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How Yahoo’s Decision to Stop Telecommuting Will Increase Innovation

by Feb 26, 2013, 10:30 pm ET

yahoo_building-thmbMarissa Mayer’s decision to require Yahoo employees to “come into the office” has already been criticized by many. But most of the criticisms that I have come across have been based on emotion rather than data. If you understand the science behind increasing innovation through face-to-face interaction, her decision can only be classified as “a brilliant business decision.”

Innovation Has a Higher Impact on Profitability

There is data to support the fact that telecommuting has several major benefits. It saves millions in real estate costs, it can help in recruiting, it helps the environment, and it certainly makes some workers happy. But telecommuting unfortunately reduces innovation. And because innovation brings in much higher profits than the traditional goal of corporate efficiency, many firms are now learning the value of emphasizing innovation as a primary strategic business goal.

Dramatic Action Was Required Because Yahoo’s Performance Simply Doesn’t Come Close to Its Competition

Let’s start with the basic driver of this action, which is a long history of weak business results. The business performance at Yahoo has been less than stunning compared to almost any competitor, indicating that something dramatic was required. Google for example is ranked #3 in market capitalization (at $259 billion), which is a 10 times higher market cap than its direct competitor Yahoo. Yahoo, a much older company, is ranked way down at #238 (with a market cap of a mere $24.5 billion dollars).

Yahoo’s current workforce also dramatically underperforms. Apple’s employees produce 6.5 times more revenue per employee, Facebook employees produce three times more revenue per employee, and Google employees produces double Yahoo’s revenue per employee (Yahoo’s average employee produces a mere $352,100 each year, compared to Apple’s astounding $2.2 million). With both Google and Apple thriving, if Yahoo wants to return to its formal role as a serial innovation firm it will have to do a number of dramatic things, so this telecommuting decision is likely to only be the start of major change.

Data Supports the Need for Face-to-face Interaction in Order to get Innovation

Yahoo’s CEO comes directly from years of work at Google, a fact driven company where “data talks”. Marissa Mayer’s herself is a computer scientist from Stanford, so she certainly loves data and the scientific approach. She has a long established track record of making major decisions based on hard data & science and this decision to bring its workers in to the office is certainly a decision supported by data. Firms like Apple, Google and Facebook simply don’t wait for innovation to happen by chance; instead, top firms use data in order to proactively increase innovation and collaboration.

Google long ago calculated the tremendous economic value of innovation, and it even has a formula for increasing it. Google has determined that innovation comes from three distinct factors: discovery (i.e. learning), collaboration, and fun. Zappos, a non-tech firm, has eliminated most telecommuting because it also has learned the economic value of face-to-face interaction and fun (everyone leaves by the same door). Pixar is famous for its centralized bathrooms, because Steve Jobs knew the economic value of increasing serendipitous interactions.

A comprehensive study by Isaac Kohane of Harvard Medical School has reinforced the internal data gathered by Google by scientifically demonstrating the positive impact of employees who work in close proximity. He dubbed it the “water cooler effect” because of the power of informal interactions. The pharmaceutical company Glaxo Smith Kline even found that increasing interactions through open office designs can increase decision-making speed (which is essential in getting innovations to market) by as much as 45%. Even co-working sites (where workers from different firms work side by side) have learned the value of interactions between people from different functional areas.

Why Face-to-face Interaction Is Such a Powerful Driver of Innovation

Telecommuting is simply not amenable to a high volume of interactions. For example, if you sent someone working remotely 50 emails every day or 50 telephone calls, they would certainly not be happy about it. However, no one complains if the same 50 interactions occurred between coworkers at the office. Face-to-face interactions between employees from different functional areas are powerful because:

