Analyze the costs and benefits of reducing work hours v. layoffs as a solution to market volatility.

Happy May Day Professor Wolff! I work for a manufacturer of heat transfer coils. In the past three years that I have been an employee, our company has responded to market demands by the traditional method of layoffs during lean times, and extreme hiring and re-hiring during periods of high demand. To clarify, it is the hourly-wage workers who are directly affected by this boom/bust cost of labor adjustment. I see some of the same employees fired and then re-hired three, or six months later. How can I communicate to my employers that perhaps a better solution would be to cut the hours of all employees rather than go through the process of layoffs and hiring cycles? I understand the intangible value of keeping workers on the payroll through maintaining worker skills, and a rapid response time to meet market demand. However, I also understand the cost to the company of maintaining worker benefits (e.g. healthcare, 401k, etc.) as a reason for layoffs. I am hoping you can add some real numbers or references to studies in an in-depth analysis of this perennial issue. Thank you.


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  • Eric Shine
    published this page in Ask Prof. Wolff 2017-05-01 13:30:53 -0400

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