Decades ago the U.S. tied healthcare to employment. It had some big positives at the time. I think it has proven to have more negatives as time has unfolded. Here is one of them. If you reduce hours per worker by, say, 10% you just pay each worker 10% less and hire 10% more workers, right? It's not so simple. If you try to cut the health insurance premium of each worker by 10% the policy becomes unattractive. If you…
It’s slightly worse than that. If you have 90 units of work to be done you might hire 9 workers at 10 units each. If the standard work goes down by 10%, you now need 10 workers at 9 units each. Your workers have increased by 11.1% (given by 1-1/(1-0.1)) A reduction from 40 to 32 would reduce hours per worker by 20% but increase workers and total health care costs by 25%.
Assuming per-hour productivity is constant, which it is not; productivity goes down with more hours worked (both in a “full work week” and in the annual number of full work weeks.)