Live data from Hacker News

Advice for US entrepreneurs who move to Europe

english.martinvarsavsky.net

141–150 of 160 posts

Re: Advice for US entrepreneurs who move to Europe

#141

There's some light and some shadow in this article. I can't tell about southern europe, but most of this does not apply in germany - even the parts that are specifically about germany. There are recommendations about how a work-place should look like but they are mostly common sense [1] and not mandated by law, at least not in the IT Business. There is a law about workplace safety [2] but that's like 12 pages long an…

It protects the employees on one side, but why would I want them to work more than 8 hours a day on a regular schedule when productivity drops sharp after 8, maximum 10 hours. Do you have any modern (i.e., post 1940) evidence for this? What little empirical evidence I've seen suggests 60 hours is optimal. (But what little evidence there is applies to industrial fields, and likely doesn't generalize to knowledge work.…

The usual model of the effectiveness of overtime in software is described in detail at http://www.stevemcconnell.com/rdvolot.htm . Most of the direct references are not from experiment but based on observations of effective work environments.

You linked to a claim for skepticism, but did not mention the the extensive counter-examples from the first commenter, at least as it applies to some subfields of work. The quote I find most persuasive is: "The best data on sustained intellectual activity comes from financially independent authors. While completing a novel famous authors tend to write only for 4 hr during the morning, leaving the rest of the day for rest and recuperation."

That is a strong suggestion that 4 hours of creative work is about the daily limit. Why is this not a sufficient counter-argument for a broad "60 hour is optimal" recommendation? After all, a self-supporting author has good economic inventive to create more works, but this puts a limit of 28 hours per week on creative work.

Your second link is based on the Nov. 2001 newsletter of "a national firm of Construction Consultants and Claims Specialists, assisting owners and contractors in achieving profitable and trouble-free construction projects", and not, say, a peer-reviewed journal or research organization. The newsletters most recent citation is from 1992, so a bit over 20 years old, instead of a bit over 60 that you are disdainful about.

Can you find anything more recent, and research-oriented, which provides better evidence for your "60 hours is optimal" suggestion? In your analysis, please note, as the newsletter points out, that "The fatigue resulting from a daily two-hour commute is considered similar to a daily increase of two working hours.", so you can't look at a 40 hour work-week in the City of London and assume that that's the only factor to consider, if the commute takes an hour each way. (The newsletter highlights this because in some construction jobs the crew is housed on-site, so there is no commute, which makes the direct interpretation of the chart results difficult.)

Because the overcomingbias.com references didn't include more recent, and more academic/research oriented papers, I suspect both it and you did insufficient research.

In any case, I don't think you understand the math of the evidence that you report. The contracting job numbers say that it's better to hire 1.25x people, who work 40 hours per week, than it is to hire 1x people who work 60 hours per week. Assuming the cost per hour are equal - which it often is for hourly construction work - then the first gives the company more productivity for the same cost.

The only way that 60 hours per week is optimal for the company is if the workers are paid constant rates no matter how much they work per day, or if it wasn't possible to hire 25% more workers (e.g., because of the size of the site, or number of hours available to work). But that's not good incentive to get people to work longer hours, is it.

So I don't understand how you drew your conclusion that 60 hours is optimal.

Here are some of the more recent (post-1940s) papers on this topic, quoting from the CDC, which is one of the top Google hits for this topic, at http://www.cdc.gov/niosh/topics/workschedules/abstracts/daws... :

> Few studies have directly investigated the financial consequences of long working hours. For example, in a study on white-collar jobs, performance decreased by as much as 20% when 60 or more weekly hours are worked (Nevison, 1992). Data from 18 manufacturing industries in the U.S. show that a 10% increase in overtime resulted, on average, in a 2.4% decrease in productivity measured by hourly output ( Shepard and Clifton, 2000). High overtime levels can cause poor employee morale, which can affect productivity and absenteeism. For example, Circadian showed that 31% of extended hours operations that have extremely high overtime hours (25% or greater) also had poor morale, compared to only 13% of companies with low or normal overtime (Kerin, 2003). Long working hours and overtime contribute to increased worker fatigue and safety problems. For example, the average cost of workers compensation claimed per individual at extended hours facilities that reported severe fatigue problems was considerably higher ($4,037) than at facilities that report moderate ($2,240), minor ($981) or no ($276) fatigue problems (Figure 4) (Kerin, 2004).

Note that productivity is only one of the factors. Health costs, impact on family life, and accident claims are others (though the last can be included in the productivity numbers, as they seem to be for the construction numbers).

The Shepard and Clifton paper uses post-1940s data, and would be a better reference than the newsletter. I'm not paying for access to the full paper. You?

