Tight labor market means longer hours for nation’s workers

In an ever-tightening labor market, many employers are following a simple credo: If you can’t find enough workers, give the ones you have more work.

While worker shortages are frustrating businesses, they’ve quietly provided a financial boon to many full-time employees, who are notching lots of overtime, and part-timers, who are toiling more hours or shifting to full time.

That’s lifting weekly paychecks, and the broader economy, even as average hourly earnings have increased only modestly. Yet some firms are starting to worry about the effects of pushing staffers too hard.

Private-sector workers put in an average 34.5 hours a week for the second consecutive month in December, the busiest such stretch since early 2016, Labor Department figures show.

The trend is more pronounced for production employees in industries such as manufacturing and construction. In November and December, those production workers on average logged the most hours since 2014.

And factory-floor workers clocked an average of about 42 hours weekly in the second half of 2017, behind only 2014 as the most work-intensive six-month stretch for that group since 1945.

“There just aren’t enough people to do the job anymore,” says Peter Guarraia, manufacturing practice leader for consulting firm Bain & Co. “And so workers are getting more hours.”

Their weekly overtime averaged a historically high 4.5 hours in October and November as the improving global economy and resurgent oil industry have buoyed manufacturers and the U.S. economy overall.

Workers racked up overtime in 2014 as well. But that was at least partly because many firms were hesitant to hire aggressively on fears that customer demand would not be sustained amid a tepid recovery from the recession of 2007 to 2009, says Bernard Baumohl of the Economic Outlook Group.

This time is different. The nation’s 4.1 percent unemployment rate is the lowest in 17 years, providing companies fewer available workers even as the economy grew at more than a healthy 3 percent annual rate in the second and third quarters. In November, there were 378,000 job openings in manufacturing, up from 319,000 a year earlier, and 210,000 in construction, up from 178,000, according to the Labor Department.

In a survey by the National Association of Manufacturers late last year, 73 percent of manufacturers said attracting and retaining a quality workforce was a chief business challenge. Two-thirds said they were responding by giving more work to existing employees.

Other remedies include hiring temporary workers, installing robots and partnering with schools to develop a new generation of employees. But “the short-term response is to keep giving workers a lot of overtime,” says Denise Rice, director of the Tennessee Manufacturers Association.