  • Interaction increases collaboration – talking to others who individual employees don’t normally work with can spur either of the parties to want to work together and collaborate on a project either immediately or in the future. This collaboration makes it easier to staff highly effective cross-functional teams.
  • Questions increase sharing – the common question between two workers from different areas is “what are you working on?” Fortunately, this question increases best practice and idea sharing.
  • Interaction provides new solutions – when someone mentions in a group setting that they’re having a problem, the odds of getting an outside-the-box solution increase if the employees they are talking to work in a different function with a different perspective. Face-to-face interactions with customers and vendors are also much more likely to occur if everyone works in the same office.
  • Interaction increases competition and energy — if when encountering a coworker they highlight their recent successes, recognition, or rewards, the odds are that the people they interact with will be energized to match their success.
  • Interaction increases learning – obviously conversations between individuals from completely different functions allows both parties to learn about problems, solutions, and new ways of thinking that no one in their working group would likely be aware of.
  • Interaction provides you with ideas — talking to others and even relative strangers may spur new ideas or reinforce your current ones.
  • Interaction breaks down functional silos — functional silos slow down decision making and time-to-market, so any increased interaction with those who work in overhead functions will likely increase their understanding of the problems faced by engineers and reduce roadblocks.

Serendipitous Meetings Can Be Consciously Increased

If your corporate goal is innovation, firms must take positive actions to increase the number of interactions. Google and Facebook have led the way in purposely increasing the number of serendipitous face-to-face interactions by using new office designs, standing desks, creating walking patterns that increase interactions, and by offering fun on-campus activities. Google HR even measures the length of the café lines for food in order to maximize these interactions. Face-to-face interactions have been increased through what might seem like bizarre actions like a laundromat at Google headquarters and a free ice cream/bakery at Facebook. Even a free Wi-Fi shuttle bus to work increases interactions between employees who don’t work in the same business unit.

Additional Reasons Supporting Yahoo’s Decision

Some additional reasons supporting the end to telecommuting at Yahoo include:

  • It needs to rebuild its culture — everyone realizes that Yahoo must rebuild its corporate culture and almost everyone agrees that the best way to do that quickly is through numerous face-to-face interactions so that everyone can “see” the new desired behaviors.
  • A shared sacrifice will build cohesion — having many employees make sacrifices at the same time (shared sacrifice) will build cohesion among employees.
  • In tight economic times you can demand more – given the weak economy, fewer telecommuters will likely quit as a result this decision.
  • Building an employer brand message – Yahoo’s image as an employer has been damaged over the last few years, so taking bold action like this has certainly gotten everyone talking about Yahoo. And a side benefit may be that this bold decision may send a message to innovators that “things have changed” at Yahoo.
  • Potential turnover – because Yahoo has a long history of numerous layoffs, you simply can’t argue that this decision is an attempt to reduce the workforce. Because of all the turmoil and the many layoffs at Yahoo over the last five years, many innovators left the firm long ago. The turnover as a result of this decision will be less impactful and the slots opened up can now be filled by new innovators.
  • The workforce is relatively young — because of the youth of its workforce, Yahoo employees have fewer child care and elderly parent care issues than many firms.
  • Force versus enticement – since the new CEO joined, Yahoo has tried to become “Google-like” by providing free food, mobile phones, and shuttle buses. However, the Google “casino like” approach is distinctly different in that it uses positive features to entice and encourage employees to come in and to work long hours. The Yahoo approach of requiring it, even though it may be necessary, may cause many unintended problems.

Final Thoughts

The decision by Yahoo to take dramatic action in order to speed up its return to becoming a serial innovation firm again may seem harsh to those with what I call “a social work mentality.” Hard-nosed businesspeople and shareholders however understand the economic value of innovation, so they already realize that Yahoo may be in a life-and-death situation and that the only way to save every employee’s job may be to immediately shift into innovation mode. And that shift simply can’t happen rapidly without the necessary face-to-face interactions that come with showing up to the office every day. Because of this bold and necessary decision, I predict that Yahoo will show dramatically improved business results in as soon as 18 months.

This article is provided for informational purposes only and is not intended to offer specific legal advice. You should consult your legal counsel regarding any threatened or pending litigation.

  • Martin Snyder

    The decision is already a disaster. It cant and wont stand in 2013, and now the real question is will she be able to walk it back and still keep her job?

    Could have been framed better with all the reasons above, but it still wont stand. Its not an either/or situation.

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  • Martin Snyder

    By the way, forcing innovation is like trying to have fun….that’s why New Year’s eve is often such a bust for people.

