The average extended hours employee anyone who works outside the 7 a.m. to 7 p.m. time frame worked about 6.5 hours of overtime per week in 2004, accounting for 16.2 percent of their total hours worked and up from 12.6 percent of their total hours worked in 2003, according to the study, which was conducted by Lexington, Mass.-based consulting and research firm Circadian Technologies Inc.
The study also found that as overtime hours go up, so do a company's health care and worker's compensation costs. The average workers' compensation costs for an extended hours employee working a "very high" amount of overtime (more than 20 percent, according to Circadian's criteria) is double that of an employee working a "low" amount of overtime (less than 5 percent), the study says.
The average health care costs for an extended hours employee working a very high amount of overtime is nearly five times as high as that of an employee working a low amount of overtime $10,160 compared to $2,307.
"I think it's been shown, not just by our study but by other research, that once you start asking people to work 50, 60 hours a week, you are going to negatively impact the safety of your workers and the safety of the plant as a whole," said Alex Kerin, a senior research consultant with Circadian.
Kerin co-authored "Shiftwork Practices 2005," an analysis of the Circadian study that surveyed 400 employers representing 129,000 extended hours workers across all major industry groups. Although this is the sixth year Circadian has conducted the study, it is the second year that it has collected key performance data such as absenteeism, turnover, workers' compensation costs and overtime.
Circadian estimates 24 million Americans work extended hours. In what Kerin described as a "self-perpetuating cycle," high overtime levels in extended hours operations can lead to increased stress, fatigue, absenteeism and turnover, all of which are factors that can compromise workplace health and safety.
"Companies with high amounts of overtime are having more accidents than ones with low overtime, and also those accidents are more severe," Kerin said.
This trend might partially be explained by the report's conclusion that night shifts and extended hours schedules disrupt human biological functions as well as traditional social structures, presenting a number of challenges for workers, from finding childcare to diminished performance. Extended hours schedules that are at odds with family and social lives can cause stress, while extended hours workers typically get less sleep and poorer-quality sleep than their day-only counterparts, creating chronic cycles of fatigue, the report says. That fatigue, according to the report, supersedes a worker's training, skills and experience creating an atmosphere that's more conducive to workplace accidents. Extended hours workers also experience higher divorce rates and higher rates of alcohol and substance abuse, the report says.
The problem also ties in to the current state of the economy. While the economy appears to be on the rebound, pressure from Wall Street and corporate higher-ups have forced businesses to keep their head counts low. As staffing levels fail to keep pace with the increased demand, employees are asked to work more overtime.
The Circadian study suggests that the increased overtime can lead to worker dissatisfaction, which can manifest itself in absenteeism and turnover both of which can cost companies significant dollars. Circadian estimates that the cost associated with absenteeism per extended hours employee in 2004 was $8,035, compared to $1,108 for daytime workers. Those costs include recruiting a replacement employee, whom the employer may have to pay overtime; decreased productivity; and lost future sales resulting from higher-than-usual delivery time. Kerin, meanwhile, estimates that the average cost of replacing an extended hours employee is $30,000, although he stressed that it varies by industry, as do all the numbers.
Based on the findings of the Circadian study, Kerin said employers need to look at the big picture when deciding whether to increase staff levels to satisfy an uptick in demand. "What they're not taking into account is how much (overtime) is costing them in terms of health care, in terms of increased absenteeism, in terms of worker's compensation costs," Kerin said. "When they factor in those costs as well they may find it's better to hire more people as the economy continues to grow."
Among the study's other findings:
- Absenteeism in the extended hours segment increased from 5.8 percent to 12.4 percent (meaning that at any given time, 12.4 of the U.S. extended hours workforce is not at work when it should be), mirroring an increase in the workplace in general.
- Turnover is higher in extended hours workplaces (10 percent) compared to day-only (3.2 percent).
- The vast majority of extended hours operations (77 percent) used mandatory overtime to some extent. Eight percent used mandatory overtime exclusively.