← WSJ Your Money Briefing
WSJ Your Money Briefing
More Overtime Means More Money, And More Problems
00:10:47
Employers trying to keep productivity levels up amid a shortage in workers are paying the staff they do have overtime to work extra shifts. WSJ workplace reporter Lauren Weber joins host J.R. Whalen to explain how that has led to more problems for many workers and employers.
Loading summary
Transcript31 lines
- [00:01]
A
Still running global payroll like a relay race. Deal replaces fragmented payroll vendors with one global system. No third parties hire, manage and pay teams in 150 plus countries with in house local experts and white glove delivery and deal plugs into what you already use. Workday SAP Netsuite operate like a local everywhere visit d e l.com WSJ that's d e e l.com WSJ.
- [00:36]
B
Here's your money briefing for Wednesday, September 22nd. I'm J.R. whalen for the Wall Street Journal. The record number of job openings in the US Coupled with not enough people sending in resumes has put employers in a bind. Many have turned to paying their staff overtime to come in early, stay late, pick up extra shifts. But that can cause problems of its own.
- [00:56]
C
Employers are relying on the existing workers and then the more they rely on those existing workers, the more likely it is that those people will start feeling burnt out, will be exhausted.
- [01:06]
B
Coming up, WSJ workplace reporter Lauren Weber will tell us about the problems that extreme overtime can cause for employers and workers. That's after the break.
- [01:16]
A
Deal replaces fragmented payroll vendors with one global system. No third parties hire, manage and pay teams in 150 plus countries. Operate like a local everywhere. Visit d e e l.com WSJ.
- [01:38]
B
We've told you before about how companies are trying to keep productivity up as they struggle to find more workers. Often that means asking the employees they do have to log overtime hours. For workers, that can mean a nice boost in pay, but in other ways it's making the situation worse. Let's bring in WSJ reporter Lauren Weber to find out why she's been talking to both employers and workers trying to navigate the current staffing crunch. Hi Lauren. Thanks for coming on the show.
- [02:04]
C
Thank you for having me.
- [02:05]
B
So Lauren, can you describe the situation for us and what it looks like as businesses try to fill in those gaps in staffing?
- [02:12]
C
Many of them are trying as hard as they can to recruit people. They're offering incentives in order to hire more people. But really in the end, when you don't have those bodies available to fill out your staff schedule, what you end up doing is relying more on the people you do have. And so I talk to people who normally are supposed to be working a 40 hour week who are instead working 72 hours, 60 hours, typically week after week working 60 hours. So I spoke to people in construction, in restaurants. Healthcare is having a really hard time. Many people have probably heard about the fact that there's not enough nurses right now to staff hospitals and clinics and that's partly because demand for services is so high with so many people becoming infected with COVID right now. So it's really across the board. But I think industries like healthcare are probably some of the ones we need to be paying closest attention to, because there you get into a situation where if you don't have enough staff, you simply can't provide care.
- [03:12]
B
Okay, so how widespread is this issue of employees being asked to work overtime?
- [03:16]
C
It's difficult to say in an official sense because the government only tracks overtime hours for manufacturing employees. So we don't have a broad measure of how many people are working overtime or how many hours. But we do know anecdotally, and from what I'm hearing from employers and managers, that workers are being asked to work a lot of extra time to make up for the fact that employers can't hire enough people to staff their open positions.
- [03:42]
B
Okay, can you just catch us up on the rules here? Who's entitled to overtime pay and who isn't?
- [03:47]
C
According to the Labor Department, there are some employees who are eligible for overtime pay, which basically means time and a half. So you get your hourly rate plus half of that on top of it for your overtime hours, and then there are people who are not eligible for that. So the Labor Department has a threshold. It's about 35,000 or $36,000 for salaried employees. If you earn less than that amount, even if you're on salary, you should be getting overtime pay for extra hours. And then if you're an hourly employee, most hourly employees are eligible for that time and a half pay. I should add that the federal standard is it kicks in after 40 hours of work per week in Californ, because California likes to do things differently. It kicks in after eight hours per day.
- [04:33]
B
Now, time and a half pay can really add up. So why are employers running into trouble, lining up employees to work extra hours?
- [04:39]
C
Well, this is part of what interested me about this story, is that this problem really intersects with the fact that so many workers are experiencing burnout. Part of the reason they're experiencing burnout is because they don't have enough employees at their workplaces to cover all of the hours that need to be worked. So employers are relying on the existing workers, and then the more they rely on those existing workers, existing workers, the more likely it is that those people will start feeling burnt out, will be exhausted. And that adds to the other pattern we see, which is a lot of people quitting their jobs, and then it becomes a vicious cycle because more people quit their Jobs, fewer remaining employees have to make up the difference. Employers can require people to work that overtime. You can force someone to work overtime and say, well, if you don't show up for that shift, you're going to lose your job. Employers are in a difficult position where even though they can compel their employees to work that overtime or lose their jobs, they were really worried that, you know, people will just get fed up and quit.
- [05:37]
B
And to that point, you've spoken to a lot of workers. How do they feel about all this overtime?
