Employers must respond to the market to stay in business

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Article Highlights

  • Flexible work schedules meet the needs of both employers and employees

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  • Flexible hourly workers help businesses meet cyclical variability in demand

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  • Inflexible work schedule rules may only result in lower levels of hiring

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Editor's Note: The following is Aparna Mathur's response to the New York Times Room for Debate question: Should there be a law limiting unpredictable schedules for hourly and part-time workers?

This week, Representatives George Miller and Rosa De Lauro introduced the “Schedules that Work Act,” a well-intentioned bill that aims to protect working families from the negative consequences of uncertain work schedules. But it misses the point.

First, the bill proposes to fix schedules for workers who are in alternative or flexible work arrangements, particularly hourly workers. However, these kinds of work schedules have developed to meet not just the needs of employers, but also of employees.

Employers depend upon these kinds of arrangements to meet cyclical and seasonal variability in demand or fluctuations in the labor supply of regular employees. Relying on part-time, hourly or temporary workers allows companies to avoid the search and training costs of new, regular hires and severance costs of lay-offs any time they face a temporary uptick or dip in demand. As a result, restaurants, bars and the leisure and hospitality industries make extensive use of these types of workers.

At the same time, these arrangements offer employees the flexibility of working different hours or different times of the day to meet their own needs. Many part-time workers choose these alternative work schedules because it allows time for school or for family and child care. Allowing businesses and workers to negotiate these arrangements on an individual basis is more efficient than trying to regulate the outcomes.

Second, while shifts in demand conditions are clearly a source of uncertainty not only for employees, but also for employers, the bill aims only to hedge the employee against this type of economic fluctuation. It would require the employer to compensate the employee for the hours in the original schedule, at a minimum of four hours of work, irrespective of actual hours worked. Schedule changes made less than 24 hours in advance would require additional compensation.

This goes against the very notion of flexibility and imposes significant costs on employers, who must respond to changes in market conditions in order to stay in business. Inflexible labor markets, or markets where employers face high costs in either employing or letting go of workers, result in lower levels of hiring. Is this really the outcome we are striving for?

The culprit here is the weak economic recovery. It would be great if we could hedge everyone against it, but shifting the costs of uncertainty solely to employers is not the solution.

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Aparna
Mathur

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