Monday, September 04, 2006

Long Hours: Not Exactly a Paradox

From this morning's WaPo:

For years, economists have taught their students a simple maxim: As employers hunt for workers, they want to get the best talent at the lowest price.

According to this theory, whether employees want to work long hours or short hours, employers have an incentive to accommodate them, because asking people to do something they don't want to do raises the price of labor -- workers demand more compensation.

On this Labor Day, consider a paradox: Millions of Americans say they feel overworked and stressed out. Many say they want to work fewer hours and find a better balance between responsibilities at home and work. Given that people have been saying this for quite a while, employers should have figured out by now that they can save money by being more flexible in workplace arrangements.

Decidedly, however, this has not happened. The number of people who work more than 50 hours a week has steadily grown in recent decades -- in concert with complaints about long hours.

This is a paradox how?? Workers can only demand more compensation to the extent that they're bargaining from a position of strength, and over the past three decades, that has been an increasingly rare situation.

And let's look at what sort of worker the writer is talking about:
In a growing number of professions, especially those that involve thinking and social skills, managers and owners find it difficult to measure the day-to-day performance of employees.
For partners at big law firms, the simplest way to track the performance of junior lawyers is to see who bills the most hours above and beyond what is officially required, leading to what Case Western Reserve University economist James B. Rebitzer calls an "arms race" of hours.
In other words, we're discussing salaried professionals, a classification that sounds better than the reality. While it includes the junior lawyer striving for partner at a major law firm, it also encompasses most of the cubicle-dwellers who are, for all practical purposes, the line workers of the knowledge economy. They're 'professionals' exempt from the protections of the Fair Labor Standards Act, and they make decent but hardly dazzling salaries, but their overtime hours are a free resource.

Let me say that again: their overtime hours are a free resource.

This means an employer has no incentive to minimize his use of those hours, and every reason to use as many of them as he can get away with. An hour of overtime, for such workers, costs the company nothing in the way of pay, benefits, or anything else - unless we're going to cost the slight increase in the electric bill for having lights on and computers running later into the evening.

Sure, asking employees to work 50-60 hours a week instead of 40 probably raises the total cost of that labor by some minuscule amount - but the employer gets a big extra chunk of extra labor in return.

How, exactly, is this a bad deal for the employer? How, exactly, is this a paradox?

It's a paradox only if one ignores the fact that for those employing these workers, their overtime is a free resource.

The WaPo article never mentions or even hints at this fact.

How clueless can they get??


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