Manufacturers skeptical about economic improvement are hedging their bets and forgoing hiring in favor of scheduling overtime work to fill welcome new orders. The tactic may be working for now—employees surely aren’t complaining—but the phenomenon is likely to be short-lived. “Overtime is more costly,” an analyst tells the Wall Street Journal. “There comes a point that it makes sense to take on new workers."
In the last recession, manufacturing firms started taking on new workers 18 months after boosting overtime to meet increased demand. One owner says 10% overtime for 2 months is feasible, but after that it makes more sense to hire. Companies must balance the increased payout against the costs of recruiting and training new hires, but extra hours have their pluses. “Production is attitude,” a business owner says, and “pockets of overtime” can improve performance.