  • Heather Janes

    Perhaps you should think about reading “Quiet – The Power of Introverts in a World That Can’t Stop Talking.” Completely weakens your argument on what “creates” innovation

  • Todd Noebel

    John – excellent piece. I happen to think that this move, while perhaps not appearing (key word) well executed thus far, is critical to Yahoo returning to a culture of high performance. It is all about shifting the culture and that can sometimes be ugly and difficult for organizations. That doesn’t make it wrong.

    Martin – why won’t it stand in 2013? What about shaking up a cultural/organizational model that is returning poor results won’t stand? At some point, some roles may effectively support a virtual/telecommuting arrangement but right now it isn’t working for the business. Good business sense tells you to fix what isn’t working.

    It isn’t about “forcing” innovation so much as it is about establishing the right culture, expectations and environment (people, facilities, processes, technology, etc.) which both allow and foster innovation.

    I think it’s a bold move though the proof will be in the long term (key concept) execution.

  • Martin Snyder

    Todd it won’t stand because; top talent won’t put up with it, every competitor will use is as prima facie evidence they are flailing and you don’t want to work there; because some people need to work from home to do modern jobs, so it will be a political perk and status marker that will create division, because it smacks of rearranging deck chairs on the Titanic, because it’s already poisoned by its inept execution, and because it stabs at the core ethos of what modern technology business culture represents, which is freedom from authoritarian micro-management. Other than that, it’s a great idea…..

  • Keith Halperin

    Thank you, Dr. Sullivan. I’ll repeat many of the comments I made yesterday.

    Keith Halperin Feb 26, 2013 at 7:12 pm

    Not only is TC a good thing to offer, IT’S A REALLY BAD THING TO TAKE AWAY FROM PEOPLE WHO ALREADY HAVE IT.

    @ Kristen:
    1) “Yahoo has been having issues with their remote workforce for quite a while (http://tinyurl.com/auv8mvn), and obviously this move is to manage those issues.” If there are individual problems, you deal with those individually- you DON’T take away something from people who’ve not had problems with it.

    2) If you need people to see each other to collaborate, then give them multi-screen broadband, hi-def tele-presence, and if THAT isn’t sufficient (would like to see objective studies of comparisons between F2F and multi-screen broadband, hi-def tele-presence to show that it isn’t) then you plan a regular period when people are in each other’s presence to “inspire each other’s creativity.” From my experience in working with engineers, they don’t sit around all day talking to each other (I’m working in a big open area with ‘em right now); most of the time they’re ACTUALLY DOING WORK.

    “However, no one complains if the same 50 interactions occurred between coworkers at the office. ” I think MANY people would complain if they were interrupted 50 times a day; I certainly would.

    3) I think that most jobs don’t require this type of “inspiration” and even those that do don’t require it ALL DAY LONG.

    4) It’s not only the fact of losing something that was already there that is demoralizing- it’s the sense that arbitrarily, ANYTHING CAN BE TAKEN AWAY AT ANY TIME- WHAT’LL BE NEXT? The Yahoos who don’t care, or too scared/couldn’t easily get new jobs elsewhere won’t be a concern, but I bet there are now a fair number of very good Yahoos (who might have been quite happy and productive before) who may now be considering other options.

    5) Finally, let’s argue for a moment that this WAS the right thing to do- it could have been handled much differently. Yahoo could have expressed empathy with working families (who may not have the nanny and other types of support that Ms. Mayer does) and made sure that every affected parent would have access to available childcare with late pick-ups, if necessary subsidized by Yahoo BEFORE the change was completed (If this is the case with this, I haven’t heard of it). Better yet, Yahoo should offer all affected families the same type of support that Ms. Meyer herself has, and THEN take away TC.

    @ Martin- Well said: my words exactly: “of rearranging deck chairs on the Titanic” are words I often use. Between eliminating TC and personally reviewing all hires, Ms. Meyer shows signs of indeed being an authoritarian micro-manager (“The Margaret Thatcher of Silicon Valley”), and if she wishes to create a company of hardworking and compliant drones, she’s off to a good start….

