something you want to commit to right now, bearing in mind where we are from an economic perspective. Now, the goals here are to make sure you're getting the same pay for the same results,

[00:12:40] but it is actually, is there any evidence of it increasing? You know, all I'm seeing is people are saying, hey, it didn't hurt. And I guess happier people are generally more productive people in theory. But is there more productive now just getting, you know, 40 hours of work done

[00:12:56] in 30, 30 sort of thing or 32. Can we actually see increased productivity or are we seeing that these happy employees are indeed 110% more productive maybe? Well, I think both the pilots in the UK and the US came out with similar results saying that no one reported a productivity

[00:13:16] decrease and a few reported a slight increase. And I mean, it's interesting. Again, we have to remember that a lot of these were much smaller companies. And where they did find those

[00:13:31] productivity increases, I think it comes back to a point you made earlier, is the way that they try to increase their efficiency. And a lot of that was the staff themselves uncovering those

[00:13:43] efficiencies. So a lot of focus was spent on, you know, how do I eradicate unnecessary meetings? How do I get rid of unnecessary travel? And is there a necessary admin that I'm doing? So I think

[00:13:53] they kind of really stepped back and said, let's rethink how we do things. If we were to take this concept and we want to make it work, you know, how do we reshape the way that we do work? And how do

[00:14:03] we reshape the way that we interact and the way we try and get things done here at work? And, you know, probably some great ideas came up because I think most of us could probably think of a handful

[00:14:13] of things in our own jobs and workplaces that we would like to see kind of improve from an efficiency perspective. So that's potentially, you know, where they did see some productivity gains, even though employees were working less hours. And it somewhat counteracts that argument that, you know,

[00:14:30] aren't you just compressing four, five days' work into four and therefore are you not making it more stressful? Right. That's really fascinating. And it does seem, I love the idea that, you know, there's probably a day's worth of wasted effort that you can probably trim from your thinking

[00:14:48] there. One of the things that I think is fascinating about this kind of stuff, and it kind of reminds me of the remote work conversations too a little bit, which is we all talk about

[00:14:57] remote work and here at PayScale, we're a remote first company, right? And we feel like we've made a really good job of the transition. It's really gotten a lot of excitement around the employees

[00:15:07] and everyone feels like this is the way to go. And our CEO is constantly saying like the genie's out of the bottle. You can't put it back. Let's embrace it and become very good at it and become an

[00:15:16] exemplar of this sort of thing, which I love that attitude. And this seems like another opportunity for organizations to do that. But one of the things I think about when I think about people

[00:15:24] talking about remote work or the four-day work week is we always think about it in the terms of the white collar jobs, meaning, but what about the blue collar jobs? What about manufacturing? Can you actually compress four, five days of assembly, four days of assembly, five days of

[00:15:39] assembly line work into four days? Can UPS deliver the same number of packages? Will their customers be okay with not getting an overnight package on Friday because they only work Monday through,

[00:15:49] you know what I mean? Or can companies afford to hire more people if they're paying the same? So I'm really fascinated by that challenge. Is this going to increase the gap between the white collar workers' benefits and the blue collar workers' benefits? Any thoughts on that, Ruth?

[00:16:07] Yeah, I read some of the kind of background to case studies and some of the other companies that have done this independently, you know, and they talked about issues around – they were running

[00:16:16] call centers. And so what do you do? Just close the call center on a Friday? There was one company, I think, that cited that they made – they wanted everybody to have the same day off. And so everybody had Monday off because they were very busy, particularly, you know,

[00:16:33] as a business on a Friday. So I think there are a lot of logistical issues. And then, as you say, when you have a segmented workforce, which is some of the issues that we've seen with companies

[00:16:42] struggling with the remote hybrid in office kind of issues, is, you know, how do you make sure you're treating the different groups of people fairly? So you'll have your head office staff who can easily work from home because they're in that white collar job. They're mainly working

[00:16:57] through tech. But then you may have, you know, retail store staff or you may have hospital staff who need to be in. So how do you treat them fairly? So I think that would be a challenge

