Lonnie Golden Associate Professor of Economics and Labor Studies

1. Overtime Labor: Consequences for Worker Well Being and Determinants at Work Lonnie Golden Associate Professor of Economics and Labor Studies Penn State University, Abington College 1600 Woodland Rd. Abington, PA 19001 lmg5@psu.edu (with Barbara Wiens-Tuers, Associate Professor of Economics, Penn State University, Altoona College) Acknowledgements: Alfred P. Sloan Foundation, Workplace, Workforce and Working Families Program Grant #B-2004-32, Bill Stull and David Pate on previous drafts.

2. OUTLINE I. Motivations: Theoretical: economic models of labor supply to consider case of mandatory overtime (OT) work as subset of “overemployment”; Empirical: Use unique survey questions from a recent General Social Survey (GSS) for a rare peer inside the black box of “welfare”—specific well-being effects associated with extra hours of labor supply, in particular when such work is required by an employer rather than strictly voluntary; II. Document Net Consequences of OT work, with Multinomial Logistic Estimations contrasting effects of: Required/Mandatory OT (MOT) vs. Not Required OT; OT vs. No OT work, on various Outcomes: Stress/Fatigue, Work-Family Conflict, Mental Health III. Identify Workplace and Labor Market characteristics associated with MOT. IV. Conclusions & Implications for Research and Policy

3. Literatures Integrated • Constrained Labor Supply • Determination of Work Hours via interaction of demand-side constraints and incentives with individual and household optimizing choices; • Occupational Health and Safety • Psychological and physical consequences of choices and constraints; • Economics of Happiness and Well Being • Complex relationship between income, work hours, working conditions and satisfaction levels; • Work-Life-Family Integration • Balance, Conflict, Interference, Boundaries, etc. • Work Organization • High Performance Workplace, Labor Relations

4. Conventional Labor Supply Model of Suboptimal Utility with Overemployment—Unpreferred oversupply of some hours of labor Income/day • If an individual is free to choose the number of hours of work, s/he chooses point U1, with 17 hours of leisure and 7 hours of work… Y • If the individual is constrained to work a standard workday of 9 hours or none at all, s/he will choose point U2, lower than optimal utility level, overemployed by 2 hours per day. U1 U2 N H 0 15 17 24 Leisure

5. Worker Welfare (Utility) Function: Amended to consider the independent impact of flexibility in work hours and scheduling, to the extent it contributes to control over the timing of work hours, a valued tool to ease transitions between leisure (L), household production (P). • U = f (Y; L; P; ). • utility is positive in the degree of flexibility in scheduling () (= negative in the degree of inflexibility) to the extent this would ease transitions and facilitate coordination of work, household (P) and leisure (L) activities. • If absence of hours autonomy is unaccompanied by compensating wage (higher Y) or more non-work time, then utility is reduced.

6. A firm providing more flexibility in work timing can induce workers to accept lower compensation, while firms offering inflexible work conditions such as mandatory overtime (MOT) should be offering a compensating differential (higher wage) Income/day Y1 (at W1) A worker may be no better off at U2, with shorter (e.g.,7) hours and an inflexible schedule, than at point U1, with longer (e.g., 9) although uncompensated hours that comes with a flexible schedule, even if the longer hours are greater than their preferred hours Y2 (at W2) U1 N U2 0 15 16 17 24 H (hours per day)

7. Previous Survey Findings re: Extent of Mandatory OT: • Work in America Institute, 2003: • 19% of unionized and 15% of non-union workers “work overtime that cannot be refused without facing penalty.” • Cornell University Institute for Workplace Studies, 1999: • 18% of workers in sample worked overtime due to supervisory pressure (#3 reason for OT work after financial strain and job insecurity). • Appelbaum and Berg, 1999: • Among production workers, 2.34 on a scale of 1-4 were “required to work overtime when you don’t want to.” • Idson & Robbins, 1991: • 16% of workers had both a penalty suffered if they refused OT work and hours of work determined primarily by their employer. • Despite this prevalence— little info re: the workplace or labor market conditions that produce it and its observable consequences on indicators of worker well being—happiness, satisfaction, health, etc.

8. GSS’s key, unique question: • Workers who responded “one or more days” to the question, “How many days in a month during the last year did you work beyond your usual schedule?” were then asked, • “When you work overtime, is it mandatory (required by your employer)?” • Those who affirmed that they worked extra hours and answered yes to the question that overtime is mandatory, are then separated from workers with extra hours where the overtime is not mandatory, and from workers with no extra hours at all.