Again, don't misinterpret the 2.4% decrease from 40- to 60-hours-per-week to say that working 60 hours is better for the company than 40. If the employees are paid per hour, than it's better to hire more people than it is to have the same people work overtime. (Again, ignoring secondary effects; perhaps the factory isn't large enough for 25% more people.) Plus, the employees will have better morale, and bad morale decreases productivity.

Another, more modern review (and definitely better than a company newsletter) is "Working Long Hours: A Review of the Evidence, Volume 1" (2003), from the Institute for Employment Studies in the UK ( http://webarchive.nationalarchives.gov.uk/+/http://www.dti.g... ). It references "Bienefeld (1972) who observed that major reductions in hours in British economic history preceded rather than followed peaks of productivity growth", though "this evidence may disputed." Still, I find nothing in there which gives strength to your "60 hours is optimal" suggestion. If anything, most of the research is aimed at determining if 35 is a more optimal number than 40.

Based on your termination of our previous exchange on the similarity of employment to a monopoly, I'm not surprised that your analysis seems weak. Your math seems wrong and your citations poor. (BTW, in that monopoly thread I've cited several economics papers which explore the model I outlined, and the developers of that model received the 2010 Nobel Prize in economics. I've also cited several papers which use the factors that you say you've never seen in economics models. This supports my belief that your analysis seems weak.)

Re: Advice for US entrepreneurs who move to Europe

#142
post #26

Earlier quoted context omitted.

A ... well, I'm not going to get specific, as he's probably not too hard to locate via facebook or something, but a person I know through my wife was ranting about how all entrepreneurs are dishonest thieves at dinner the other day. Granted, this was an after-a-few-bottles-of-wine chat at the table, not a serious, reasoned opinion from someone who I do respect, but still, it's not an uncommon opinion here in Italy.

Unfortunately, this is often true here in Italy: The main reason, imho, is that rules are often so difficult to follow that selection is working against the more honest entrepreneurs...

Exactly. One of the first people many Italians think of when they hear 'entrepreneur' is Berlusconi, whose 'big idea' wasn't something new or clever or otherwise particularly innovative, but a sneaky way around the state television monopoly. I think it's an example that shows both sides of the coin: the oppressive state, and the "entrepreneur" being not an innovator, but someone good at bending the rules. So yeah, that's probably where that comes from, but it's a vicious circle, because people look down on those who are doing something new and creative as well.

Re: Advice for US entrepreneurs who move to Europe

#143
post #87
post #25

Earlier quoted context omitted.

> Can't afford to treat your employees like humans? Want to give them big bonuses and then fire them the following year so they can't pay the mortgage on that house they put a deposit down on with that bonus? Don't want to shell out a bit of money on decent offices, and rather shove them in some little basement somewhere? Isn't this something the market will mostly take care of, especially in tech where people can ea…

Isn't this something the market will mostly take care of Only if there is a perfectly functioning market. Which there often isn't in many cases. Hence the laws.

I don't think I need to spell out that Italy's laws and government are probably not what most people think of when they think of "perfectly functioning", right?

Markets often work well even if they're not "perfectly functioning". Governments certainly solve other kinds of problems decently even if they are not "perfectly functioning" either. I'm pretty happy with the health care here in Italy, for instance.

Re: Advice for US entrepreneurs who move to Europe

#144
post #83

Earlier quoted context omitted.

The work ethos is different as well, europeans tend to regard extreme outliers in wealth as extreme outliers, less as role models. I think part of these stems from the fact that some of the extreme outliers in europe (in terms of wealth or political power) often inherited their wealth. Whereas the USA has the attitude that "This is America, the land of oppertunity, where an illiterate immigrant can step off the boat…

I disagree with you, i think it has much more to do with the concept of happiness.. In US where the capitalism is too strong, people tendo to believe that wealthy = happiness Despite not been a european, but a brazilian, i think europeans understand that happiness its a more tricky and uneasy concept to conquer.. and is made of much more values.. even the simplest ones.. They are far more sophisticated in human relat…

Interesting perspective, I hadn't thought of that.

Re: Advice for US entrepreneurs who move to Europe

#145
post #3
post #2

I'd be living on a beach in Italy right now were it not for the visa situation. Anybody know a way around the 90-day rule for Americans?

If you have enough money take up residence in Switzerland. Tax rates in certain parts are negotiable as long as you do not earn money in Switzerland and we are part of the Schengen Area which allows you to travel freely within most of Europe.

How much money do you need? :)

Re: Advice for US entrepreneurs who move to Europe

#146
post #141

Earlier quoted context omitted.

