Do the Rich Work Harder?

There are two types of people who like discussing the habits and characteristics of “the rich.” Those that want to point out how evil these oppressors of the masses are, and those that want to learn how to be rich themselves.

I do not have much patience with the oppressors shtick. Thankfully, the great majority of Americans agree with me. Outraged complaints about how the rich Mansion - William Helsen are not paying their fair share of taxes is something leaders of the Blue Team voice to raise money from their navy blue supporters early in an election cycle, only to be conveniently forgotten as the day of actually voting approaches.

Support for raising taxes on high income households dissipates quickly once how much they are already paying is understood. An easy majority of Americans will say yes when asked if those making more than $250K should pay more taxes to reduce the deficit. But if the pollster gets specific and asks just how much those lucky few should cough up, a big majority choose rates lower than the current ones. Raising the marginal rate on households with incomes over $250K to 40%, which the administration claims to want, was found by a February poll to be supported by all of 4% of voters.

This clash between rich mythology and rich reality is typical. Even amongst the ambitious would-be emulators of rich behavior, accurate visions of the rich are surprisingly rare. Any number of successful personal finance gurus have for years gotten away with such unlikely stories as the rich buying cars by the pound and other howlers because their audience does not know any better.

I am not at all a fan of the “secrets” of the rich genre, but I will concede one thing. For many non-rich people, the rich are a mystery. Our media does not help.

Recently the WSJ’s Wealth Report asked Do the Wealthy Work Harder Than the Rest? Depending on your outlook, the answer to that question could be interesting, obvious, or irrelevant. Or maybe a mix of all three.

The academic research cited by the post is thin and indirect. “Highly-educated” men spend less time on leisure, 33.2 hours a week, than “low-educated” men, who clocked an average of 39.1 hours. If you are willing to assume that highly/low is rich/poor and that less time at leisure means working harder, then yes, the rich do work harder.

You might also believe several other equally as plausible explanations. The higher number of hours spent not working by the less educated might not be entirely by choice. Or perhaps cause and effect have been confused. Guys who like to work a lot naturally became highly educated. And hours worked may not be a good proxy for effort. An hour in an office is not the same as an hour digging a ditch.

But at the highest level, it is almost inconceivable that there would not be a positive relation of some kind between hours worked and income. Everything else equal, you work more, you make more. There are clearly many other factors playing a role, but in isolation the hours worked factor ought to positively impact income.

Indeed, what is striking is the degree to which this dog-bites-man finding is surprising to a few academics and a WSJ writer.

Serious Marxists believe that there is no sense in which the rich deserve to be rich. They got that way entirely because of luck (particularly accidents of birth) and a coordinated effort to rob the rest of society of the fruits of their labor. While I am not saying that the author of the WSJ’s Wealth Report is that far off the deep end, his surprise at hearing that effort might actually play a role is telling.

Not that I think that hours worked is all that explanatory of wealth. I am sure that Mitt Romney put in staggeringly long hours in his glory days at Bain Capital, but I expect he worked about twice the number of hours of a typical white collar worker and got paid about a hundred times as much.

In my view, the two most important factors determining wealth are luck and talent. I am not sure which of the two are more important, but I do think that after them everything else, hours worked, physical attractiveness, etc., hardly matters at all.

Romney benefitted from a host of advantages others did not have, the best schools, a well-connected father, great hair. But that describes a lot of people. How many sons of ex-governors are there? How many made $250m?

Of course, an argument that people might become rich even partially based on talent is fingernails on a chalkboard to Marxists. It would undermine everything. Hence the valiant effort by academics and others to find an explanation, any explanation, other than talent for how rich people got that way.

Which, unfortunately, makes it much harder than it ought to be for those without a political axe to grind and who want to know, for simple and practical reasons, how people get rich.

[Photo – William Helsen]

No Comments

  • By Steve, May 16, 2012 @ 12:46 pm

    I have not read the paper, but according to the WSJ article, ‘leisure time’ is defined as “time spen[t] watching TV, socializing, playing games, talking on the phone, reading personal email, enjoying entertainment and hobbies and other activities…” I would assume they address this, but it would seem to me that, especially at the higher end of the income spectrum, there is quite a bit of time spent “talking on the phone (read: networking), enjoying entertainment (read: fundraisers), hobbies and other activities (read: playing squash, racquetball, or golf) that most would consider at least partially “work.” This simply is not true at the lower end of the spectrum.

  • By Terry Pratt, May 16, 2012 @ 1:26 pm

    Working more hours (as the above suggests applies to the college-educated) is NOT the same as working harder.

    One could argue that many blue-collar jobs (say, manufacturing and construction) are more labor-intensive that pencil-pushing desk jobs.

    And in my experience, menial dead-end jobs which pay the least (say, flipping burgers or cleaning restrooms) are often enormously labor-intensive.

    And I would say that I have do not know whether the rich should pay more or less in taxes. I think everyone should pay some nominal amount – say $100 to $500 per person annually (to ensure everyone pays something) plus a flat percentage on all discretionary income. A flat percentage does not penalize the rich, and taxing discretionary income does not penalize those without discretionary income.

  • By Neil, May 16, 2012 @ 3:07 pm

    I’m not sure that the implication that ability might be involved is anathema to Marxists. “From each according to their ability to each according to their needs” does imply that some people are just more capable than others. Marxists just think of ability as being the result of luck, and there’s certainly something to that. I think the implication that effort also has an impact would bother people of the extreme left persuasion.

    It’s been my unscientific observation that there’s a curve in terms of hours worked vs money made. People at very low end of the curve work a lot of hours, as they pick up multiple jobs and whatever is necessary to make ends meet. At the high end of income, hours worked is also very high. I seem to know many millionaires, and they all work insane hours.

    But in the middle there’s this low point. I make enough money to live comfortably, and working longer hours is unlikely to bring me substantial returns over and above what I already get just for being good at my job. So I put in my 40 hours per week of work and 6 hours per week of school (that actually will pay measurable dividends), and that’s it. I spend some of my leisure time improving my employment skills through volunteer work, but mostly think of that as “fun.”

  • By CalLadyQED, May 16, 2012 @ 10:23 pm

    Remember the old saying, “Some men are born great, some achieve greatness, and some have greatness thrust upon them.” I think it’s very similar with wealth. :)

  • By jim, June 22, 2012 @ 3:19 pm

    “Raising the marginal rate on households with incomes over $250K to 40%, which the administration claims to want, was found by a February poll to be supported by all of 4% of voters.”

    I wonder what % of the people surveyed know the difference between marginal and effective rates. I’m betting somewhere around 20%.

  • By LMT, November 8, 2012 @ 2:24 am

    I am a professional that works 60 hour weeks, and not sure what is meant by “highly educated” but I have a post graduate degree. I do ok but by no means do I consider myself well off. I have very limited leisure time, well below the 32.3 quoted in the wsj article. The reason is simple; my job is not one I can leave in the office, so to speak. Not only do I have to take work home, even when I am not technically working I am thinking about my job.

    The nature of a lower income jobs is such that once the work day is over you can walk away and not think about it until you clock in the next day.

    So do I work harder than a brick layer? I do not think so. I do work longer, possibly more stressful hours, but not harder. Further, the implication that low income earners are lazy since they have a few additional leisure hours I think is false, for the reasons I outlined above.

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