Why Americans Work So Much–Some Overlooked Explanations

I saw this article going viral WHAT IF AMERICANS ARE HAPPY AT WORK?, by Derek Thompson, which got me thinking about the topic of work.

In regard to the oft-asked question, “Why do Americans work so hard or so much?” the default explanation is that American are overworked out of economic necessity. Americans must work a lot because living expenses are too high. Or because of ‘bullshit jobs’–an explanation that has gained currency on either side of the aisle in recent years after being popularized by the eponymously-titled book.

In agreement with the aforementioned article, I think there are some overlooked explanations:

1. A sizable percentage of Americans derive enjoyment or satisfaction from their jobs. Work creates routine and brings order to one’s life, in agreement with Dr. Jordan Peterson regarding the importance of routine as an antidote to chaos and the uncertainty of the unknown. Or employees believe they are ‘making a difference’ or affecting positive change in the world.

2. More ‘bang for the buck’ means more incentive to work. American workers derive a lot of utility, both absolute and relative to other developed countries, for their wages, such as for cheap and abundant consumer goods, entertainment, vanity/elective medical procedures and drugs (like plastic surgery or Wegovy), or invested in rapidly appreciating assets such as stocks and real estate.

In the ’70s and elsewhere in the world, consumer goods are more expensive relative to wages, or worse selection, or returns on assets are/were worse. In the ’60s, ’70s and early ’80s, inflation was so high and inflation-adjusted asset returns were mediocre or negative, compared to high inflation-adjusted returns of the ’80s, ’90s and from 2010-present. Consumer goods such as electronics and automobiles are cheaper and bigger (such as pickup trucks) in the US compared to in Europe.

The S&P 500 has solidly outperformed all foreign peers, as has US real estate (foreign countries may show strong nominal gains, but this is negated by falling currencies and high inflation, whereas the greenback by comparison is the ‘global unit’ of wealth). Same for ‘fat’, inflated wages in the US–for all income levels and jobs–compared to anemic wages elsewhere. All of this creates an incentive for Americans to work more.

3. Similar to above, Americans earn a lot of money. In case I didn’t make myself clear, wages have gone up a lot. From Dan Stroot, Remembering Charlie Munger, “In 1949, Charlie Munger was 25 years old. He was hired at the law firm of Wright & Garrett for $3,300 per year, or $42,000 in inflation-adjusted dollars.” That is pretty bad. Nowadays lawyers and even paralegals make much more than that. IBM employees of the ’60s, which was one of the biggest and most prestigious employers of its era, earned the equivalent of around $80k today–not the mid-six-figure salaries seen or expected in ‘FAMNG’ or on Wall Street today. The ‘talent wars’ in Silicon Valley and in finance means higher wages.

White collar salaries have really exploded over the past few decades, especially since the Great Recession. White collar work is more lucrative than ever even accounting for inflation and student loan debt. The media and pundits on Twitter complain about young people going into debt to get degrees; well, those same people are getting those six-figure jobs too (true, not all of them, but having a degree is generally a prerequisite). If lawyers and doctors earned what they earned in the ’40s, I am sure the student loan debt crisis would fix itself as demand dries up. And people would work less too.

The average US household net worth recently crossed $1 million, which is incredible and shows how much wealth has inflated over the past decade. Sure, this is affected by outliers, but it’s little wonder Americans are working so much if they are getting so rich. This does not establish the causality, but I think there is something to it in explaining why Americans work so much.

4. Similar to #1, work is a form of escape from the misery of home and family life. I suspect this is a major but unreported reason (out of embarrassment or shame) for workaholism in America. I am sure most people can attest the worst bosses are not nearly as bad as the worst family members. Whereas work disputes have some form of mediation, family disputes are generally intractable or only through divorce, which is costly.