- [05:42]
C
It's a bit of a double edged sword for workers. I mean, many people, especially people who may be single, not have kids or families that they want to spend more time with. A lot of people enjoy that extra money in their paycheck. You know, they appreciate the fact that they can earn some extra money, maybe save up to buy a first home, things like that. I talked to one person, a woman who's a line cook, and for the first time, she's not gonna have roommates. She's moving into her own apartment. So the extra money helps. On the other hand, it is really hard on your body. It's hard mentally, physically, emotionally, to just work so many hours over and over, especially if it's week after week, especially for those who have kids, the people I spoke to, it's very hard for them not to see their children as much as they'd like to.
- [06:26]
B
And how are some workers voicing their frustration over this?
- [06:29]
C
One way they're voicing their frustration is just by walking out the door. And the overtime contributes to burnout, which then contributes to workers wanting to quit their jobs. And what we've seen in the data from the Labor Department is that the rate of people quitting their jobs has been higher over the last few months than it's ever been before since the department started collecting this data in the year 2000. So you can tell from the numbers that people are just overworked and starting to get frustrated and just, you know, vote with their feet and walk.
- [07:03]
B
Now, from the company's perspective, what kind of a balancing act are they facing as they're trying to keep production levels up?
- [07:08]
C
That's the thing. They want to take advantage of the fact that the economy is doing really well. As one economist I spoke to said, GDP is miraculously above pre pandemic levels. So we know the economy is doing pretty well. The companies are getting lots of business, lots of orders, everything from a fast food restaurant to a manufacturing company. There's no shortage of business for them. But they do have to balance that out with how to make sure that they retain the staff they have. So it is definitely a balancing act. And it's also financially, you know, they are paying that extra 50% for the overtime hours. So it can be a financial hit for companies. Another thing several managers I spoke to brought up is that people actually get less productive as they work longer hours. So the exhaustion catches up with them. Maybe they get less careful, more errors at work. And you, you know, so the employers, business owners that I talk to, they feel like they're getting those extra work hours, but not at the performance level that they really need.
- [08:10]
B
Okay, so what else is on the table here? What are employers offering workers in addition to overtime pay?
- [08:15]
C
You know, the main thing that workers get for working those extra hours is the time and a half pay. But I was also noticing that a lot of employers are offering retention bonuses to try to keep people to stay. You know, not only are they trying to hire more staff by offering signing bonuses and other kinds of incentives, but in order to keep the people they do have. I spoke to the head of HR at Providence, which is a medical system healthcare system based in the Northwest. And you know, they're very worried about retaining their current people. So they're doing more both financially to keep people and retain them, but also offering more mental health services, really investing in the kinds of support and well being benefits that they think will help people get through this period where they know that they're demanding a lot.
- [09:06]
B
Got it. Now I also want to ask you about overtime violations. What's being done about employers who might not want to pay overtime or cases where overtime work is not being tracked properly.
- [09:16]
C
So another issue that comes up often with overtime is the specter of overtime violations, which means companies not either tracking the overtime that people are working or simply not paying for it or not paying for it at that time and a half rate. Some people may not be aware of their rights and realize that they're eligible for the premium pay. Sometimes employers take advantage of that. Sometimes it's just accidental. They're just not being careful about tracking hours. So I spoke to some employment lawyers and they said they're seeing more inquiries from workers saying I'm being asked to stay later after my shift ends, but that time is not being recorded or logged. Or I'm being asked to do these extra things, but I'm not being paid for that time. So a couple of lawyers I spoke to said they expect to see probably a wave of claims or litigation relating to potential overtime violations. This is something that the Labor Department also tracks and investigates employers for.
- [10:12]
B
So longer term, what's the outlook for the staffing crunch? Are people you've spoken with optimistic that with the federal unemployment bonus payments expiring, it could actually mean more people looking to return to the workforce?
- [10:23]
C
Some people I talk to, managers and business owners are hopeful that more people will come back to work, start looking for jobs. But the numbers so far don't quite bear that out. They don't show that the federal overtime payments really made that much difference in when people chose to re enter the workforce. You know, if someone wants to work, they want to work regardless of whether they're getting the extra $300 a week from the government. I mean, you know, you hope that these things find an equilibrium. Some combination of people coming back to the workforce, which also may have something to do with kids going back to school, vaccination rates going higher, people feeling maybe more comfortable in the workplace between those things and then employers are raising wages. You know, there are all these things that are happening that may work as incentives to bring people back into the labor force. And so presumably this will balance out at some point. You know, I think that that will take a while. These are all processes that do take some time to kind of work their way into how people behave and the choices they make.
- [11:25]
B
All right, that's Wall Street Journal reporter Lauren Weber. Lauren, thank you so much for coming on the show.
- [11:29]
C
Thank you for having me.
- [11:30]
B
And that's your money briefing. I'm J. R Whelan for the Wall
- [11:33]
A
Street Journal deal replaces fragmented Payroll vendors with one global system. No third parties. Hire, manage and pay teams in 150 plus countries. Operate like a local everywhere. Visit De L. Com WSJ.