Fewer days vs fewer hours, the importance of watercoolers, and the true Olympic Champions

Morning all,

Well, from a living standards perspective, this week’s economic data has been confusing. Slower wage growth doesn’t sound great for workers, but it’s probably a good thing if it lets the Bank of England cut interest rates. Rising inflation also seems bad, but it rose by less than expected – and services inflation is falling rapidly. And robust GDP sounds good – but misses the bigger picture that GDP-per-capita is actually lower today (by 0.4 per cent) than it was on the eve of the pandemic. Oh, and we don’t really know how many people are in work in Britain – which is not good for anyone.

My weekend task is to run 50km around Northamptonshire and Leicestershire. I say running – there will be a lot of walking. And eating – ultra-running is more like an energetic picnic in some pretty countryside. It’s a world away from those actual sportsmen and women who’ve been impressing us all for two weeks in Paris. Though perhaps not given that, ludicrously, one-in-four people think they could qualify for the next Olympics. And, now the dust has settled, our Chart of the Week presents the Only Medal Table You Need.

Whether running or sedentary, have a great weekend,

Mike

Interim Chief Executive
Resolution Foundation

McCarthy’s movies. America’s red scare at the dawn of the Cold War had no shortage of cinematic moments – perhaps most famously delivered by Joseph Welch to the House Un-American Activities Committee (HUAC) in 1954. But this fascinating new paper combines some serious data-wrangling and machine learning to assess how that repression affected Hollywood. The authors find that the individuals targeted with anti-communist suspicion did indeed tend to hold progressive or dissenting views, and that the suspicions set their careers back by a decade or more, chiefly because film studios were less willing to work with them. Beyond that, fear of being accused pushed other filmmakers away from progressive topics, rendering the nation’s cultural output more conservative. This even affected voting habits – parts of the country that watched more movies swung further to the right during the red scare. In a week when some people are shouting about whether the UK has freedom of speech, this reminds us that it’s a serious topic that really can affect people’s lives.

Inhibited ideas. The debate around home-working isn’t going away anytime soon. On the one hand, the most recent winner of the Nobel Prize for economics has said the key to tackling gender pay gaps is enabling greater flexibility around work. On the other hand, a recent paper finds that employees had worse ideas when they were working totally from home, and fewer ideas when they were following a hybrid work model (particularly when employees didn’t sync their days to all be in the office together). It could be that remote and hybrid work modes inhibit collaboration and innovation, perhaps due to the loss of spontaneous interactions, or a generally lower quality of communication between colleagues. Who knew that watercooler chat was productivity gold dust?

Moving margins. From the quality of work to the quantity of work. Back in 1930, John Maynard Keynes predicted that by 2030 we would work only 15 hours per week. We are definitely not going to reach that in six years’ time, but questions around compressed hours have been all the rage since the pandemic. Here’s one – would you prefer a four-day week with longer hours, or a five-day week with shorter hours? A new paper looks at US data between 1985-2018 to see how weekly hours shifted to meet cycles of demand. On average, in downturns, just under a third of the reduction in hours worked comes from people working fewer days a week, with the rest comes from working fewer hours a day. But there were some industries – manufacturing, and to some extent education and health – where almost all the reduction was in hours worked per day. These industries, the authors note, are going against the grain of what employees prefer, which tends to be to want to work fewer days (not shorter work days) and, ideally, enjoy all their days off together (long live the long weekend). Personally, I reckon we should obsess a little less over 4-day weeks, and worry more about low earners not being able to work enough hours…

Sick in Scotland. Economic inactivity due to ill health is on the rise, and the Scottish Parliament Information Centre (SPICe) have dug into this trend within Scotland specifically, where poor health is playing an even bigger role in economic inactivity than in the UK as a whole. Scotland bucked the UK trend of rising inactivity during the pandemic, but its inactivity rate started to rise in 2023, and is currently higher than the rest of the UK. Moreover, a lot more (nearly 40 per cent) of this inactivity is down to permanent ill health or disability, compared to the rest of the UK (less than 30 per cent). The report highlights some areas with particular challenges: in Lanarkshire, for example, the employment gap between working-age adults with and without a long-term limiting illness is a whopping 33 percentage points. The author concludes that labour market policy should pay more attention to health drivers, and health policy should think about how to help people work – for more on that, check out our future work on disability (and our first paper here).

Growth grab. In case you’re not sick of hearing it from us yet, the new Government needs to address the twin challenges of low growth AND high inequality. But don’t take our word for it: nearly a decade after it argued that high inequality reduces growth, a new IMF paper has found it goes both ways: long periods of stagnation are linked to rising inequality. Although policies like a robust higher education sector and a comprehensive social safety net do help, the IMF shows that countries experiencing a period of stagnation of more than four years tend to see inequality rise by around a sixth. Now, I am not saying that UK is in this camp – our problem is persistently high, rather than rising, inequality –  but the IMF concludes by saying that “against a backdrop of weak and uneven growth, inclusive growth requires the use of a policy mix that not only boosts growth prospects but also addresses inequality.” And that’s music to our ears…

Chart of the week.

The Olympics are over, and amid the many tales of individual or team joy and despair was a hot contest in the overall medal table. The US pipped China to the top spot after being tied on gold medals, while the UK came a respectable seven in terms of golds, and a remarkable third in terms of total medals. But medal tables are crude and, much like real household disposable incomes, benefit from being equivalised (I can’t believe I just made an HBAI joke). COTW does that by dividing a country’s medals by the size of their economy. The table looks very different now… The US falls off the podium and is replaced by the tiny island of Dominica (similar in population size alone to Salford…), thanks to Thea LaFond’s gold in the Triple Jump. Note, too, the mix of high, middle and low income countries at the top of the leaderboard. And well done to New Zealand for its GDP-adjusted medal achievements, despite neither of its main sports actually featuring in the Olympics (and lets hope the people of LA take to cricket as well as the Parisians took to the breakdancing)….