    Cheers,

    Keith

  • Todd Noebel

    Martin – First let me say that we both agree that thus far what we have seen of the execution is not good. The problem is that since we’re on the outside, and Yahoo is choosing (somewhat smartly) not to openly publish their plan, we can only evaluate “the memo”.

    And now back to disagreeing – Do you know, for fact, that this is actually a takeaway from people they view as the top talent they need to remake Yahoo into a successful business? If so, then maybe you’ve seen their new org model and talent assessments but I know I haven’t. I also disagree that it is indicative of flailing – it is indicative of recognition that what they’ve been doing isn’t what they need to do in order to be successful. No great revelation to the marketplace there.

    I have to ask, what modern job (and what exactly does that mean), needs to be done from home? The reality is that working remotely (especially entirely) is a benefit. Most definitely a nice one, and one that can be well managed and productive. But right now, today, at Yahoo it is not working. What’s the definition of insanity? Oh yeah, doing the same thing but expecting a different result. Further, how (because I don’t see it as if), they reintroduce remote/telecommuting work arrangements, I am betting it will be with much better discipline and, one hopes, much better leadership & management oversight. There’s too much we don’t know to paint it as some evil “political perk”.

    And forgive me while I don’t jump on the bandwagon of the core ethos rhetoric. Technology is a tool, an enabler of getting the core work done. Period. Authoritarian micro-management is a separate issue. And thus far, there is no proof that what is being proposed is micro-management. It is management. I go back to the fact that how the workforce is currently being managed, or even managing themselves, is not working. If it were, we wouldn’t be having this debate.
    As to rearranging the deck chairs – perhaps it signals better vigilance for “iceburgs” and more disciplined vigil at the helm. So yeah, it is a great idea.

  • Martin Snyder

    “Marissa Mayer Has Made a Terrible Mistake” scream the headlines. Evidence of a wonderful idea?
    http://www.slate.com/articles/technology/technology/2013/02/yahoo_working_at_home_marissa_mayer_has_made_a_terrible_mistake_working.html

    Modern jobs like DevOps and Security are driven by the work, not the clock. Sure you can try to staff around that, but the putative benefits of people in the office at fixed hours are eaten up by coordination friction.

    You can call it core ethos and you can be on or off the bandwagon, but extensive scientific work has shown that autonomy, purpose, and mastery are the key motivational drivers for high value workers, and killing autonomy, distracting purpose (into internal conflict about who gets to and who does not) and hurting mastery (because great work happens when it happens) seems to me like a pretty poor way to proceed.

    As to the “we are not privy to the details” argument, just peruse the tubez and you can see that it’s a terrifically unpopular move, which may as well be true because it’s self-fulfilling. She will walk this back or she will be toast- the only question to me is how they manage to “clarify” it…

  • Todd Noebel

    “Marissa Mayer’s No-Working-From-Home Rule Is Stupid — Or It Could Save Yahoo” Evidence that we just don’t know
    http://www.wired.com/business/2013/02/yahoo-no-work-from-home/

    Being unpopular, and managing by screaming headlines is about as useful as governing by the latest polls. Perusing people grousing about it does not reveal the key workforce issues I asked about – operating model, org design/structure, talent assessments, etc.

    Autonomy, purpose and mastery exist in a variety of environments and are not the exclusive domain of the virtual worker. To your point – could these same people who work in an office environment not produce good work? More to the point, while I may work in an office based environment, that does not somehow preclude me from having that “aha!” moment at home and finding a way to capture that inspiration. The clock is immaterial.

    We disagree and I’m OK with that. I don’t see it as the great cataclysm of autonomy (I’ve seen and been part of self-directed high performance…in an office), purpose (clearly NOT tied to location), or mastery (I’ve yet to read anything that says working in an office prevents mastery).

    I guess time will tell if you or Marissa knows better how to run Yahoo.

  • Martin Snyder

    Todd how will time tell such a thing if I am not given a chance to run Yahoo? Sophistry like that betrays the nature of your argument- so no, we can’t prove a negative, and yes, you can govern by polls- they are quite accurate and indicate if you will be elected or re-elected based on your numbers.

    In this instance, Marissa stepped in it but good, and so we shall see what the downstream results will be. I expect walkback or ‘clarification’ real soon assuming she even hangs on to the job.

