Why Americans No Longer Work More Than Others: The Hidden Policy Shift

Americans no longer work significantly more than people in other advanced economies, mainly due to a decline in U.S. employment and rising participation abroad. The study finds that expanded U.S. government benefits, especially health programs, reduced incentives to work, driving much of this shift.

For decades, Americans were known for working longer hours than people in other rich countries. That is no longer the case. A new study by economists from the Federal Reserve Bank of St. Louis, the University of Minnesota, the National Bureau of Economic Research, and the National University of Singapore shows that the gap has shrunk significantly.

Back in the 1990s, Americans worked far more than Europeans and others in advanced economies. But by the late 2010s, about half of that difference had disappeared. The change is not because Americans suddenly chose to work less alone, but because two things happened at once. Work participation in the United States declined, while in many other countries it increased.

A Global Shift in Work Patterns

Looking at long-term data from the 1970s onward, the pattern becomes clear. In the 1970s, workers across advanced economies had similar working hours. By the 1990s, Americans had pulled ahead. Then, after 2000, the trend reversed.

Countries like Germany, France, and the United Kingdom saw more people entering the workforce, especially women. At the same time, the U.S. experienced a drop in employment rates. This means the main change is not about how many hours people work each week, but whether they are working at all.

Economists call this the “extensive margin,” and it plays a key role in explaining the shift. Simply put, more people in other countries are working, while fewer people in the U.S. are.

The Role of Government Benefits

The study finds that the biggest reason for the U.S. decline is the rise in government benefits for people who are not working. Health programs, especially Medicaid, are at the center of this change.

Over time, millions more Americans have gained access to public health insurance. This has made life without a job more financially manageable for some people. While these programs provide important support, they can also reduce the need to seek employment, particularly for lower-income groups.

In some cases, people face what economists call “benefit cliffs.” This happens when earning more money leads to a sudden loss of benefits, making work less attractive. As a result, some individuals choose not to work or to work less.

Why Other Countries Are Different

Other advanced economies also have welfare systems, often more generous than those in the United States. However, their systems are designed differently.

In many countries, healthcare is universal and not tied to employment. This means people do not lose health coverage if they stop working. Because of this, employment decisions are less affected by benefit structures.

Instead, rising wages, better job opportunities, and social changes have encouraged more people to work. Women, in particular, have joined the workforce in larger numbers. Jobs have also become less physically demanding, making work more appealing.

These factors have pushed employment up in non-U.S. countries, helping close the gap with the United States.

What It Means for the Future

The findings challenge common ideas about why people work less or more. While technology, globalization, and demographics all play a role, they do not fully explain the changes seen in the United States.

The study shows that policy choices matter a great deal. The way benefits are designed can influence whether people decide to work. When benefits are high or quickly reduced as income rises, they can unintentionally discourage employment.

The researchers also point out that not everyone responds the same way. Lower-income individuals and those receiving benefits are more sensitive to these incentives. This means small policy changes can have big effects on overall employment.

In the end, the decline in America’s work advantage is not just about changing attitudes toward work. It reflects deeper differences in how countries structure their economies and support systems. As governments think about labor shortages and economic growth, these insights could shape future policies on work and welfare.