Americans today may work less than they did a hundred years ago, but they still work more than workers in any other industrialized country.

This figure compares average annual hours worked in the United States with those worked in other industrialized countries. The differences result from a combination of Americans’ longer workweeks and shorter vacations. For example, the great majority of full-time American workers put in at least 40 hours per week. Until recently, however, a government mandate limited most French workers to a 35-hour workweek; collective bargaining has achieved a similar reduction in the workweek for many German workers.

In 2013, American workers got, on average, eight paid vacation days, but 23% of American workers got none at all. In contrast, German workers are guaranteed six weeks of paid vacation a year. Also, American workers use fewer of the vacation days they are entitled to than do workers in other industrialized countries. A 2013 survey found that American workers used only 51% of the vacation days they are entitled to, compared to 90% in France.

Why do Americans work so much more than others? Unlike their counterparts in other industrialized countries, Americans are not legally entitled to paid vacation days; as a result, the average American worker gets fewer of them.

Source: OECD.

Come summertime, resort towns along the New Jersey shore find themselves facing a recurring annual problem: a serious shortage of lifeguards. Traditionally, lifeguard positions, together with many other seasonal jobs, had been filled mainly by high school and college students. But in recent years a combination of adverse shifts in supply and demand have severely diminished summer employment for young workers. In 1979, 71% of Americans between the ages of 16 and 19 were in the summer workforce. By 2007, that number was 50%, and by 2013 it had taken another sharp fall to around 43%.

A fall in supply is one explanation for the change. More students now feel that they should devote their summer to additional study rather than to work. An increase in household affluence over the past 20 years has also contributed to fewer teens taking jobs because they no longer feel pressured to contribute to household finances. In other words, the income effect has led to a reduced labor supply.

Another explanation is the substitution effect: increased competition from immigrants, who are now doing the jobs typically done by teens (like mowing lawns and delivering pizzas), has led to a decline in wages. So many teenagers have forgone summer work to consume leisure instead.

But it was the deep recession of 2007-2009 that contributed most to the severe fall in youth summer employment in the ensuing years. As of 2014, youth employment has not yet rebounded. Post-recession cutbacks in employment by private employers, as well as in local and state government programs that hire teens during the summer, have led to the lowest number of teens employed during the summer in decades. Thus a steep fall in demand, along with a long-run trend of falling supply, has led to the decline of what was once a summer tradition.

Solutions appear at back of book.

In July 2013 President Barack Obama gave a much anticipated and widely discussed speech on the economy, arguing for policies that would raise wages and reduce income inequality. Along the way, he name-checked Costco, the giant retail chain, “which pays good wages and offers good benefits.” Good wages compared to what? He didn’t say it, but everyone understood that he was implicitly comparing Costco to an even bigger retail giant, Walmart, which famously pays so little that some of its workers qualify for food stamps and other poverty programs.

Indeed, that same year, a Bloomberg BusinessWeek story about Costco reported that it paid an average wage of $20.89 an hour, compared with $12.67 at Walmart, and provided much more generous health benefits too. Despite paying much higher wages, however, Costco has been substantially more profitable than Walmart in recent years. How is this possible?

According to Costco executives, what they get in return for relatively high wages is a stable and highly productive workforce. Retail companies typically have high labor turnover—that is, workers frequently quit, and then new workers have to be trained—but turnover at Costco is relatively low. Costco workers also appear to have high morale, and deliver better customer service than their counterparts at other stores.

Would Walmart be more profitable if it paid like Costco? Skeptics argue that the retailers aren’t completely comparable: Costco offers a narrower range of products and caters to a higher-income clientele. Still, Costco’s success shows that paying the lowest possible wage isn’t always the best business decision.

QUESTIONS FOR THOUGHT