The financial sector is often at the heart of much of the dysfunction and rotten excess in the American economy. For example, there is mounting evidence that economic inequality is driven by the pay of CEOs at the major investment banks, which has a spillover effect throughout other sectors and occupations. And as we know, the wildly irresponsible and at times criminal behavior of the deregulated financial sector was the immediate cause of the worldwide financial crisis of 2007-08 and subsequent recession/depression/whatever-you-want-to-call-it.
There also is abundant evidence that the culture of overwork in professional America has its roots in the financial sector as well. It makes sense that it would begin there, right? Since the pay is highest there, the income effect of working extra hours would tend to dwarf any possible substitution towards leisure. Though that’s if you assume workers have much of a choice in these things, a theory that’s questionable, to say the least.
In any case, today’s Financial Times features a disturbing article about a new study that finds that ex-bankers tend to impose the financial industry’s culture of workaholism on their new workplaces. The former bankers
become so used to their long hours that they are blind to the stresses and, when they leave banking, impose their schedules on new colleagues, concludes a forthcoming survey in Sociological Quarterly written by a Goldman Sachs investment banker-turned academic.
“Bankers intensified the pace for all at their new environment,” writes Dr Alexandra Michel of the University of Pennsylvania, after following the careers of junior bankers over 12 years. “As leaders, they implemented work practicesâ€‰.â€‰.â€‰.â€‰which had the sometimes unintended consequence of causing people to work excessively hard.”
The article is full of ghastly details. 80-hour work weeks are considered standard within the banking industry. Getting off work no later than 11 p.m. on most days is mentioned by one former banker as a heart-warming example of his newly acquired work/family “balance.”
The single worst incident cited, however, is the death last summer of an intern at Bank of America Merrill Lynch, which according to the coroner may have been caused by overwork. The finance industry responded by taking steps to limit work hours. Weekend work was prohibited, for example.
Unfortunately, however, the new rules did not take:
Ms Michel found such measures failed to work, not just at banks but also at workplaces overseen by former bankers.
She cites one employee at a think-tank who said: “We all see the problem, but so far all of our attempts to solve it were ineffective. It got so far that we prohibited people from working on weekends, but what happened is that we now all worked secretly, just to be able to keep up with the results that others produced.”
That is just sick. No one’s work — except for life-saving labor such as the kind performed by health care and emergency response professionals — is that important. And even in the life-saving professions, long, grueling workdays do no one any favors. Working long hours endangers workers’ health and tends to hurt productivity as well.
Two weeks ago, President Obama did something very commendable: he took executive action to expand overtime pay regulations. That step will ensure that fast food managers, loan officers, and other workers who have been misclassified as “executive or professional” employees will now be eligible for overtime pay if they work more than 40 hours a week.
That’s a step in the right direction, but as the investment banking study shows, more sweeping actions are needed. Excessive overtime requirements are onerous and dangerous, and thanks to investment banking culture, they are spreading to other workplaces. It’s time to start pushing for a cap on work hours across the board.
If you think such a cap is a utopian pipedream, think again. As business reporter Geoffrey James has pointed out, in six of the ten countries with the most competitive economies in the world, it’s illegal to require employees to work more than a 48 hour work week. We could adopt a similar cap here — if we want to.
Besides being sane, humane, and good for workers’ health and family lives, such a cap could bestow additional advantages. It would disproportionately benefit women, who often find themselves torn between the macho, super-human hours required in high-paying fields like finance and the tech industry on the one hand, and their family responsibilities on the other. It could also help the unemployed. If 80-hour work weeks are banned, but the work still needs to get done, we might start to see some firms hiring more employees to pick up the extra workload.
Americans began agitating for the right to an eight-hour workday over 200 years ago. Countless workers fought and died for that right before it was institutionalized under the Fair Labor Standards Act of 1938. But sadly, it looks like this is a battle that working people must continue to fight.