Richard Alcock in The Guard­ian writes today about the ever-increasing pay gap in the UK between rich and poor. I do like his idea that pro­fes­sional hater Melanie Phil­lips be nom­in­ated for a nice big pay cut to see the effect on her work motiv­a­tion (though if Alcock’s eco­nom­istic account of what drives people to work harder is true, a pay cut will make Phil­lips put in more hours, and that can only mean more diatribe.)

How­ever, I’ve never met an eco­nom­ist with a reas­on­able explan­a­tion for human beha­viour. Alcock sug­gests that work­ing hours are sub­ject to an income effect and a sub­sti­tu­tion effect (either an increase in your hourly pay makes you work more hours because you get more back, or the same increase makes you cut hours because you can main­tain your stand­ard of liv­ing with less effort). Impli­cit in this is the naive assump­tion that people choose their work­ing hours.

The waiters, shelf-fillers and road-sweepers whose wages are fall­ing, are work­ing in organ­isa­tions that don’t per­mit them to choose hours. They’re likely to work for com­pan­ies which strictly con­trol over­time, pos­sibly work­ing where flex­ib­il­ised work­ing time is imposed, and they may be on a zero hours con­tract with no say over when and how long they work for. Pur­cell et al (1999) found that manual and lower skilled work­ers were less able to con­trol their work­ing hours, and benefited less from flex­ib­il­isa­tion. The eco­nom­ists man­tra of choice gets in the way of under­stand­ing labour mar­ket experiences.

Ref­er­ences

  1. Pur­cell, K, Hog­arth, T. and Simm, C (1999) ‘The costs and bene­fits of ‘non-standard’ employ­ment’. Joseph Rown­tree Foundation.