Productivity Push Means End to Carefree Weekends
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The Fiscal Times
July 30, 2011

Once reserved for family time, day trips and relaxation, the American weekend has become the latest casualty of the Great Recession. For many Americans, more of the work week is spilling over onto Saturday and Sunday as companies tighten payrolls and ask employees to put in more hours rather than hire more workers. Over a third of Americans currently work on the weekend and on average, people worked 30 minutes longer on weekends in 2010 than in 2009, from 5 to 5.5 hours, according to the U.S. Department of Labor’s American Time Use Survey released last month.

Overtime and after-hours work are also on the rise. Agency statistics also show that average overtime hours in the manufacturing sector rose to 4.2 a week in April, up from 2.8 in January 2009. A third of U.S. households now have a home office, and of those, 61 percent are for after-hours work, according to Investor’s Business Daily. Today’s tough job market allows employers to demand more from their workers. In turn, longer hours may be taking a toll on employees, their families, and even their work performance.

“The 40 hour work week? Forget about it. I just work seven days,” says Tom Smith of Anua Environmental Products U.S., an Irish company that sells wastewater management systems. The company hired Smith last October as director of marketing. But when the firm’s director of operations decided to return to Ireland, Smith’s boss called him in to ask what else he could do—the firm’s sales are tied to new housing starts, which are down, and they needed to cut overhead. Could Smith take over the operations role? “If it’s a matter of keeping my job, you’re damn right I can,” Smith replied. He started the dual role July 1 and works 10- to 11-hour days during the week and 4 to 5 hours on Saturdays and Sundays.

Dan Bischoff is also helping his firm streamline by doing two jobs. His employer, lendio.com, which links small businesses with loans, is flying high—last year it turned up number 34 on Inc. magazine’s list of the 500 fastest-growing companies, and this year it’s landed $6 million in new venture capital funding. After the firm’s e-mail marketing specialist left, Bischoff’s supervisors gave him that job on top of his regular role as communications director. He says his managers are doing the right thing: the two roles mesh well, and he thinks everyone can find efficiencies when they have to. So far, he’s only occasionally needed to put in extra time to handle the extra workload, though he’s only been doing both jobs since early July.

Pushing the Limit
Personnel moves like those are helping corporations crank up productivity levels. U.S. productivity growth nearly tripled from 2008 to 2010, according to the Organization for Economic Co-operation and Development. In turn, keeping up output with fewer workers is driving up profits but depressing new hiring. In 2010, earnings at the companies on the S&P 500 were up 47 percent over 2009 and are expected to increase another 15 percent this year. But profits aren’t translating into new hires. Large S&P 500 companies, the top employers in the country, added a mere 3.2 percent more net jobs last year, according to an analysis by USA TODAY, which translated to only 557,000 jobs. That’s not nearly enough to make a dent in the 7.5 million jobs lost since the recession began.

American and European employers take advantage of productivity gains in very different ways, according to economist Howard Rosen, a visiting fellow at the Peterson Institute for International Economics*. Rosen says Europeans treat labor as a fixed cost, but for Americans it’s a variable. German and U.S. firms, for example, both increased their output per worker-hour since the recession, he says. But German companies used the productivity rise to ratchet up exports, while U.S. employers used it to reduce their workforces and ask the remaining employees to do more. At the end of 2010, the U.S. unemployment rate was the highest of any Group of 7 country, even while U.S. employees worked more hours per week than those in any of their G-7 partners except Italy.

Overtime was associated with poorer perceived
general health, increased injury rates,
more illnesses, and increased mortality.


But though high productivity has improved U.S. corporate bottom lines, there may be hidden costs of loading more hours onto current workers. A 2006 report from the Center for WorkLife Law at the University of California’s Hastings College of Law noted a 400 percent increase in the number of lawsuits since the mid-1990s against companies for allegedly engaging in “family responsibilities discrimination” related to overtime and inflexible work schedules. Employees won cases in which they were given work schedules that they could not meet because of child care or elder care responsibilities—the largest verdict for a single employee was $11.65 million.

And more work doesn’t always translate to higher productivity. An analysis in 2000 of the effects of overtime hours found that it lowered productivity per hour across all 18 manufacturing industries studied. And Joan Williams, director of the Center for WorkLife Law, cites research that overworked employees make more mistakes and that their poorer health leads to higher insurance costs for companies. There’s even evidence that more overtime leads to higher rates of marital discord and divorce, which in turn decrease worker productivity, she adds. 

The 40-Hour Week
If the American work week is expanding, it’s a reversal of historical trends. Workers’ hours declined from 70 per week in 1830 to 60 by 1890 and then about 50 by 1920. In 1938 Congress passed the Fair Labor Standards Act, which established overtime for more than 40 hours. But further legal restrictions on the work week are unlikely in the near term because of declining labor union participation—just 12 percent of wage and hour workers belonged to a union in 2010, down from 27 percent in 1940.
 
Workers are becoming increasingly unhappy with the changes—back in 1999, 59 percent of workers were very satisfied with the number of hours they were working, according to a study by Rutgers University’s Center for Workforce Development. By 2009, only 37 percent felt that way. And only 40 percent say they’re satisfied with their ability to balance work and family, down from 51 percent in 1999. This can cause some of the most qualified workers, mainly women, to opt out of the workforce. Their responsibilities at home make working more than 40-hour weeks impractical.

If workers are unhappy, they have reason—longer hours may put their well-being at risk. A 2004 review of studies by the federal Centers for Disease Control and Prevention, page iv addressed general health effects of extended working hours. The reviewers concluded that in 16 of 22 studies, overtime was associated with poorer perceived general health, increased injury rates, more illnesses, and increased mortality. 

Yet Christopher Melillo, managing partner with executive search firm Kaye/Bassman International, sees a positive side to companies asking more of their employees. “We’ve seen a renewed passion for job ownership,” he says. “I think we became somewhat complacent . . . The market as a whole has recognized that we have got to do a better job. And that means one thing—it means working harder.”

Employers can make those demands at times when work is scarce. “It’s good to have a job right now; it’s hard to complain. I’d rather have too much work,” says Bischoff. His outlook fits today’s job market: from 1999 to 2009, the average amount of time that an unemployed worker spent in a job search went from slightly more than three months to more than seven. It’s the longest average length of unemployment since 1948 when the data were first collected.

Smith knows that well—he was unemployed for much of last year before landing the job as marketing director, and it’s changed what he’s willing to give his company: “Anything I used to do for fun doesn’t exist anymore,” he says. “But after being out of work for nine months, that’s ok.”

*The Peterson Institute for International Economics is funded by Peter G. Peterson, who also funds The Fiscal Times.

STEVE YODER writes about business, real estate and other domestic policy issues. His work has appeared in print and online at Salon, The American Prospect, Men's Health, The Crime Report, and elsewhere.