Too many workers, not enough work?
November 10, 2008 12:22 PM   Subscribe

Why do companies keep hiring when they already don't have enough work to go around?

When I was younger, I worked several retail jobs. I noticed that we were never given full-time schedules, and rarely given more than 20 hours. The stores seemed to just keep hiring more and more people, yet cutting the hours of those who already worked there. They seemed to have around 3 times more employees than they really needed and just gave them not so many hours. At the time my friends were also at this stage in their careers and reported the same thing.

Now it's 10 years later and I have moved on to other types of employment. But I have a friend who is just entering the (American) workforce at a retail store and informs me of the same thing. When she first signed up, she got 20-25 hours/week, but now that has been cut in half, while the store keeps hiring more and more people.

People aren't leaving, it's not a turnover issue - they just seem to want as many people on the payroll as they can get. And it's not what the employees want. True, some are students, and this fits their school schedule - but a lot of them are not, and they WANT more hours, but just aren't given them. And if the employees aren't available almost any time they are needed, they can be reduced down to as little as 8 hours for an entire week. So it's hard to get another part-time job as your hours are never consistant.

So basically they have to be available for full-time hours, but only get 1/3 to 1/4 of that schedule.

I used to think this was a way for companies to avoid paying benefits - if you could get people to work less than 40 hours, you didn't have to give them benefits. That's fine, but why not just give people 30 hours and be done with it, why cut them down to 10-15?

Is there a name for this phenomenon - hiring more people than you need and can provide hours for?

And what, other than to avoid paying benefits, is the purpose?
posted by bulanjing to Work & Money (13 answers total) 2 users marked this as a favorite
The employers have made hours artificially scarce to create a carrot (giving extra hours) and a stick (taking away hours) for the employees. Good employees can ask for and receive extra shifts. Bad employees will find themselves stuck with short shifts at undesirable times. 'Good' and 'bad' can be based on efficiency, competence, brown-nosing, whatever. The employer knows that most employees would rather try harder to get more hours at one job than juggle multiple part time jobs.

Overhiring also makes it easy to fire bad employees without consequence. As a bonus, good employees will get the fired employee's hours. This all works to create a struggle between the workers that prevents them from cooperating to address problems they may have with management. Maybe your friend should consider unionizing.
posted by jedicus at 12:33 PM on November 10, 2008 [1 favorite]

benefits is a big one, keeping your ass covered is another. retail jobs come with a high turnover and a high call in sick rate. if you have a bunch of people working minimum hours, then if someone walks out it's not a big deal to cover them.

if she started at 20-25 and her hours got cut in half, she's not selling enough and they're trying to find people who do.
posted by nadawi at 12:33 PM on November 10, 2008

Because those kinds of jobs have a very high percentage rate of no-shows and under-performers, as well as having a high turnover rate. Having more diversity of workforce spreads the risk.

As far as benefits, there is no legal requirement in any state that I know of that requires benefits based on hours worked. For the most part companies offer benefits as a way to attract workers and be competitive with other employers. They can opt to do it for people with less than full-time hours (like Starbucks) or for nobody regardless of hours (like WalMart in some regions).

Now there IS a requirement most everywhere to pay overtime at a higher rate than base salary for time over 40-45 hours, motivating employers to make sure they're nowhere near that. If you give a worker with a planned 20h a week 30h you pay at the same rate. Someone already scheduled for 40h who picks up an extra shift might cost you time and a half.

