How many hours do those in the top 10% of wealth work versus those in the bottom 10%? A better question may be who works more: people in richer countries or those in poorer countries? There are many similarities when comparing average work weeks across the globe.
Data shows that working hours tend to go down as countries become wealthier. Data also shows that the average working hours based on income level are also very similar across different countries.
Rich countries are more productive
Switzerland is 20 times richer than Cambodia, but the average Cambodian worker works 900 hours more a year than the average Swiss worker. This amounts to an extra 3.5 hours a day. The data clearly shows there is a direct link between working hours and national income.
Countries like Germany, Switzerland, and Norway have high labor productivity (their labor is worth $69, $83, and $111 per hour, respectively). With workers producing more in less time, there is no need to work as much. On the other end of the spectrum, countries such as Cambodia, Bangladesh, and Mexico have low labor productivity ($3, $5, and $20 per hour, respectively). As a result, those living in these countries have to work more hours to compensate.
Technological innovation
The primary driver of high productivity is technological advancements, which includes physical machines as well as ideas, knowledge, and processes. The average person today can produce 10 times more than their counterparts a century ago, thanks to things like electricity, assembly lines, and the internet. Technology, like computers, better machinery, agricultural fertilizers, and operational management help workers become more productive. This increase in productivity in turn drives higher incomes and a need for fewer working hours.
For example, farm production in the U.S. increased close to 16 fold in 63 years, between 1948 and 2011. This significant increase in productivity allows the farmers in the U.S. to feed more people with fewer workers.
Workers in the U.S. work more
The increase in productivity doesn't necessarily mean rich countries work less. Countries like the U.S. and Singapore work more hours compared to countries with similar productivity. The U.S. is one of the most productive countries in the world, averaging $74 per hour worked, but the average worker works more hours than other Western developed countries.
The average worker in the United States puts in 1,765 hours a year. In Japan, the figure is 1,691, and France, it's 1,505 hours. Norway holds the top spot, with 1,384 annual working hours and $100 per hour in productivity output.
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Working hours by income level
There are similarities in how many hours people work depending on income levels. Using data from 27 different countries, on average the top 10% work about one hour less per week than the bottom 10%. However, the U.S. bucks this trend. According to data from the U.S. Census, the top 10% of Americans work 46.6 hours per week, compared to 42.2 hours for the bottom 10%. The difference is just 4.4 hours.
The top 10% in the U.S. make at least $132,676 a year, more than double the average salary in the U.S. (which is $66,755). While it may seem that rich people work significantly longer hours, on average they don't work any more than the bottom 10%. The difference is that their productive output is much higher.
Main income sources for the wealthy
As you might expect, the rich get a larger share of their income from investments than poor people do. In fact, the top 5% of earners get over two-thirds of their income from investments. The top 5% make more money from their investments and business interests than their salary and wages. The rich also have more sources of income.
The bottom third heavily rely on Social Security payments and their salary and wages. The rich also make money from their private business investments. For those making $10 million or more a year, their salary only makes up 17% of their income and their investment income makes up 67%. The stock market is one of the primary sources of income for the rich. Many wealthy individuals invest in stocks and bonds as a way to generate passive income. In this way, the fact that they work only a few more hours per week on average doesn't have the biggest impact on their earnings.
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As an expert in the field of labor economics and income inequality, I can confidently delve into the intricacies of the concepts discussed in the article. The information presented in the article sheds light on the relationship between working hours, income levels, and productivity across different countries. Let's break down the key concepts:
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Working Hours and Wealth Disparities: The article begins by addressing the question of how working hours vary between the top 10% and bottom 10% of wealth. The data suggests that, on average across 27 countries, the top 10% work about one hour less per week than the bottom 10%. However, the United States deviates from this trend, with the top 10% working more hours (46.6 hours per week) compared to the bottom 10% (42.2 hours per week). Despite the longer hours, the higher productivity of the top earners is highlighted.
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Global Workweek Averages: The article points out that working hours tend to decrease as countries become wealthier. Richer countries, such as Germany, Switzerland, and Norway, exhibit high labor productivity, allowing workers to produce more in less time. In contrast, countries like Cambodia, Bangladesh, and Mexico have lower labor productivity, necessitating longer working hours to compensate.
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Labor Productivity and National Income: There is a direct correlation between working hours and national income. Switzerland, being 20 times richer than Cambodia, has an average worker who works 900 hours less per year than a Cambodian worker. This highlights the impact of national income on the overall work hours of a country.
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Technological Innovation and Productivity: Technological advancements play a pivotal role in driving high productivity. The article emphasizes how innovations such as electricity, assembly lines, and the internet contribute to increased productivity. The example of the significant increase in farm production in the U.S. over the years underscores the role of technology in making workers more efficient.
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Working Hours in the United States: Despite being one of the most productive countries globally, the United States exhibits a unique trend. Workers in the U.S. put in more hours (1,765 hours per year) compared to other Western developed countries. This challenges the assumption that increased productivity necessarily leads to fewer working hours.
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Income Sources for the Wealthy: The article touches upon the income sources for the wealthy, highlighting that the top 5% derive over two-thirds of their income from investments. Wealthy individuals, making $10 million or more a year, rely significantly on investment income, with the stock market being a primary source. This information provides insights into how the rich structure their income streams, with investments playing a major role.
In conclusion, the article weaves together various facets of working hours, productivity, and income distribution, showcasing the complex interplay of these factors on a global scale. It highlights that while there are general trends, each country and income group has its unique dynamics that contribute to the overall narrative of labor and wealth.
