Employers assigning more overtime hours to make up for skills gap
- Average weekly overtime hours dipped slightly from February to March 2018, a dataset from the U.S. Bureau of Labor Statistics (BLS) shows. But employers, especially in the construction, mining and logging industries, are assigning workers extra hours to make up for labor shortages, the The Wall Street Journal (WSJ) reports. Employers in these industries have asked their workforces for overtime hours at higher year-over-year rates — increases as much as 50% at some businesses.
- As a result, some workers regularly put in 50-60 hour workweeks, even as overtime benefits diminish, WSJ said. Although asking workers to work overtime allows employers to maintain current benefits levels in a tight labor market, the hours both cut into profits and cause strain for both sides. Even contingent workers are asked to put in overtime, says WSJ.
- Automation is eliminating staffing increases and overtime costs for some companies, but new machinery and software can take as long as six months to activate and requires workers with tech skills to operate them, making automation a risky investment for some employers, according to WSJ.
The issue of rising overtime hours belies a much larger long-term problem: the skills gap. Employers are well-aware that a shortage of new hires — as well as a shortage of experienced workers who can train and mentor those hires — means current staff bear more responsibility, and therefore longer hours.
Complicating the compliance issues involved, employers could see a new overtime rule proposal under the Fair Labor Standards Act (FLSA) in October 2018. Previously, a federal judge invalidated the Obama administration's overtime rule, which would have made workers earning less than $47,476/yr eligible for overtime pay under the FLSA.
A diverse set of viable options exists for those companies and industries facing problems with attracting new talent. On the retention and training side, HR might convince leadership to invest in apprenticeships, reskilling programs and the like. On the recruiting side, expanded talent pools and partnerships with local educational institutions could broaden the applicant base and perhaps overcome what has been termed as the "image gap."
- US Bureau of Labor Statistics Economic News Release
- The Wall Street Journal Companies Pressured to Pay More in Overtime Wonder If It’s Worth It