9. Table 1: General Social Survey 2002, Quality of Work Module, Basic Descriptive Information **Difference between mandatory overtime and no mandatory overtime is significant at ρ < 0.05

10. Hypotheses: • Distribution of Mandatory and non-mandatory OT work varies by: • Employees’ demographic characteristics; • Employees’ job characteristics. • Individuals’ capacity to absorb OT and unanticipated work • Effects of OT and MOT Work on workers involves tradeoffs: more income (current or expected future) for less non-work (leisure and household production and reproduction) time and/or less control over timing of work and non-work hours. • Incentives and rewards may offset risks to welfare. • Hours of both OT and MOT work, and lack of controlover work hours, have separate, and thus additive or opposing effects on well being, relative to no OT work.

11. Table 2: Selected Demographics by Type of Overtime, 2002 GSS * Difference between All Extra Hours and No Extra Hours is significant at ρ < 0.10 ** Difference between All Extra Hours and No Extra Hours is significant at ρ < 0.05 † Difference between Extra Hours: MOT and Extra Hours: Not MOT is significant at ρ < 0.10 †† Difference between Extra Hours: MOT and Extra Hours: Not MOT is significant at ρ < 0.05

12. Key Work/Home Life Outcomes • “How often do the demands of your job interfere with your family life?” • the order of the responses is (1) often, (2) sometimes, (3) rarely, and (4) never. • How hard it is to “take time off to take care of personal or family matters.” • responses are (1) very hard, (2) somewhat hard, (3) not too hard.

13. Key Stress/Fatigue Outcomes • STRESS: How often do you find your work stressful? • USEDUP: How often during the past month have you felt used up at the end of the day? • TIREDHME: How often in the last three months have you come home from work too tired to do the chores that need to be done? • HRSRELAX: After an average work day, about how many hours do you have to relax or pursue activities that you enjoy • Range of responses: Always/Very often; Often; Several times a month/week; Rarely; Never;

14. Table4: Descriptive Comparison of Home/Family Related and Stress/Fatigue Outcomes by Type of Overtime Work

15. Continued… How often is work stressful? Always/often 38.6† 34.5 35.8** 22.8 30.7 Sometimes 42.4 45.6 44.8** 39.7 42. Hardly ever/never 18.7 19.7 19.5** 37.4 26.1 Come home from work too tired to do chores to be done (%) Several times a week 28.6 30.9 30.1*24.4 28. Several times a month 30.5††21.7 24.7 23.7 24.4 Once or twice/never 39.6† 46.4 44.1 48.8 45.4 On an average work day, how many hours do you have to relax or pursue activities you enjoy? • Mean number of hours (SD) 3.5 (2.5) 3.6 (2.4) 3.5 (2.6) 4.2 (3.5) 3.8 (2.9) During the past 30 days, for how many days did your poor physical or mental health keep you from doing you usual activities such as work, self-care or recreation? • Mean number of days (SD) 1.7 (5.2) 1.3 (4.0) 1.6 (5.1) 1.4 (4.4) 1.5 (4.7) • Zero days (%) 75.4 77.2 76.6 80.9 78.3 Fatigue effects apparent, but not Healthiness

16. Table 5: Descriptive Analysis: Economic Satisfaction Outcomes

17. Estimation Models: • Multinomial logistic regression models are applied here. The model estimating the true frequency of an outcome is given by: Oj= β1overtimej + β2X2j + uj • The dependent variable Oj is one of the selected outcomes reported as ordered categories. • The independent variables are the type of overtime and a vector of control variables (X) including male, married, age and age squared, and whether or not the job is a ‘standard’ employment arrangement • N = 1,769 total employed

18. Conclusions: • Required OT work exists for a non-negligible %, 1 in 4 of the employed, lengthening by 2 hours their average hours. • Extra work hours is associated with greater (in order): • Interference of job demands with family life; • Stressfulness of work; • Difficulty in taking time off during your work to take care of personal or family matters; • Feeling used up at end of day; • too tired to do chores that need to be done. • OT work does not statistically significantly reduce hours of leisure (relaxing) or health (subjective self report).

19. Mandatory Overtime work has additive, adverse welfare effects(in order of strength): • Interference of job with family life; • Difficulty taking off time for personal/family matters; • Too tired to do chores; • Stress from work. • No add-on effects on feeling used up, relaxation time or reported health.

20. OT work and economic satisfaction • OT work is rewarded, with greater extra pay or $bonuses (more for non-mandatory than mandatory OT, however). • This leads to greater satisfaction among non-mandatory OT workers, but not among mandatory OT workers. • Thus, mandatory nature of some OT does not appear to be “compensated” with either time or money.

