High temperatures and increased air pollution affect workers’ ability to do their jobs and can limit the hours they work. Productivity will take a further hit if these events become more frequent with climate change.
Among the vast number of detrimental effects a warmer planet may have on humanity, one that has received less attention is the impact on worker productivity. But the link is important: exposure to hotter temperatures has a well-established negative impact on human health, resulting in an unhealthy workforce.
The effects may be strong enough that people don’t turn up to work. A day spent home is a day of lost productivity. In other cases, workers may show up, but like going to work with a cold, they will be less productive than when they feel well.
Figure 1 below shows that workers in industries that are regularly exposed to the heat, such as agriculture, landscaping, and construction, reduce the number of hours they work when daily maximum temperatures exceed 32°C. This decrease largely comes from workers going home early. These subtler effects are more likely to arise for a broader segment of the population and at less extreme temperatures, suggesting these productivity impacts may be widespread throughout the economy.
Figure 1: Hours work at different temperatures
Panel A: High-risk industries
Panel B: Low-risk industries
Source: Graff Zivin and Neidell, 2014
Why is this link between climate change and productivity important to understand? By properly measuring the full range of damages from climate change, this will improve policy decisions surrounding greenhouse gas emissions. The impact on worker productivity represents a relatively understudied area that should be included in these calculations to best inform policy decisions.
Further, policies that lower greenhouse gas emissions are also likely to lead to improvements in local air quality. Evidence indicates that, much like hotter temperatures, poor air quality impairs worker productivity, suggesting an additional benefit from greenhouse gas reductions.
It is important to note that climate change policies that don’t lower emissions but instead capture emissions will not improve local air quality and provide these so-called co-benefits.
These harms to worker output could also affect the profitability of businesses where workers are routinely exposed to higher levels of heat. Workers in a climate-controlled environment are more likely to be spared from the impacts of hotter temperatures, at least during the workday. In less conditioned spaces, businesses may find a labour shortage where people don’t want to work at prevailing wages.
Some businesses may adapt by better conditioning their workspace, or they may pay higher wages to compensate workers for the risk they face, particularly in settings where air-conditioning isn’t an option. Both factors will increase the cost of doing business, increasing the price of the products for consumers.
Understanding this process also helps turn around the way we look at the problem. Many people argue against climate change legislation because they fear that any regulations will be a drag on the economy. While there is certainly truth to the notion that intervening will inflict harm on the economy, so too will doing nothing. Climate change, if left unchecked, will be a drag on the economy as well.
Where can I find out more?
- Temperature and the allocation of time: Implications for climate change: Joshua Graff Zivin and Matthew Neidell discuss the effects of high temperatures on people’s working hours and leisure time
- The impact of pollution on worker productivity: Research showing that ozone levels below US federal air quality standards have a significant impact on productivity
- Temperatures and cyclones strongly associated with economic production in the Caribbean and Central America: Solomon Hsiang stresses the need to include the response of workers to elevated temperatures in climate models
Who are experts on this question?
- Matthew Neidell
- Joshua Graff Zivin
- Solomon Hsiang