  • Keith Halperin

    More discussion:
    http://wunc.org/post/presence-vs-productivity-how-managers-view-telecommuting
    http://www.kqed.org/a/forum/R201302260900

    Who thinks that requiring everybody to always be there will:
    1) Fix Yahoo’s problems?
    2) Improve Yahoos’ morale?
    3) Increase good employee retention?
    4) Make it easier to recruit people for Yahoo?
    5) Not make it easier to recruit people FROM Yahoo?

    Your thoughts, Folks….

    Keith

    Keith

  • Todd Noebel

    Don’t mistake sarcasm for sophism. By your statements you are at the very least insinuating that you know better how to manage the Yahoo workforce than does their CEO. I simply pointed out who I believe is in a better position to do so.

    You’re own comment actually supports my argument – “we shall see what the downstream resultes will be”, sure seems aligned with time will tell. Look, this isn’t personal to me since I don’t know you.

    The facts are that we don’t have all the facts and we certainly don’t have the CEO’s view. We have a memo and a plethora of second-guessers (you and me included). As I mentioned before, I don’t think (based on the knowledge we have available) that this was handled cleanly. But in that I could be wrong. It could have been handled exactly as intended – again, we lack volumes of information on the plan and intended outcomes). We’re all sure spending a lot of time discussing it aren’t we.

    Oh – and getting re-elected is not the same as good governance. Or do you like the way Congress is handling things right now? Ah well, but the polls told em about being reelected. But that’s a separate conversation and was only an illustration.

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  • Todd Noebel

    1) Fix Yahoo’s problems? In and of itself, no. But it is likely part of the broader, longer term solution.
    2) Improve Yahoos’ morale? That would depend on who you ask. There are already some current Yahoo! Employees coming out in support of the issue just as there are those deriding it. So, short term could be a negative. Longer term engagement and morale – it could give high performers confidence that leadership won’t tolerate poor performance and bad management. That tends to boost morale.
    3) Increase good employee retention? Perhaps – see above regarding leadership and tolerance for poor performance.
    4) Make it easier to recruit people for Yahoo? Far too early to tell.
    5) Not make it easier to recruit people FROM Yahoo? Short term, it could.

  • Ty Chartwell

    Cutting edge Doc Sully, just absolutely cutting edge.

  • Merlynn Bertini

    There is a misconception that because individuals are together, that automatically translates to “interaction”–it is not that simple.

    This article would have been more appropriate for a 1990′s workplace. Keith you make an excellent point regarding technology’s place in the workforce. In the 21st century while the innovative companies are embracing mobile workforces, broadband, high-definition presence, Yahoo is going in the opposite direction.

    Some of the comments are really off track such as, is it feasible to believe that “innovators” are going to be lining up to work at Yahoo? There is always a demand for “top talent” because of the their skills–”quitting” is not an issue for these individuals. Martin makes an excellent point about competitors using this action by Yahoo as “prima facie” evidence of Yahoo’s being a “sinking ship.

    Lastly, the comment regarding branding sending “a message to innovators that “things have changed” at Yahoo”–that is true, unfortunately the message appears to be, only people who work “in an office are productive”–people who work remotely are “the problem”.

  • Keith Halperin

    @ Todd K: I appreciate the feedback.
    @ Merlynn: Thank you.

    Some additional points to consider: I heard on the NPR Talk that telecommuting saves both businesses and employees money over having them go in. Also, ISTM that the discussion is over whether people who could quickly and easily get in to work telecommute or not. We’ve missed perhaps the main reason for TC- the avoidance of a long, inconvenient, or unpleasant commute. I would be curious to see if having employees who have 1 hour-each way car commutes are more effective at “inspiring” themselves and others when they are tired and exhausted from the drive in…Here’s something even I would settle for: the shorter/easier/more convenient your commute, the more face time you put in, e.g., you’re in walking/biking range: you come in every day, but if you’re more than about 45 minutes away at non-rush hour: you come in once/week. I think many people could see the logic in that. If they’d done that, Yahoo could have come off as a progressive, environmentally responsible corporate citizen of the 21st Century, instead of an authoritarian throwback to the 20th.

