Academic journal article Monthly Labor Review

Analyzing the Recent Upward Surge in Overtime Hours

Academic journal article Monthly Labor Review

Analyzing the Recent Upward Surge in Overtime Hours

Article excerpt

During the economic expansion of the 1990s, employers in manufacturing industries were more likely than in previous recessions to increase overtime hours among existing employees than to hire new workers

From March 1991, the end of the last recession, to early 1997, average weekly overtime in manufacturing increased by 1.6 hours, reaching its highest level--4.9 hours--since BLS began publishing the series in 1956.(1) Overtime remained at or near this high level over the next year, retreating slightly by the end of 1998. These data are from the BLS Current Employment Statistics (CES) survey, a monthly survey of payroll, hours, and earnings collected from a sample of more than 400,000 of the Nation's employers. The CES program defines overtime as hours for which premiums were paid because they exceeded the number of straight-time workday or workweek hours. Average overtime is computed by dividing the total number of overtime hours in a given industry by the number of production workers in that industry, including those that work no overtime at all.

Historically, average overtime has increased with recoveries and fallen with recessions, with the level never exceeding 4.1 hours. Average overtime fell from 3.7 to 3.3 hours during the 1990-91 recession, but the current expansion has seen overtime reach an unprecendented level. This article analyzes the striking growth in overtime from March 1991 to January 1998 and its relationship to employment.

Overtime growth in the 1990s

Following the 1990-91 recession, cyclical job loss in manufacturing continued until mid- 1993. Indeed, after losing 683,000 jobs during the downturn, another 400,000 manufacturing jobs were lost after the recession officially ended in March 1991. Interestingly, however, the cyclical trend in manufacturing overtime hours turned around exactly the same month that the recession ended. By the time that manufacturing employment started its cyclical recovery in July 1993, average overtime had increased from 3.3 to 4.1 hours. (See chart 1.) Overtime hours continued to surge, reaching 4.8 hours in the last quarter of 1994. Manufacturing employment expanded until April 1995, adding a total of 541,000 jobs in a period of less than 2 years.

[Chart 1 OMITTED]

Average factory overtime fell by 0.6 hour in 1995. In 1996, it started inching upwards again, while employment in the industry experienced a mild downward trend. By December of 1996, average weekly overtime had reached 4.6 hours, after starting the year at 4.2 hours. Employment also started back on a growth trend early in 1996, but at a very slow pace. By March 1997, overtime had reached a record high of 4.9 hours--a level it sustained for the next 2 months and then revisited at the end of the year. In contrast, employment, while still growing, ended 1997 at a level nearly 700,000 lower than its prerecession peak in March 1989.

Sources of overtime growth

Manufacturing's record-setting increase in average weekly overtime is the result of two factors. The first, as shown in table 1, is that, from March 1991 to January 1998, overtime increased in all but one of the component industries in manufacturing. The increases ranged from a notable 3-hour gain in transportation equipment to a relatively slight increase of 0.6 hour in apparel products. As the table illustrates, more than half of the 20 industries within manufacturing had increases of at least 1 hour over the 1991-98 period. In fact, many of these industries had set records for their overtime series by early 1997.(2)

Table 1. Change in overtime hours in manufacturing industries, March 1991-January 1998

SIC                                 March   January
code            Industry            1991     1998

20-39       Total, manufacturing     3.3      4.9
37      Transportation equipment     3.1      6.1
33      Primary metal industries     4.2      6.8
34      Fabricated metal products    3. … 
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