Workplace Stress in US

Despite relative affluence, workplace stress is a prominent feature of the US labour market. To the extent that job stress causes poor health outcomes – either directly through increased blood pressure, fatigue, muscle pain, etc. or indirectly through increased rates of cigarette smoking – policy to lessen job stress may be appropriate. Focusing predominantly on the United States, this report reviews the literature on a variety of economic concerns related to job stress and health. Areas in which economists may provide valuable insights regarding job stress include empirical selection concerns in identifying the effect of stress on health; measurement error with respect to stress; the existence and magnitude of compensating differentials for stress; and the unique “job lock” effect in the United States created by a system of employer-provided health insurance. This report concludes with a brief discussion of US policies related to job stress. This Working Paper relates to the 2014 OECD Economic Survey of the United States (www.oecd.org/eco/surveys/United States ).

The Labour Market Implications of Poor Health

Generally, NIOSH (1999) suggest that stress is correlated with absenteeism, tardiness, and intentions to quit. Research on 15 OECD countries has found that stress leads to increased rates of absenteeism and individuals’ quitting behaviour. Indeed, Leontaridi & Ward (2002) find that individuals reporting at least some workplace-related stress are 10 – 14% more likely to hold intentions to quit or be absent from work. Those authors also show that the probability of absenteeism is increasing in the level of self-reported stress. Leontaridi &Ward (2002) show that work hours and physical demands, as well as being female, are correlated with higher levels of stress, and that stress is increasing in income and educational attainment.

According to economic theory, a worker’s wage should reflect the value of her marginal product. That the marginal product of a worker should fall as health declines is common sense; thus, we should expect workplace stress to manifest itself in lower productivity and lower wages. A 2004 report from the Centers for Disease Prevention and Control reviews 52 published studies that examine the relationship between long working hours and “illnesses, injuries, health behaviours, and performance”.16 According to the review, the majority of studies find that along a number of health dimensions, overtime work is detrimental. Of the 52 studies, lengthy work times were categorized as 1) any time over 40 hours per week, 2) specifically 10 and 12 hour-work shifts relative to 8-hour shifts, 3) 12-hour shifts in particular, and 4) very long shifts in which an individual is on call for 24, 32, or 48 hours. Across a variety of countries, category 1 was generally associated with higher risk for cardiovascular disease, but studies that focused on hypertension were inconclusive. The report finds that 8 of 12 studies find increased morbidity and mortality risks associated with broad overtime work, but also a trend towards increased cigarette and alcohol consumption, as well as worse test performance. The report also finds report mixed results across a variety of outcomes for extended work as defined in categories 2 and 3.

Especially of note in the CDC report is the general association in most studies of worse subjective health, productivity and overtime hours. Rocheteau (2002) provides a conceptual framework within which one can analyse worker productivity under a policy designed to, in part, relieve workplace stress: mandated work time limits. Rocheteau (2002) states that, “our model predicts that reducing the number of working hours in high unemployment countries can reduce the unemployment rate, whereas the same policy in low unemployment countries has negative effect on the employment level”. The key mechanism that drives their results is the well-known notion of efficiency wages – paying workers more than the value of their marginal product to induce effort, and thus prevent moral hazard induced shirking, and to generate loyalty. In the model of Rocheteau (2002), workers shirk their work responsibility if the rent received from working — the value of being employed less that of being unemployed – exceeds a threshold that is a function of the disutility of work and the probability of being dismissed when shirking. Clearly, as unemployment benefits rise, or as marginal tax rates rise, the incentive to shirk increases. Crucially, the disutility of work is assumed to be increasing, at an increasing rate, in the number of hours of work. In addition to ignoring feedback loops, the model of Rocheteau (2002) omits any mention of increases in productivity induced by health benefits and stress relief from reduced hours or efficiency wages.

Another important implication of growing workplace stress levels is the potential increase in mental health disability applications. Indeed, the Social Security Disability Insurance (SSDI) and Supplemental Security Income (SSI) programmes have grown considerably since the 1984 decision to switch from a medical to a functional definition of disability. Autor & Duggan (2003) argue that the odd co-movement of rising disability growth and improving aggregate health in the United States can be partly explained by changes in screening within the SSDI program and an increase in the rate at which wages are replaced in the SSDI programme. Furthermore, not surprisingly, Maestas et al. (2013) show that the extent to which disability insurance negatively impacts work participation depends on the severity of the disability, and Kostol & Mogstad (2014) show that the disabled who receive disability insurance and do not work, but who have some capacity for work, may respond to financial work incentives designed to promote a return to work. Autor & Duggan (2007) show that expansion of Veterans’ Affairs Disability Compensation programme reduced the labour-force participation rate of Vietnam Veterans. Autor & Duggan (2006) offer an excellent summary of the growth in the SSDI and SSI programs, as well as the toll of these programmes on the long-run solvency of the Social Security program in the United States.

via Workplace Stress in the United States – Papers – OECD iLibrary.