While some amount of overtime is often operationally needed and desired by some employees, excessive overtime hours can compromise safety, health and productivity – adding to the true costs of long working hours of exempt and non-exempt workers. These indirect costs relate, for example, to an increased risk of heart attacks; diabetes; high blood pressure and mental illness; a greater risk of retirement disability; increased safety risks due to human error; lowered productivity and presenteeism; increased chance of turnover and absenteeism; and costs of potential liability issues and law suits.
Few studies have directly investigated the financial consequences of long working hours. For example, in a study on white-collar jobs, performance decreased by as much as 20% when 60 or more weekly hours are worked (Nevison, 1992). Data from 18 manufacturing industries in the U.S. show that a 10% increase in overtime resulted, on average, in a 2.4% decrease in productivity measured by hourly output ( Shepard and Clifton, 2000). High overtime levels can cause poor employee morale, which can affect productivity and absenteeism. For example, Circadian showed that 31% of extended hours operations that have extremely high overtime hours (25% or greater) also had poor morale, compared to only 13% of companies with low or normal overtime (Kerin, 2003). Long working hours and overtime contribute to increased worker fatigue and safety problems. For example, the average cost of workers compensation claimed per individual at extended hours facilities that reported severe fatigue problems was considerably higher ($4,037) than at facilities that report moderate ($2,240), minor ($981) or no ($276) fatigue problems.
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