This may explain why capital intensive industries such as auto and steel have tended to have relatively high hours. The combination of hours-invariant costs, the hours externality of salaried employment and capital investment create powerful incentives for employers to schedule long hours and to oppose hours reductions. In the United States and Japan, the postwar era has brought a cycle of work and-spend, as shown in Figure 4.2. Employers set schedules and workers conform to them. When productivity rises, employers pass the gains along in the form of higher wages, rather than reduced worktime.
Workers take the extra income and spend it.
They become accustomed or habituated to the new level of spending and develop aversion to their previous, lower level of spending. Preferences adapt such that workers are unwilling to reduce current income in order to get more leisure. They respond to surveys saying they are satisfied with their current levels of hours and income. That is, the surveys cannot distinguish between workers 'getting what they want' or 'wanting what they get'. The existence of a work and spend cycle has a number of implications.