The Economics of Working 80+-Hour Weeks

Or: Why Don't Banks, Biglaw, Consulting, and Accounting Just Hire Twice As Many People and Work Them 9-to-5?

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There are many jobs available for people who want to work a defined shift, and to leave their work behind when they leave the office. But there are also careers that require an immense time investment, mostly front-loaded. Most of these jobs pay well, simply because there’s a tradeoff at work: if you give up all of your free time, you'll be rewarded with a bit more money now and a lot more of it in the future, at which point you might conceivably downshift to a relaxing seventy hours a week schedule so you can enjoy the fruits of your labor.

But: why? Why is it that some career tracks more or less require a period of workaholic hazing for several years in order to stay on the elite track? It's not ubiquitous, but it's pretty common, and the pattern persists even when it sometimes involves literally working people to death.

One way to look at it is that many of these jobs are fundamentally apprenticeships. There are some technical skills that can be transmitted through textbooks, lectures, and exams, and then there's tacit knowledge that can only be acquired through experience. Meanwhile, the work is lumpy: an investment banker is either working on a deal, or not, and if they're working on a deal they're slammed until it closes. An accountant in the middle of an end-of-year audit has a serious deadline to meet. Lawyers also run into situations where the required turnaround time soaks up all of their waking hours.

And realistically, the average person's capacity and willingness to do back-to-back all-nighters, or to sleep on the floor of the office, and to answer the last email of the day four hours before sending the first email of the next day, will diminish with age. But the pacing of these deals does not diminish, and in many cases transactions are bottlenecked by decisions from the most senior person on the team, who is also likely to be the oldest. The convexity of expertise strikes again: in knowledge work, skill accumulates partly as a function of time spent, and there is no real ceiling on productivity, so whoever has put in the most time—ideally time that could be described as "deliberate practice," not as "doing repetitive work in exactly the same way over and over"—will tend to come out ahead.

So part of what banks, accounting firms, law firms, and consultants are optimizing for is maximizing the number of people who 1) have X thousand hours of directly relevant experience to rely on, and who 2) can take a red-eye flight across a continent and then hop into a cab to go directly to a meeting where they'll give a coherent presentation and be effective at answering questions.

The only way to do this is to massively front-load that experience. The bank that's working its first-year associates to the bone is the bank that, years later, will have more VPs with the necessary experience to get a deal done.

There are less flattering reasons for this dynamic, of course. Some of these organizations just aren't run very effectively, and a good way to bump up someone's hours-worked-per-week is to wait until Friday afternoon to inform them of a critical Monday deadline. But that's also part of the cadence of business generally, and of dealmaking in particular. Monday morning is the ideal time to announce a merger because it gives you a good sixty hours from the end of day Friday to Monday morning during which everyone can focus on hashing out the last few terms of the deal, without as many external distractions (including the distraction of a leak, or of seeing stock prices react to the latest rumors). The preliminary work is more spread out, but crunch time will typically happen during non-traditional working hours, precisely because they're non-traditional working hours.

In any situation like this, it's important to avoid falling into the trap of treating all of these practices as specific choices people made with precise goals in mind. Marvin Bower did not sit down one day and decide that, thenceforth, McKinsey associates would be ghosting friends and family in pursuit of maximizing stakeholder value and delivering on KPIs. Different firms had different cultures, and accepted different tradeoffs between money and quality of life. It turned out that in some fields, there was a set of tradeoffs that led firms to prosper, and another set that caused them to get left behind. Ultimately, this model persists because it fits the contours of the job: there's a lot to learn, new workers start out knowing almost none of it, deadlines are either unpredictable or predictably inconvenient, and these are all tournament-style businesses where any given deal will have a few big winners and some almost-as-good also-rans whose consolation prize is that they can reuse a bit of their research for next time. It's a brutal model, but it's hard for anyone to invent a better one that still works.

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Read More in The Diff

The Diff has covered these kinds of careers in a few different contexts:

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