    Finally, what if Yahoo (I’m trying to avoid personalizing this, but it’s hard) had tried something REALLY revolutionary: going to results-based work in the spirit of the “4 Hour Work Week”? How this would operate- Yahoo says: “This is what we need you to do each week, and we calculate it will take the typical employees close to 40 hours to accomplish. We need you to accomplish this work- how and where you do it, or *how much time you spend accomplishing it are immaterial to us- just get it done on time and high-quality. If you finish early, we won’t give you additional work to do for that week- take the time off and enjoy yourself if you want. If you need to take longer that’s OK too, as long as you meet the deadline and hit the level of quality.” Obviously, not all types of jobs would be suitable for this, and some jobs wouldn’t be suitable at some times and suitable at others. However think what an incentive this would be for a lot of people!

    Cheers,

    Keith

    *However, it would NOT be the “you’re free to work any 80 hours of the week you want” crap…

  • Todd Noebel

    Keith – I have no issues with, and actually I am highly in favor of, being focused on work product/output and not the hours required to get there. Particularly since what we’re talking about with Yahoo is, primarily, thought work with intelectual product as opposed to manufacturing.

    I also agree that some, though not all, work is well suited to remote or telecommuting models. However, I am not convinced that Marissa Meyer disagrees with either of those concepts.

    And that is what brings me back to my primary point of contention with everyone slamming the current decision to bring everyone back in house. I will state, yet again, that from what we’ve seen (operative concept)- this memo was not good execution of policy change.

    BUT, and we need to talk about this big but – we simply do NOT know the targeted end game of this change. We have a snippet of information and I just don’t find that sufficient to indict their entire new workforce strategy within what is clearly going to be a new operating philosophy within Yahoo. It could turn out to be a horrible plan or it could turn out to be the ugly, tough change needed for the restructuring we all agree that they need…BUT we just don’t have enough data to properly assess the long term impact and outcome.

  • Keith Halperin

    @ Todd: I hear you- it’s right to calmly and quietly evaluate new ideas in the light of evidence. However, whatever merit this idea has is greatly diminished by the poor manner of its presentation. ISTM that one area that one area that “the Margaret Thatcher of Silicon Valley” clearly needs to “shake up” is Marketing Communications, aka “the Ministry of Corpaganda”.

    Cheers,

    Keith

  • Todd Noebel

    @Keith – And here we are in violent agreement with one another. Damnit, I hate when that happens.

    No matter what, this will be a fun one to watch.

  • Keith Halperin

    @ Todd: Likewise. Definitely interesting.

    Thanks again,

    Keith

  • Kristen Fife

    This is one of the best articles I have read supporting the decision Yahoo and Marissa Mayer have implemented. Having worked both from home and in the office, I can say that there is absolutely no replacement for F2F collaboration. “Productivity” isn’t just about the number of minutes worked, it’s about the results of such efforts, and clearly the current model doesn’t work.

    Kudos for a well-researched and laid-out article.

  • Keith Halperin

    @ Kristen:
    “I can say that there is absolutely no replacement for F2F collaboration.” I happen to agree with you, but just because that applies to you, doesn’t mean that applies to me, or to other people overall, since many jobs don’t require much of it, and even the ones that do don’t require it 40+ hrs/week.
    “Productivity”: since by-and-large productivity gains aren’t passed on as increased wages, benefits, or non-work time to employees, and it’s tended to reduce the need for greater hiring, how does increased “productivity” help US?

    Additional things I heard today on NPR re: the discussion:
    1) TC employees tend to put in 5-7 hours/week more work time than non TC employees, and ISTM that might more than make up for whatever loss in “productivity” may exist.

    2) Marissa Meyer had a special nursery built right next to her office. Will she allow all working parents to bring their small kids in to work to share it?

    3) If Yahoo is going to a Twen-Cen “Command & Control”-type corporate work environment where you must be onsite to work, wouldn’t it be fair to say that work can only be done onsite, so no answering/making phone calls, emails, texts, etc away from work? That would be both fair and ironic for Yahoo.

    Happy Friday, ‘Cruitaz!

