The four-day work week: Could employees toil less while businesses profit? It’s possible, but complicated

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When Leena Yousefi, the founder of Vancouver-based YLaw, decided in February to experiment with a four-day work week at her small but fast-growing law firm, she already knew the benefits of a shorter weekly toil. Years earlier while working for another firm, she’d temporarily cut back her schedule by a day – albeit at 20 per cent reduced pay – on the recommendation of a migraine specialist, and immediately felt happier and more focused.

As a business owner, however, she wasn’t sure what would happen when she moved her staff to a shorter week, without any decrease in pay. “I went in fully expecting I might have to take a 10-per-cent cut to my profits and I was ready to live with that,” she says.

Ms. Yousefi was stunned by the results. One month into the trial, profitability was up 10 per cent, and had notched a 30-per-cent gain by the trial’s end in May. Margins have only continued to grow since four-day work weeks became permanent at the firm, along with the company’s size. YLaw has doubled its roster of lawyers to 14 since March, with more job inquiries pouring in. “It’s pretty insane, the applications we’re getting and the loyalty we’re seeing,” she says. “It’s been the complete opposite of a downturn in our profits or expansion.”

YLaw operates in an industry infamous for grinding down employees with long hours, making its story of success even more noteworthy. However, it’s just one of a small but growing group offering employees an extra day off each week. The trend is catching the attention of workers worldwide, coming when many feel burned out by pandemic workloads and businesses face pressure to rethink how they’ll operate once things return to normal.

Yet as the enthusiasm builds for shorter work weeks, it’s just not clear how many of us will ultimately get to benefit. It’s not just that four-day work weeks are better suited to white collar jobs than blue collar or service industry work. There’s also the matter that some of the most widely touted examples of four-day work weeks are more complicated than they seem while several companies that have dabbled with them have backtracked.

Besides, anyone dreaming of perpetual long weekends should take note: YLaw settled on Wednesdays as the most efficient day to take off.

What’s more, economists argue there will need to be trade-offs if the trend becomes widespread – like a cut to pay, or the need for a dramatic increase in labour productivity across the whole economy. “If you believe that markets are competitive, employers literally can’t afford to pay the same amount to workers and get less output as a consequence,” says Steven Globerman, a senior fellow at the Fraser Institute who has studied the economics of achieving a four-day work week.

Since the Ford Motor Company became one of the first big employers to adopt a five-day, 40-hour work week a century ago, a further expansion of our weekends has at times seemed inevitable, even if it never really arrived. In 1956, Richard Nixon, then vice-president, predicted a four-day work week in the “not-too-distant future”.

Four-day work weeks did catch on somewhat in the decades to follow, though largely as a cost-saving measure by companies during recessions or a way to spread around work during periods of high unemployment.

Now, however, its proponents say the time has come for a shorter week as a way to benefit workers, not the bottom line.

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Charlotte Lockhart, the chief executive of 4 Day Week Global, a non-profit dedicated to spreading the concept, is at the forefront of that endeavour. “As business owners we need to remember that we borrow our people from their lives and we’ve got very twisted in our thinking that work is your entire life,” says Ms. Lockhart. “Employees think that, business leaders think that, and essentially we have it the wrong way around.”

What’s changed now, she says, is that pandemic lockdowns have removed a lot of the psychological barriers employers had around flexible work arrangements. If you can trust your workers to be productive remotely from home, why not explore other arrangements that benefit their wellbeing without affecting customer service levels or the bottom line?

Some executives have taken up the challenge. In June Aziz Hasan, the CEO of crowdfunding platform Kickstarter, signed onto a one-year global pilot project launched by 4 Day Week Global set to begin in 2022. Unilever PLC, the consumer products giant, is in the midst of its own one-year experiment allowing its New Zealand employees to work four days.

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The four-day movement got its latest boost earlier this week when Rep. Mark Takano, a Democrat from California, introduced a bill to shorten the standard work week in the U.S. to 32 hours. Any additional hours worked would be considered overtime. While the bill will undoubtedly face intense opposition from companies, not to mention many workers who would presumably see their regular hours cut, it marked a watershed moment in the mainstreaming of the four-day work week. The moment that Mr. Nixon predicted might finally be happening, yet again.

When Ms. Yousefi was crafting YLaw’s four-day work week experiment, she was careful early on to frame the idea to her staff as “a privilege not a right.” Under her plan employees added one extra hour to each of their four work days; she committed to swallowing any losses from the remaining unworked hours. She was upfront that if the experiment affected customer service levels or unduly hurt the business it would have to go.

There were some minor hiccups. Taking Fridays off led to a backlog of e-mails and messages that consumed their Monday mornings, so the firm switched to Wednesdays instead. Some junior employees also felt anxious about being perceived as “lazy in a profession where we’re somehow expected to be undeserving of having a work-life balance,” she says. Those anxieties subsided as the experiment unfolded.

The end result was that employees collectively set out to work more efficiently to ensure the plan succeeded and became permanent. They ditched things like extended lunches and cut out procrastination habits like browsing social media. “People realized how much time they were wasting because they were tired,” she says. “The waste of time has been almost completely eliminated.”

In fact, she says, the firm’s lawyers are exceeding their old billable-hour targets, which explains how the firm boosted its profitability despite the shortened work week.

But Ylaw’s four-day work week isn’t the only version. Others compress a 40-hour week into four days. U.S. burger chain Shake Shack expanded a trial of compressed weeks for some store managers after it found it improved retention.

