Bernie Sanders is right about the four-day workweek – but wrong about how to get there

Bernie Sanders, the Vermont senator, recently proposed new legislation that would change federal overtime rules. The new law, if passed, would require employers to pay a minimum 1.5 hours of overtime for each hour worked past 32 hours in a week. Currently, overtime kicks in at 40 hours per week. The requirement would phase in over a few years.Sounds great. Who wouldn’t want that? There’s just one problem: somebody has to pay for it. For business owners, this isn’t an ideological argument. It’s math.Say a company employs 100 people. And, for argument’s sake, say that each employee earns $50,000 annually for a 40-hour workweek. Assuming 50 workweeks, that’s about $1,000 per week or $25 an hour.Under Sanders’ proposal that employee would make $25 per hour for the first 32 hours and then be paid overtime of time and a half, or $37.50 for the additional eight hours to make it a 40-hour workweek. Which means that for a full week the employer is now paying $1,100 per week or $55,000 per year for 50 weeks. That’s $5,000 more for each employee.And it’s actually more than that. You have to add in federal and state taxes that an employer pays – about 7% of wages, which adds $350 more per year. A small business that employs 25 people would then be paying an additional $133,750 more per year under Sanders’ proposal. If they had 50 employees it would be an added cost of $267,500 per year. Well, you can do the math from there.And I’m not including other benefits – retirement plan contributions, workers compensation, etc – that are usually calculated as a percentage of wages. These costs would also go up.Of course, the business doesn’t have to pay for a 40-hour week. They can limit the workweek to 32 hours. But with unemployment and open jobs at historically low levels, I encounter very few businesses that can do this. They can’t find enough employees to do the work they have.No business wants to be forced to pay more for fewer hours. Up until now, many business owners have been dabbling with AI. But the owner of a 50-person company would gladly spend $100,000 on an AI project to save $267,500 per year. Sanders wants a moratorium on AI development. But now he’s proposing a law which would give employers another financial incentive to automate. The CEOs of Microsoft, Google, Anthropic and OpenAI must love this.The solution, I believe, is to accept that the workplace has changed. Today’s workers value compensation in different ways.It’s not just an hourly wage or a weekly paycheck. Recent research suggests that additional time off can have psychological benefits that an equivalent cash bonus doesn’t provide. According to a recent study in the Journal of Managerial Psychology, a majority of employees favored getting more time off over extra compensation. Researchers found that “a vacation time benefit gave surveyed employees an internalized sense of being treated and valued as a complete human being”.Getting paid a livable wage is of course important. But many workers, particularly in the younger generations that make up more than half of today’s workforce – want something just as important: balance. They want flexibility. They want to spend more time with their families, traveling, relaxing and pursuing their own personal interests.Providing incentives to – not mandating – employers to provide more paid time off, dependent care leave, and sick and personal days would make more sense. The government already provides employer tax credits for providing family leave and other benefits for reimbursing dependent-care expenses. This is also a valuable form of compensation, and one that more accurately addresses the issues that today’s employees face.Which is why a 32-hour, or four-day, workweek isn’t a bad concept. Government can help, but in the end it’s employers who need to step up.A four-day workweek can be accommodated by better scheduling. I know nurses, veterinarians, and healthcare and construction workers who are employed by firms that offer their employees to work four 10-hour days and take three days off. They love it. Of course, some jobs may not be amenable to such a schedule, and other paid-time-off plans for those workers should be considered. But if an employer invests the time to come up with a strategy for allowing their employees to only come to work four days a week (while still meeting the requirements of their job), they’ll find it easier to attract and retain talent.