    Keith

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  • Keith Halperin

    Hey id we’re talking productivity, then read this, Folks:

    http://www.salon.com/2010/08/25/german_usa_working_life_ext2010/
    WEDNESDAY, AUG 25, 2010 10:26 AM PDT
    “Were You Born on the Wrong Continent?”: America’s misguided culture of overwork
    Germany’s workers have higher productivity, shorter hours and greater quality of life. How did we get it so wrong?
    BY ALEX JUNG
    48 8 1
    more

    TOPICS: NONFICTION, ECONOMICS, GERMANY, BOOKS, ENTERTAINMENT NEWS

    Since the start of the recession, the number of unemployed in the U.S. has doubled. Those who are fortunate enough to still have jobs are often working longer hours for less pay, with the ever-present threat of losing being laid off. But even before the recession, American workers were already clocking in the most hours in the West. Compared to our German cousins across the pond, we work 1,804 hours versus their 1,436 hours – the equivalent of nine extra 40-hour workweeks per year. The Protestant work ethic may have begun in Germany, but it has since evolved to become the American way of life.

    According to Thomas Geoghegan, a labor lawyer in Chicago and author of “Were You Born on the Wrong Continent?: How the European Model Can Help You Get a Life,” European social democracy – particularly Germany’s – offers some tantalizing solutions to our overworked age. In comparison to the U.S., the Germans live in a socialist idyll. They have six weeks of federally mandated vacation, free university tuition, nursing care, and childcare. In an attempt to make Germany more like the U.S., Angela Merkel has proposed deregulation and tax cuts only to be met with fury on the left. Over multiple trips spanning a decade, Geoghegan decided to investigate how the Germans were living so well, and by extension, what we might be able to learn from them.

    Salon spoke to Geoghegan over the phone about Germany’s luxurious worker benefits, our own dysfunctional attitudes towards work, and how we can make our lives more like theirs.

    People in the U.S. often pride themselves for working more than our European counterparts. Why do we work so much in the first place?

    There aren’t any historical or cultural reasons for it. Americans famously had more leisure time than the Japanese back in the 1960s. I would say if you did a survey of most people who are in their late 50s or 60s, they will tell you that they take fewer vacations than their parents did. Now why did that change? It wasn’t because of the Pilgrims. People work hard in America, but there was a period where leisure time was increasing. I quoted Linda Bell and Richard Freeman in an article they wrote about what happened during the ‘90s. There was nobody to stop you from working longer. There was no government check, there was no union check as there is on excessive work as there is in Germany or elsewhere in Europe. These institutional checks are gone. So people feel like lab rats: “If I work an extra 10 minutes over the person in the cubicle next to me, then I’m less likely to get laid off.” It’s a very rational response.

    Aren’t we at least more productive by virtue of the amount of time we’re putting in?

    No. Look at their productivity rates. They’re like ours. I think we understate our hours and they overstate them, because they take so much time off and sneak off early from work. If the productivity rates being reported are officially the same, and if they’re understating and we’re overstating, they’re probably working more efficiently than we are, and maybe the fact that they’re taking time off has something to do with that.

    Why is it useful to compare ourselves to the Germans?

    Germany has the highest degree of worker control on the planet since the collapse of the Soviet Union. When I saw German labor minister Günther Horzetzky in April of 2009, he said “Our biggest export now is co-determination.” He meant that other European countries were coming up with versions of it.

    How did Germany become such a great place to work in the first place?

    The Allies did it. This whole European model came, to some extent, from the New Deal. Our real history and tradition is what we created in Europe. Occupying Germany after WWII, the 1945 European constitutions, the UN Charter of Human Rights all came from Eleanor Roosevelt and the New Dealers. All of it got worked into the constitutions of Europe and helped shape their social democracies. It came from us. The papal encyclicals on labor, it came from the Americans.

    But the Germans have a lower GDP than we do. Doesn’t that mean that our quality of life is better?