21. Employment, Job and Workplace Characteristics: Hypotheses: • Incidence of Mandatory OT work depends on: • Employees’ demographic characteristics; • Employees’ job characteristics. • Industrial relations and work organization context such as flexibility of the workplace; • Incentives and rewards to offset welfare risk.

22. Table 3: Incidence and Distribution of Industry Classifications by Type of Overtime

23. Table 4: Distribution and Incidence of Occupations by Type of Overtime

24. Table 5: Employment Characteristics by Type of Overtime

25. Table 6: Incidence of Selected Job Characteristicsby Type of Overtime Source: 2002 General Social Survey * Difference between All Extra Hours and No Extra Hours is significant at ρ < 0.10 ** Difference between All Extra Hours and No Extra Hours is significant at ρ < 0.05 † Difference between Extra Hours: MOT and Extra Hours: Not MOT is significant at ρ < 0.10 †† Difference between Extra Hours: MOT and Extra Hours: Not MOT is significant at ρ < 0.05

26. Logistic Regressions Whether an individual in the sample reports working: • mandatory overtime (beyond normal hours at least once last month), • overtime but not mandatory, or • no overtime, • is presumed to be dependent on three sets of observable factors. The likelihood of each depends on an individual (i) worker’s: • Personal characteristics () such as age, gender, race, marital and parental status or foreign born. • Income level, of the respondent or his/her family, education level. • Job and employer/organization characteristics (), such as occupation and industry of employment, union membership, hourly vs. salaried status, job tenure and various features of their compensation package and workplace relations between management and labor.

27. Relevant Variables and Measures in 2002 GSS OVERTIME WORK MOREDAYS How many days per month do you work extra hours beyond your usual schedule? MUSTWORK When you work extra hours on your main job, is it mandatory (required by your employer)? WKVSFAM How often do the demands of your job interfere with your family life? USEDUP How often during the past month have you felt used up at the end of the day? FAMWKOFF How hard is it to take time off during your work to take care of personal or family matters TIREDHME How often in the last three months have you come home from work too tired to do the chores that need to be done? STRESS How often do you find your work stressful? HRSRELAX After an average work day, about how many hours do you have to relax or pursue activities that you enjoy? DEMOGRAPHIC CHARACTERISTICS age Age in years age2 Age in years squared male Respondent is male nonwhite Respondent is nonwhite married Respondent is married hsorless Respondent has a high school degree or less insmsa Respondent within an SMSA and a large or medium size central city, a suburb of a large city. homeowner Respondent owns or is buying place of residence foreign Respondent was born in a foreign country childs Number of children FAMILY INCOME faminc9999 Family income less than $10,000 faminc19999 Family income between $10,000-19,999 faminc39999 Family income between $20,000-39,999 faminc49999 Family income between $40,000-49,999 faminc59999 Family income between $50,000-59,999 faminc74999 Family income between $60,000-74,999 faminc89999 Family income between $75,000-89,999 faminc109999 Family income between $90,000-109,999 faminc110000 Family income equal to or greater than $110,000.

28. General Social Survey, QWL, 2002Key Empirical Findings Factors positively associated with working mandatory OT • Demographic factors: • Male, but due to occupation and industry • Foreign-Born, but due to job factors • Job factors: • Job tenure greater than one year • More frequent overtime work • Not easy to find another job • Certain occupations—transportation, precision production (non-construction), managerial. • Certain industries—mining, non-durables manufacturing, public admin., transportation-utilities-communications, and non-profits. • Union, although due to occupation and industry. • Involvement in Decision-making

29. Factors associated with reduced likelihood of working mandatory OT • Flexible daily scheduling • Employed in professional services, finance-insurance-real estate industries and in professional specialty, sales and administrative support type jobs • Part-time and shorter standard work hours • Good labor-management relations, much say in job content.

30. Conclusions: Tradeoffs from working mandatory OT • Mandatory OT work is associated with lack of control over job content and scheduling and poor labor-management environment. • However, working mandatory OT is rewarded, with greater $bonuses, participation in decision-making and increases satisfaction with life through work.

31. Future Research? • Splits by: • Gender, • Salaried vs. Hourly Employees • Income Level re: well being effects • Disentangle effects: • daily schedule flexibility from MOT • Incentives vs. coercion • Workplace structures vs. job market state

32. Potential Policies that would improve living standards by addressing OT work and Mandatory nature of some OT work • Legislation: • Right to Refuse • Minimum Advance Notification • Limiting length and incidence of MOT work, by: • State (Mainly Nurses and Health Care Workers) • Federal Legislation (amending Fair Labor Standards Act Overtime Law and Regulations) • Global: Extending the ILO convention principle of prohibiting forced or compulsory labor, to grant all workers a right to refuse overtime work without suffering the severest penalty in market economies--job loss.