The shortest answer is that they do it because they can (the workforce is low-skill and easily replaceable and unemployment is comparatively high now) and because it makes things most flexible for them.
posted by phearlez at 12:38 PM on November 10, 2008

If the store requires five people to be working at any one time, and they are all getting paid basically the same rate, it doesn't matter to the company if those five are drawn from a pool of eight or a pool of eighty. They are still paying out the same amount of money in payroll.
posted by desjardins at 1:00 PM on November 10, 2008 [1 favorite]

A part of it, too, may be that, by hiring in the way you describe (lots of employees, but at low hours) the employer can claim to have created umpteen new jobs. This is a very handy number to bandy-about when it comes time to squeeze a community for tax breaks on the new store you're putting up.
posted by Thorzdad at 1:08 PM on November 10, 2008 [1 favorite]

I would also imagine that with the holiday season fast approaching, it would be useful for retail places to have a deep roster of employees for the crazy times.
posted by advicepig at 1:19 PM on November 10, 2008

Years ago, my dad worked at a large architectural firm that did something similar, but for different reasons than described above, since everyone was given full-time schedules and benefits--managers got paid based on the number of architects they managed. Yeah, it was a stupid system. Yeah, Dad left. Yeah, the company went bankrupt.
posted by MrMoonPie at 1:31 PM on November 10, 2008

If youve ever managed retail/foodservice then you would know that the possibility of noshows is excessively high. You need redundancy and lots of it. Some companies will 'promote' someone to FT status if theyve proven themselves. These people are hard to find and worth keeping.
posted by damn dirty ape at 2:05 PM on November 10, 2008

Also, optimistic employers who foresee a pick-up in their business can use the slower period to train new people more thoroughly and carefully.
posted by Rykey at 2:08 PM on November 10, 2008

Low-level jobs have high rates of absenteeism and employees not really doing their jobs. Training costs are usually really low, so there is little fixed cost associated with hiring a new employee. Therefore, the goal is to have so many employees that the loss of one won't result in major disturbances.

Also, what jedicus said: in the places I worked, there was a definite hierarchy to how employees get assigned extra shifts/desirable shifts. It was based on reliability.
posted by wsp at 3:08 PM on November 10, 2008

What Jedicus said. And yeah, its good to have a big pool of people to draw from because of turnover and absenteeism issues, but then, that's part of the choice the employer makes by maintaining that sort of working environment.
posted by Good Brain at 3:39 PM on November 10, 2008

In most businesses, if you work 40 hours a week, you become eligible for company benefits. If there's a large pool to pull from, the possibility of someone getting to 40 hours in a pay period is much less likely.
posted by elle.jeezy at 5:22 PM on November 10, 2008

In my company (a very large mall based toiletries chain) we have a certain amount of payroll hours per week that we have budgeted. Those hours are dictated by corporate and are based on our sales. If we make over 19k a week, we get more hours. If we have a certain amount of shipment, we get more hours. If we have floor changes, we get more hours. If it's just a general average week, we have a set amount of hours. I'm one of 2 full time managers, so we take 80 of those hours off the top. (We both work far more than 40 hours each when you add in the work we take home and the extra times we come in on our days off, the 13 hour shifts we work when people call in or no show, but we only get paid for 40).

You want depth on your bench, so to speak. You have certain employees that are good at certain things, some are great at working stock and suck at cash register. Someone might be great at selling and completely ridiculously worthless at setting a display, so you schedule according to your needs. Now that we're hiring seasonal help for holiday, we have to cut our core staff's hours in order to be able to train the new folk-when you have a tight payroll budget you really don't have a choice. We schedule a lot of "on call" hours, where you aren't technically scheduled for a shift, but should call in to see if we need you, since things change moment to moment in retail. We realize that sucks and makes it hard for you to plan and try to not to do it unless necessary.

Yes, the more flexible you are, the more often you step up and come in when we're desperate and the better you are at all aspects of your job, the more hours you'll get. We know who we can count on to get things done and done the right way and who we call when we just need someone to be in the store with us.

We also have hiring goals for holiday that are set by corporate and we HAVE to meet those by certain dates. At this point, we are literally hiring just for Black Friday. My mall is open 14 hours that day, another one of our stores is in a mall that's open 24 hours that day-we have to have coverage for that-if we don't then we will have all sorts of askmefi questions about why there are such long lines and empty shelves at the mall stores on Black Friday.
posted by hollygoheavy at 5:26 AM on November 12, 2008 [1 favorite]

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