The push for a four-day workweek has gained traction during the pandemic, but it’s not a new idea. Then vice-presidential candidate Richard Nixon even campaigned on it during the 1956 election. Around the same time, Wall Street shortened its trading hours from five and a half days a week to only five. We got rid of Saturday trading hours back in the 1950s. We had an extra half hour in the morning back in the 1980s. The real question is, how long should they be open?
The idea is also gaining traction when Congress representative Mark Takano from California introduced federal legislation in July 2021 to shorten the standard workweek to 32 hours. Since businesses including Wall Street have shortened the workweek in the past, could it happen again? What would happen if the four-day workweek came to Wall Street?
The pandemic has shifted people’s opinions about work, employees are making it clear that they like the flexibility of working from home, and companies are taking notice. That’s one of the discoveries that people have made with the COVID working from home that they can have a life and do their job as well, don’t have to go and stay in the office 10 hours a day and pretend to be doing things just burning the time.
Preliminary trial runs of a four-day workweek in Iceland suggest that working fewer hours could lead to increased productivity. Some US companies have adopted or are piloting four-day workweeks, such as Kickstarter and social media software company, Buffer. But there are still questions about how the US economy may be impacted on a larger scale if a four-day workweek becomes the norm.
When we talk about having a pilot program for a four-day week in your business, we’re really talking about having a conversation in your business about what productivity truly is, how you’re going to measure it, and how you’re going to improve it. And how do you support a conversation around reducing working hours so that we can actually get those benefits into our society? And it might not be a four-day week – it might be reducing work hours to 32 hours over 5 days.
In March 2021, results of an internal survey showed that junior investment bankers at Goldman Sachs reported that the working conditions were “inhumane,” saying that they were working more than 100 hours per week and only had about four hours a day for sleep and self-care.
The idea is that we create this groundswell that understands that working with the number of hours that we are now and burning out and ruining our lives, ruining our health isn’t actually worth it. Whether it’s investment banking, wealth management, financial planning – it’s always been a culture of heavy hours and working a lot. There’s evidence that a shorter workweek could be in a company’s best interest. In August 2019, Microsoft Japan tested a four-day workweek without pay decreases, which led to a 40% improvement in sales per employee compared with the previous summer.
Most of the employees also said they liked the change. So what are the odds US exchanges could shorten trading hours? And how could it impact markets? If US exchange hours were changed to a four-day schedule, there would likely be a big short-term impact. Essentially, the trading volumes will remain the same, but you have less time. So you have to cram in all those buy and sell orders into four days instead of five days, so you get more volatility.
A shift to a four-day trading week would probably also require investment into how the market’s electronic trading infrastructure operates. You would think in this computerized world that we should just let the computers run 24 seven, but the reality is a lot of people have to monitor those computers, and it’s not just the technical staff making sure they’re working. It’s the people who are working on customer orders. There’s a trade-off between the human element of the people who work in the markets and the machine element that could go all night long.
Shorter trading hours could also slow down the process of completing a trade. But there could be potential benefits to shortening hours, such as attracting more diverse talent to the industry. It’s no secret that the finance profession and trading especially are overwhelmingly male, and in the industry, we’re doing a lot of navel-gazing to say, how can we fix this problem? And one of the things floating around in Europe is the idea of shortening their trading hours.
Culturally, it would take a lot to make Wall Street work fewer hours, but that doesn’t mean it’s impossible. The financial sector traditionally has been one that folks work a long time. And as we look at a new cohort of workers entering into the workforce, we can see a shift here because it’s happening in other industries. It’s happening all over the world.
Even though the general public may be excited about a four-day workweek, Wall Street has actually made calls to make market hours longer. When the market closes at four o’clock in the East, it’s still only one o’clock on the West Coast. There are a lot of retail investors who are left basically unable to trade until the next morning. They would love to have longer hours, but every time that suggestion comes up, the people on the East Coast say no, because even though the computers don’t complain, the people who have to watch those computers do.
Even though the markets are open and close, there is still trading outside of standard operating hours. The regular trading session starts at 9:30 am Eastern time, and it closes at 4 pm Eastern time. But stock trading can also occur as early as 4 am and as late as 8 pm. Most exchanges now offer after-hours trading where investors can buy and sell securities outside of the regular trading session.
There are pros and cons to trading during extended hours. Stocks react more drastically to a company announcement, which usually comes out after hours. So if you want to bet on a company’s earnings, and you would usually buy and sell the stock after the bell. It is pretty speculative in nature that you want to capture the profit in a very short amount of time.
Few people are trading after hours, which means it may be harder for a seller to find someone to buy a stock at a specific price. If you’re trading a US stock, you’re trading it after hours. Oftentimes that execution will be executed the following day when markets open. So that sometimes is not the best pricing from an investment perspective on execution.
It’s also important for investors to have time to regroup and strategize about the next day’s market action. Companies want the investors to have the time to digest the news, to go through all the numbers in the earnings report, and really make a rational investment decision instead of acting on it immediately and sometimes emotionally and irrationally. If the markets already function outside of their current set schedule. Does that mean hours could be extended rather than shortened? Even the market is only open from 9:30 to 4:00, and most traders monitor the news 24/7, extending trading hours even more, would be a lot more consuming for them. Investors really don’t want the people who are managing their retirement plan to be any more fatigued and tired when they’re doing the trading.