Overemployment
Overemployment
Little is as damaging economically, socially, and psychologically as depriving people of income and job opportunities, from unemployment and underemployment. Overemployment, however, refers to depriving the employed of desired time. Individuals are defined as overemployed when they are prepared to sacrifice income proportionally for a given reduction in their work hours but cannot do so at their current job or a suitable comparable job. For example, an overemployed individual would like to work no more than forty hours per week (including overtime), but he or she is forced by the employer to work fifty hours per week.
The conventional microeconomic model of individual labor supply assumes that workers desire to work a certain number of hours per week based on their expected wage rate, nonwage income, and preference for nonwork uses of time. Insightful models have incorporated the possibility that at least some workers are often not able to realize a preference for fewer work hours because of constraints that are imposed by employers or the labor market (Dunn 1996; Feather and Shaw 2000; Altonji and Oldham 2003). Employers face a variety of incentives and pressures that may lengthen the hours of work demanded from each employee (Rebitzer and Taylor 1995; Contensou and Vranceanu 2000). Whenever hours demanded exceed workers’ desired number of hours supplied to their job, workers supply “surplus” hours (Lee and McCann 2004). This condition may persist indefinitely when the alternative job with shorter hours actually results in relatively lower levels of utility than working surplus hours (Kaufman and Hotchkiss 2006). Hours mismatches or inconvenient hours do not create compensating wage differentials for working (Altonji and Paxson 1992; Reynolds 2004). Overemployment becomes a wider social problem to the extent that it creates symptoms of “overwork,” such as fatigue and stress, which heighten the risk of workplace accidents, illnesses, and work-family time conflict.
As with unemployment, there are cyclical, frictional, and structural macroeconomic sources of overemployment (Altman and Golden 2004). Further, measuring the overall rate of overemployment has proven tricky. The estimated rate is sensitive to the wording of survey questions and response options. Estimates range from 6 percent to over 30 percent of the U.S. workforce (Bell and Freeman 1995; Altman and Golden 2004), lower than the rate in comparable countries (Bielinski, Bosch, and Wagner 2002). Moreover, the overemployment rate may diminish with time if preferences are “endogenous.” Workers unable to “get what they want … eventually want what they get” (Schor 2005, p. 46). The distribution of overemployment is highest among women with preschool children, those in professional and technical health occupations, and those with long workweeks (Golden 2005). Overemployment may take the form of an unfulfilled wish to switch from longer to standard or part-time hours or to decline mandatory overtime work.
Conventional economists discount overemployment for two reasons. One is the suspicion that stated preferences for shorter hours would actually be acted upon. In addition, the rate of overemployment is a low priority because it is dwarfed by the rate of underemployment (Kahn and Lang 2001). However, a proactive approach would favor regulatory incentives that compel employers to shift the excess hours of the overemployed toward the underemployed within their workplace or industry.
SEE ALSO Inflation; Underemployment
BIBLIOGRAPHY
Altman, Morris, and Lonnie Golden. 2004. Alternative Economic Approaches to Analyzing Hours of Work Regulation and Reform. In Law and Economics: Alternative Economic Approaches to Legal and Regulatory Issues, eds. Margaret Oppenheimer and Nicholas Mercuro, 286–307. Armonk, NY: Sharpe.
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Altonji, Joseph, and Jennifer Oldham. 2003. Vacation Laws and Annual Work Hours. Economic Perspectives 3: 19–29.
Bell, Linda, and Richard Freeman. 1995. Why Do Americans and Germans Work Different Hours? In Institutional Frameworks and Labor Market Performance: Comparative Views on the U.S. and German Economies, eds. Friedrich Butler, Wolfgang Franz, Ronald Schettkat, and David Soskice, 101–131. London and New York: Routledge.
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Contensou, François, and Radu Vranceanu. 2000. Working Time: Theory and Policy Implications. Cheltenham, U.K.: Edward Elgar.
Dunn, L. F. 1996. Loss Aversion and Adaptation in the Labor Market: Empirical Indifference Functions and Labor Supply. Review of Economics and Statistics 78 (3): 441–450.
Feather, Peter, and Douglass Shaw. 2000. The Demand for Leisure Time in the Presence of Constrained Work Hours. Economic Inquiry 38 (4): 651–662.
Golden, Lonnie. 2005. Overemployment in the US: Which Workers Face Downward Constrained Hours? In Decent Working Time: New Trends, New Issues, eds. Jean-Yves Boulin, Michael Lallement, Jon Messenger, and François Michon, 209–234. Geneva: International Labour Organization.
Kaufman, Bruce, and Julie L. Hotchkiss. 2006. The Economics of Labor Markets. 7th ed. Mason, OH: Thomson South-Western.
Lang, Kevin, and Shulamit Kahn. 2001. Hours Constraints: Theory, Evidence, and Policy Implications. In Working Time in a Comparative Perspective. Vol. 1: Patterns, Trends, and Policy Implications for Earnings Inequality and Unemployment, eds. Ging Wong and Garnett Picot, 261–290. Kalamazoo, MI: Upjohn Institute for Employment Research.
Lee, Sangeon, and Dierdre McCann. 2004. In Working Time and Workers’ Preferences in Industrialized Countries: Finding the Balance, ed. Jon Messenger, 65–91. New York: Routledge.
Rebitzer, James, and Lowell Taylor. 1995. Do Labor Markets Provide Enough Short-Hour Jobs? An Analysis of Work Hours and Work Incentives. Economic Inquiry 33: 257–273.
Reynolds, Jeremy. 2004. When Too Much Is Not Enough: Actual and Preferred Work Hours in the United States and Abroad. Sociological Forum 19 (1): 89–120.
Schor, J. 2005. Sustainable Consumption and Worktime Reduction. Journal of Industrial Ecology 9: 37–50.
Lonnie Golden