    One day we’ll get beyond that and see that the European standard of living is rising. You can pull out these GDP per capita statistics and say that people in Mississippi are vastly wealthier than people in Frankfurt and Hamburg. That can’t be true. Just spend two months in Hamburg and spend two months in Tupelo, Mississippi. There’s something wrong if the statistics are telling you that the people in Tupelo are three times wealthier than the people in Germany. Despite the numbers, social democracy really does work and delivers the goods and it’s the only model that an advanced country can do to be competitive in this world. I mean that not just in terms of exports, but in terms of being green at the same time. That we can raise the standard of living without boiling the planet shows how our measure of GDP is so crude.

    What are we missing when we measure the GDP?

    We don’t have any material value of leisure time, which is extremely valuable to people. We don’t have any way of valuing what these European public goods are really worth. You know, it’s 50,000 dollars for tuition at NYU and it’s zero at Humboldt University in Berlin. So NYU adds catastrophic amounts of GDP per capita and Humboldt adds nothing. Between you and me, I’d rather go to school at Humboldt.

    So much of the American economy is based on GDP that comes from waste, environmental pillage, urban sprawl, bad planning, people going farther and farther with no land use planning whatsoever and leading more miserable lives. That GDP is thrown on top of all the GDP that comes from gambling and fraud of one kind or another. It’s a more straightforward description of what Kenneth Rogoff and the Economist would call the financialization of the American economy. That transformation is a big part of the American economic model as it has morphed in some very perverse directions in the last 30 or 40 years. It’s why the collapse here is going to take a much more serious long-term toll in this country than in the decades ahead.

    Who is better off in a social democracy like Germany?

    Social democracy is good for the middle class even more than it is for the poor. We’ve got it completely backwards here. It’s the relatively educated and well-to-do that do well on European socialism. What’s the cash value of Humboldt education to people who are high school grads? Zero. For the German upper middle class, it’s worth 50,000 a year. That’s the difference. You have to remember, even if there’s universal healthcare, the more educated people always use the system better than the less educated people. They know how to make it work for them.

    By some measures though, it’s good for everybody. America has this wonderful freedom and openness and this ability to create yourself out of nothing. We’re just much more individualistic a country. I think we have overdosed a little bit on that, but I share that. I’m an America and I’m glad I was born in the U.S. and I always will be. But in terms of receiving the benefits of economic growth and both in terms of enjoying life and enjoying the richness of life in a developed country both in terms of private goods and public goods, quality of life that comes from that and leisure, I think Germany has an enormous amount to teach us.

    Can we adopt this German working life in the U.S.? Is it even feasible?

    We do things that are more socialist than Europe does, but we don’t call it that. We have some things left over from the New Deal that a lot of European social democracies aren’t even close to, like time-and-a-half for overtime and social security. The single biggest single-payer socialist medical system in the world is in the United States: Medicare. Untouchable. Defended by Republicans. But it’s more socialist than the German health care system. The problem with it is that it coexists with several other systems that are not socialist at all and just pay scandalous windfalls to private vendors.

    The whole system is just grossly inefficient. All of those European countries have one system. There’s cost control. There’s no cost control here; there are four or five systems competing simultaneously. To get cost controls, we’re going to have to have one system of payments for everybody. Now either we go to a free market system or a German insurance system or a single payer system. Although I don’t understand how it could happen at the moment, I just see no alternative in the long run except that the U.S. goes single payer across the board. Not because I believe in single payer over these other systems but just because of the facts on the ground. You’ve got to have one system and we aren’t going to trash Medicare. That will never happen.

    Thomas Friedman’s “flat world” theory predicts that in the future, all countries will be competing on an equal playing field — paving the way for highly-populated countries to dominate the world economy. Do you agree with him?

    How does he explain the existence of Germany? What country has the highest exports in the world today? It’s the country with the highest wage rates and union restrictions. Germany has become more of a power, not less of a power as the world has become more global. Our problem isn’t competing with China, it’s competing with Germany in China. We’re so focused on China all the time, and low-wage assembly stuff, that we’re missing what’s going on. It’s Germany that’s going in and selling stuff in China that we ought to be selling that would hold down the trade gap between the U.S. and China. It’s not China’s fault; it’s Germany’s. But no one wants to talk about that. Because that would raise questions about the whole U.S. model: Why is this high-wage country beating us? Why are the European socialists beating us? It’s too subversive an idea so we don’t allow in the discourse.

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