[00:17:09] for this in terms of being able to schedule hours appropriately under this arrangement. And again, it kind of comes back to – I think, you know, this would be a bigger challenge for some of the larger companies than the smaller companies that obviously participated in the

[00:17:22] pilot studies. Yeah, it's interesting. I think it's – I do wonder, though, if you could get to the productivity being 110%, then maybe you could make it cost-effective to have more people so you could have more shifts and shift them. So I just think about the jobs where, you know,

[00:17:39] there's expected service 24-7, you know, healthcare, as I said, shipping, manufacturing, even retail and theme parks. Like how do they all do that stuff? But then you have examples too. There are companies out there, you know, I think about like Chick-fil-A, for example, here in the

[00:17:56] US, they are closed every Sunday. That's only a six-day workweek, but still they – every day, you know, once a week they're closed. And so there's opportunities there for companies to think about that a little different. I just think we have to kind of shake it up.

[00:18:10] I'm a big proponent of that. I did a lot of research previously on, you know, how much we think of the five-day week where everybody's in the office, which we were all doing pre-COVID,

[00:18:22] the way that we work. And because I spend a lot of time focusing on pay equity and equal opportunity, that's not a construct that works well for all groups of people. And so I've kind

[00:18:34] of done a lot of research into, you know, how we ended up where we were. And it is really interesting to understand how we've evolved through the various industrial revolutions.

[00:18:42] And we came to this concept of what we think is the way we should work today. And, you know, I don't think it has to be the only way we should work. So any way we can think about considering,

[00:18:52] you know, getting everybody the same opportunity to come to work is really important, particularly when we think – I mean, I talked about economic difficulties, but we have significant labour market difficulties perpetuating. We have a declining workforce for many reasons and we

[00:19:09] have key skill shortages. So, you know, we really have to start thinking about ways that we can encourage everybody to be able to come to work. I think you're right. I think there's been a huge

[00:19:21] change in, you know, you mentioned social and I think you implied cultural there. I think there's a huge cultural thing we have to think about not only as employers and employees, but as consumers, right? Like as we think about the pushback against burnout post-COVID, right? The pushback against

[00:19:40] not only working, you know, 60 hours in a 40-hour week, but now, you know, this concept of, hey, maybe we could work 32 hours in a 40-hour week. For that to work for everyone and for that to be

[00:19:51] fair to everyone, we have to be okay with maybe you can't fly on a plane seven days a week. Maybe the trains don't always run every day of the week. Maybe, you know, maybe there aren't movies to see

[00:20:02] every day. Maybe the restaurants aren't open all the time. You know, like that has to be sort of we have to be okay. And some countries are better about that, right? Like in places in Europe,

[00:20:09] there's whole months where they shut down and everybody gets a month off. And here in the US, we just go, go, go. And I feel like there's an opportunity for us as a culture to really think

[00:20:19] differently about this so that employers can feel more confident about doing the right thing for their people and creating a realistic and healthy work week. Does that seem right? Yeah, no, definitely. Well, we've had a lot of that here in the UK. We've had a lot of strikes

[00:20:33] over the last 12 months, a lot of industrial activity. So, you know, we've had a lot of our public transport system not working and, you know, sort of other key areas of the economy that have

[00:20:44] not been working on a regular basis. So, we are kind of seeing some of that behavior already happening here maybe for different reasons. Yeah. So, that's what we think about, you know, reducing the work week but trying to get the same amount of both productivity and the same

[00:21:01] compensation for that period. Have you tried a four-day work week? Let us know how that went. We'd love your thoughts, your feedback. How are your organizations doing this? To let us know, you can either email us at coffee at payscale.com or reach us on Twitter at PayScale.

[00:21:31] Coffee and Coffee is a PayScale production dedicated to the compensation community. We welcome your feedback. Send email to coffee at payscale.com, tweet us at PayScale or share your thoughts in our PayScale Connect community. Until next time, keep your coffee hot and your data fresh.