Overtime is a loan. The interest is your people.
When a shift runs short, overtime is the honest, immediate fix. The crew steps up, the schedule holds, nobody has to approve a new hire. That's why it's also the fix that quietly becomes the system.
The premium is the visible interest
The math is plain. Sixty workers averaging eight overtime hours a week at $18 an hour pay a premium—just the half-time on top of straight time—of well over $400,000 a year if the pace holds for forty weeks. That's the cost of covering work with overtime instead of headcount, before counting a single downstream effect.
The compounding is the hidden interest
The downstream effects are where the loan turns expensive. Sustained overtime is a fatigue program: error rates climb, safety incidents rise, and the best workers—the ones who get asked first, every time—are the ones who burn out and leave. Their exits create more open seats, which create more overtime, which lands on the next-best workers. The spiral is reliable enough that you can read a plant's future turnover in this quarter's overtime report.
The question we get most from operators is some version of: when does overtime stop being flexibility and start being structure? A workable answer: when the same people pull it every week, when it survives two consecutive schedules, or when anyone starts planning around it. Occasional overtime is a tool. Standing overtime is an unfilled-headcount problem wearing a disguise.
Paying the loan down
The fix is rarely "hire more people" in the abstract—it's knowing which seats, on which shifts, are generating the overtime, and filling those specifically. Sometimes that's permanent headcount. Sometimes it's a surge crew through peak season so the core team isn't carrying it. Sometimes it's fixing the turnover that opened the seats in the first place.
Start with the report you already have. Sort overtime by person and by shift, look for the standing pattern, and price it honestly: premium paid, plus the seats it's covering, plus the people it's wearing out. Then decide whether the loan is still worth the interest.