It protects the employees on one side, but why would I want them to work more than 8 hours a day on a regular schedule when productivity drops sharp after 8, maximum 10 hours. Do you have any modern (i.e., post 1940) evidence for this? What little empirical evidence I've seen suggests 60 hours is optimal. (But what little evidence there is applies to industrial fields, and likely doesn't generalize to knowledge work.…

The usual model of the effectiveness of overtime in software is described in detail at http://www.stevemcconnell.com/rdvolot.htm . Most of the direct references are not from experiment but based on observations of effective work environments. You linked to a claim for skepticism, but did not mention the the extensive counter-examples from the first commenter, at least as it applies to some subfields of work. The quot…

I should have been more clear - I meant for the phrases "what little empirical evidence I've seen" and "likely doesn't generalize to knowledge work" to indicate my lack of confidence in the little data I've seen. (Not to mention the fact that my entire post was just a question, together with links one discussion of a little bit of data.)

I'll take a look at your CDC links and see if they answer my question.

Incidentally, my apologies for not responding to your reply to me - I didn't notice it on Christmas afternoon and I just logged on today. I'll take a glance at what you wrote.

Re: Advice for US entrepreneurs who move to Europe

#147

Earlier quoted context omitted.

There are some valid generalizations about europe. There are some mandated minimum holidays for example (4 weeks IIRC) and the tendency to have stronger employee rights. The work ethos is different as well, europeans tend to regard extreme outliers in wealth as extreme outliers, less as role models. The problem is that this article takes some assumptions that might be true for spain and uk and tries to sell them as '…

"The work ethos is different as well, europeans tend to regard extreme outliers in wealth as extreme outliers, less as role models. What does that have to do with work ethos? Do you think there is a strong correlation between working hard and the dream of becoming extremely wealthy? Of the four options, (born poor/rich, working hard/slacking) I agree that (born poor & slacking) is highly unlikely to make you wealthy,…

>> "The work ethos is different as well, europeans tend to regard extreme outliers in wealth as extreme outliers, less as role models.

> What does that have to do with work ethos? Do you think there is a strong correlation between working hard and the dream of becoming extremely wealthy? Of the four options, (born poor/rich, working hard/slacking) I agree that (born poor & slacking) is highly unlikely to make you wealthy, but that is about it.

I'm sorry I was unclear. I meant that as a list of items that tend to be different not that the work ethos is different in the issue of rich people as role models.

Two minor nitpick: Studies show that of the 4 options (born poor/rich, working hard/slacking) two are bad: Born poor is highly unlikely to make you wealthy. Slacking will make things worse, but in general the equation "born (modestly) rich -> die rich" and "born poor -> die poor" holds true. [1]

Calling in sick in Germany is a bit more difficult: By default you only need a doctors approval after the third day. The employer can demand a medical certificate on day one if they choose to. Small businesses get most of the wage paid by the health insurance for the period that they have the doctors certificate, so they tend to be stricter about it.

[1] see for example http://www.americanprogress.org/issues/economy/news/2006/04/... for the american case, sadly social mobility is not on an acceptable level in germany either. Nordic countries tend to be better in that respect.

Re: Advice for US entrepreneurs who move to Europe

#148
post #88

Earlier quoted context omitted.

I'm not certain about it but I think debts from criminal offenses are not cleared on personal bankruptcy. Sozialversicherungsbetrug (not paying your employees social security) and tax evasion are criminal offenses for the manager of a company so they'd not be cleared. However, if you start up a company with employees you'd want a limited liability company of some form anyways, so personal liability only extends to cr…

I'm not certain about it but I think debts from criminal offenses are not cleared on personal bankruptcy Not all debts can be cleared by bankruptcy in the USA AFAIK. I don't think you can clear college tutition fees with bankrupcty.

Yes, I heard that. The tricky part is that the debts that a failing startup is most likely to rack up are the ones that later translate into criminal charges and the manager is personally liable for that.

Re: Advice for US entrepreneurs who move to Europe

#149

"state mandated severance pay packages... a direct attack to start ups" While it's true that many startups fail, I wouldn't go so far as to say severance pay is an attack. You can fire someone with two weeks notice in Spain, paying 33 days of severance for every year paid (used to be 45). AND take home salaries are usually lower. What is done in practice, to compare worker compensations across countries, is to factor…

Starting a company is still not that easy in the rest of Europe, eg Belgium there are capital requirements of EUR18000 to start a company still.

Wow, that's definitely not making it easy for a startup.

Re: Advice for US entrepreneurs who move to Europe

#150

"state mandated severance pay packages... a direct attack to start ups" While it's true that many startups fail, I wouldn't go so far as to say severance pay is an attack. You can fire someone with two weeks notice in Spain, paying 33 days of severance for every year paid (used to be 45). AND take home salaries are usually lower. What is done in practice, to compare worker compensations across countries, is to factor…

This would indicate that starting a company in Spain is not quite as easy as you say:

http://www.doingbusiness.org/data/exploreeconomies/spain/#st...

You are talking about a "real" (Limited Liability) company, right?

Post reply on HN