Do Manufacturers Like Overtime Better than Hiring?

Manufacturing employment rose again in June by more than 11,000 employees, according to the U.S. Bureau of Labor Statistics. Growth in Q2 2012 averaged 10,000 employees per month, below the average of 41,000 per month during Q1 2012. But since June 2011, manufacturing employment has grown overall by 1.9%. The U.S. Bureau of Labor Statistics reports that the manufacturing unemployment rate stood at 6.9% in June, a decrease from 9.2% in June 2011. (Overall nonfarm unemployment was unchanged May-to-June at 8.2%.)

The under-reported part of this story, according to John Brandt, CEO of the MPI Group, is that the manufacturing workweek in June grew by 0.1 hour to 40.7 hours, and manufacturing overtime for all employees was 3.3 hours for the fifth consecutive month (4.3 hours for production employees).

“That doesn’t look like a one-time surge to meet unexpected demand,” he writes in his current blog. “Instead, it seems like a consistent strategy of using overtime hours rather than hiring. The U.S. has nearly 12 million manufacturing employees. Imagine if even half of those overtime hours were applied to creating new full-time positions, instead of just additional hours for current employees. Simple math says that nearly 500,000 new jobs could appear. Even with current employees losing overtime wages, it’s hard to envision a scenario in which a half-million new jobs wouldn’t boost the economy into overdrive.”

Related Editorial:

Chrysler’s World Class Manufacturing Leverages Labor

Material Handling Equipment Demand to Grow 4% Annually

June Conveyor Shipments Up 35.4% over June 2011

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