Personal finance

California considers a shortened, 32-hour workweek for larger companies

Thomas Barwick | Digitalvision | Getty Images

A shortened workweek may become the reality for many employees in California.

Legislation is now working its way through the state legislature that would make the standard workweek 32 hours for companies with more than 500 workers. There would be no cut in pay, and those who work more would be compensated at a rate of no less than 1.5 times the employee’s regular rate of pay.

“It doesn’t make sense that we are still holding onto a work schedule that served the Industrial Revolution,” Democratic Assembly member Cristina Garcia, one of the bill’s sponsors, said in a statement.

While the shift is long overdue, the Covid-19 pandemic and “Great Resignation,” also known as the “Great Reshuffle,” have made it clear the time to make the change is now, she said.

Nearly 48 million Americans walked away from their jobs last year, and the trend is still going strong. Almost 4.4 million workers quit in February alone, according to the U.S. Department of Labor.

“There has been no correlation between working more hours and better productivity,” Garcia said.

However, the California Chamber of Commerce opposes the bill, calling it a “job killer” because it will end up imposing more costs on businesses.

“Labor costs are often one of the highest costs a business faces,” Ashley Hoffman, public policy advocate at the California Chamber Commerce wrote in a letter to Assembly member Evan Low, another Democratic sponsor of the bill.

“Such a large increase in labor costs will reduce businesses’ ability to hire or create new positions and will therefore limit job growth in California.”

Four-day workweek

Proponents of the four-day workweek say the same work can get done in the shorter timeframe. More companies are now testing it out as a way address employee well-being.

Earlier this month, dozens of companies across the U.S. and Canada began a six-month pilot of a four-day workweek, which is being led by 4 Day Week Global.

The idea is that employees work 80% of the time for 100% of the pay and maintain 100% productivity. It comes down to working more efficiently, including cutting back on unnecessary meetings.

“More and more companies are recognizing that the new frontier for competition is quality of life, and that reduced-hour, productivity-focused working is the vehicle to give them that competitive edge,” said Joe O’Connor, CEO of 4 Day Week Global.

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Among those participating in the North American trial is crowdfunding platform Kickstarter. Its CEO, Aziz Hasan, told CNBC in July it is a way for the company to become more powerful as a group.

“It’s really about — if our time and attention is focused as best as it can be in those four days — can we have a more potent impact on the things that we care about from a professional standpoint, so that it opens up so much more range for us personally?” he said.

For those who shortened the workweek during the pandemic, there are no plans to turn back.

“There are so many parts of the workweek that are just a waste of time,” said Banks Benitez, CEO of Denver-based Uncharted, which switched to a four-day workweek in 2020.

“It has been a great forcing function for us to think differently.”

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Disclosure: NBCUniversal and Comcast Ventures are investors in Acorns.

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