That’s also the approach of an eight-month experiment under way in Zorra Township, a small municipality near London, Ont. The goal was two-fold, says Don MacLeod, Zorra’s chief administrative officer – employee retention and a recruitment drive at a time when several older workers are preparing to retire.

While researchers from Western University are conducting a third-party review of the trial, Mr. MacLeod says staff report being happier, while the township has actually been able to extend its hours of service. “It seems like a win-win from my perspective.”

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Ultimately, though, the type of four-day week Ms. Lockhart of 4 Day Week Global envisions would see workers toil less, yet pocket the same-sized paycheque. In 2018, she and Andrew Barnes, chief executive of New Zealand financial services company Perpetual Guardian, launched a trial that moved its 240 employees from five to four days without a cut in pay. An analysis by academics from the University of Auckland determined that employee stress levels fell while job satisfaction rose alongside a 20-per-cent increase in productivity. Perpetual eventually adopted four-day weeks in perpetuity.

“If you think four-day weeks are a bad idea, I’m not going to argue with you because I’m too busy talking to all the people who think it’s a great idea and you’ll just get left behind,” she says.

Or is it? While the idea of workers en masse claiming Fridays (or even Wednesdays) as a third day to unwind appears tantalizingly close given the big names testing out the concept, for now it remains a fringe benefit.

There have been high-profile pilot projects, of course. In June, the results of two large-scale trials carried out in Iceland between 2015 and 2019 were released and garnered glowing headlines after the analysis proclaimed the shortened work week experiment an “incredible success story.” The Spanish government has also agreed to embark on a four-day work week experiment that could see it subsidize companies to take part to the tune of roughly $74-million.

But those studies aside, job postings on the employment website Indeed.com in both Canada and the U.S. show that fewer than 2,000 listings per million make mention of “four-day work weeks” – though it’s worth noting that the U.S. rate of such postings has climbed 35 per cent since 2019, while remaining unchanged in Canada. (Also of note: even without a shorter week, the average number of hours worked by Canadians has dropped since the 80s while leisure time for Americans has stagnated.)

Some companies that have tried four-day weeks have backtracked. Treehouse, a Portland, Ore., company that offers online coding courses abandoned the policy in 2016 after a brief experiment. “It created this lack of work ethic in me that was fundamentally detrimental to the business and to our mission,” CEO Ryan Carson told a conference in 2018.

Likewise Beelineweb, an online marketing firm in B.C.’s Okanagan region touted itself in a 2019 press release as the “first Canadian firm to undertake 4-Day, 32-hour workweek (with no pay cuts)” but updated its website at the end of that year to say it was reverting to five days because it could not keep up with its current projects. In an e-mail, Beelineweb CEO Lauren Gaglardi said the firm has adopted temporary four-day weeks this summer and that she’d like to make it permanent, “but I have found that it needs to be more of a gift or reward,” she wrote. “We will soon be doing some brainstorming with our team to try and figure out how to keep it fresh and not an entitlement (which I hear is a common situation).”

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Even one of the most commonly cited examples of four-day work week experiments isn’t what it seems. News stories about the impending four-day work week invariably reference a one-month experiment carried out by Microsoft Corp. in Japan in 2019 which supposedly boosted productivity by 40 per cent. Never mind that if the software giant saw such swift and dramatic productivity gains, it surely would have expanded the program to the entire company. The original Japanese-language “measurement results” page has since been edited to play down that claim “to avoid misunderstanding” because “they are not the results achieved by this challenge alone, but the results realized by various factors.” Microsoft declined an interview request.

These examples get at what some see as a fundamental stumbling block to working less for the same pay. “These studies can talk about it all they want, but companies are not going to go for it,” says Chris Higgins, a professor emeritus at Western University’s Ivey School of Business who has researched alternative work arrangements.

That said, all hope is not lost. Earlier this year the Fraser Institute released a roadmap of sorts for how Canada could achieve a four-day work week without a cut to pay. Prof. Globerman and his colleague at the institute, Joel Emes, ran simulations on what it would take to achieve that feat. The answer: higher labour productivity gains at the national level.

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“If Canada achieved labour productivity growth of 2 per cent per year between 2019 and 2030 the average Canadian employee could be working a four-day work week and actually make slightly more in inflation-adjusted dollars in 2030 than they were making in 2019,” Prof. Globerman says.

The bad news: Since 2000 labour productivity growth has been stuck at 1 per cent, with one significant reason being our aging work force.

The good news: prior to 2000 Canada’s productivity growth averaged around 2 per cent. “We have to improve productivity, but we’re not looking at an improvement that is historically implausible,” he says.

That would still entail a significant revamp of Canada’s economy – the road map calls for the reduction of inter-provincial trade barriers and measures to reduce red tape, foster more entrepreneurship and tax reform. Of course, these are all in themselves seemingly intractable political problems that would need to be fixed to make shorter work weeks feasible and sustainable.

However things unfold, Prof. Globerman says companies and employees are currently “engaged in a once in a two or three generation search for new workplace governance structures” that will take much experimentation to figure out what works best.

As for Ms. Yousefi, she hopes the success she’s had with four-day weeks so far will continue. “It’s not been perfect,” she noted in a blog that detailed her firm’s four-day week journey, “but I can say confidently it has come as close to a fairytale as I could imagine.”

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