How Extreme Heat Impacts Worker Productivity

Find out how this sizzling summer shapes our work and our wallets.

Jun 24, 2024

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As the summer sun blazes over the United States, nearly a third of the country has been sweltering under a massive heatwave. These dangerous temperatures aren’t just a sweaty inconvenience—they’re a serious issue that’s here to stay. You might have noticed that these extreme weather events are becoming more frequent and intense. This isn’t some distant future problem; the economic consequences of our current heatwave give us a preview of what might be our new normal.

Right now, this heatwave is breaking records, putting a strain on our power grids, and sending temperatures skyrocketing past what most of us can handle. But there’s more to it than just feeling uncomfortable and worrying about heatstroke. Extreme heat takes a serious toll on worker productivity, which in turn affects our entire economy.

Heat index forecasts as of 7:35 a.m. on June 23, 2024, using data from the National Oceanic and Atmospheric Administration [Source: The New York Times]

The Impact on Outdoor Workers (The Seen)

Let’s start with the people who feel the heat the most: outdoor workers. It’s those folks working in agriculture, construction, or delivery services. These jobs involve spending long hours under the blazing sun, and it’s no surprise that the heat takes a serious toll.

First off, there’s the physiological stress. Working in extreme heat reduces both physical and cognitive performance, which means people get tired faster and can’t think as clearly. This increases the risk of heat-related illnesses like heat exhaustion or heatstroke. And it’s not just about feeling lousy—this can lead to more accidents and injuries on the job.

How much of an impact does extreme heat make? According to the International Labour Organization, temperatures above 75-79°F are linked to reduced productivity for individual workers, and at higher temperatures (above 91-93°F), individual productivity can drop by as much as 50% in moderately physical jobs.

Because workers need more breaks, they move slower, and the heat physically limits what they can do. This is especially tough for agricultural workers who are already doing physically demanding work. Imagine trying to pick crops or tend to fields when it’s scorching hot—that’s a recipe for exhaustion.

The Impact on Indoor Workers (The Unseen)

Let’s shift our focus indoors. While it’s easy to see how outdoor workers suffer in the heat, indoor workers aren’t exactly off the hook. You might think that air conditioning solves the problem, but that’s not always the case. Many workplaces have poor ventilation or inadequate cooling, turning them into stuffy, uncomfortable environments. Believe it or not, indoor temperatures have a big impact on how well we think and work. For every 1°C increase in temperature above 22°C (72°F), productivity drops by approximately 2%.

So, even a small increase in temperature can make a big difference in how efficiently we work. This is a major issue in places without good climate control—like older office buildings, warehouses, and factories. When it’s too hot inside, workflows get disrupted, errors become more common, and sometimes, operations even have to shut down temporarily. So, whether you’re in an office or a warehouse, the heat is a serious concern. It might be less visible than the impact on outdoor workers, but it’s just as important. These drops in productivity indoors add up, affecting businesses and the economy as a whole.

Economic Output: The Broader Implications

Let’s zoom out a bit and look at the bigger picture—the broader economic impact. When workers are less productive because of extreme heat, it doesn’t just affect them individually; it affects the entire economy. When productivity drops, the output of goods and services declines, and this is felt across various sectors. This means slower economic growth and higher costs for everyone.

Short-Term Economic Impacts:

First off, businesses face increased operational costs. They must spend more on cooling their spaces, providing hydration and rest stations, and covering medical expenses for heat-related health issues. When workers can’t perform at their best, especially in heat-sensitive industries like agriculture and construction, there are delays in projects, drops in yields, and disruptions in supply chains. These issues create a ripple effect that impacts the availability of products and services.

A recent study found that high heat costs the U.S. economy a staggering $100 billion each year in lost productivity. And this figure doesn’t even account for other heat-related impacts, like decreased tourism and rising health and energy costs. It’s not getting better anytime soon—those losses are projected to double by 2030.

Long-Term Economic Impacts:

Over time, the health costs associated with heat-related illnesses start to pile up. Both individuals and the public health system bear these costs. The labor market isn’t immune either. Extreme heat can lead to higher absenteeism and turnover rates as workers struggle to cope with the conditions. Employers end up spending more money on recruitment and training. Extreme heat doesn’t just make us sweat. It has a significant impact on our economy, both in the short term and the long term. Businesses, workers, and consumers all feel the heat—literally and financially.

A study by researchers at the Federal Reserve Bank of Richmond found that rising summer temperatures are linked to a drop in gross state product (GSP)—which measures the value added in production by labor and capital in each state. The researchers found that for every 1°F increase in average summer temperature, the annual GSP growth rate declines by 0.154 percentage points. This isn’t just a dip in economic output. A reduction in the growth rate has long-term implications since growth rate changes compound over time.

Final Thoughts

The current heatwave is a stark reminder of the growing challenges posed by climate change. But how can policymakers and businesses tackle the economic impact of extreme heat? This isn’t just about handling the immediate effects; it’s about planning for a future where these heatwaves might become the norm. As extreme heat events become more frequent and intense, their impact on worker productivity and economic output will only increase if we don’t change how we respond.

Federal law requires employers to protect workers from the dangers of heat exposure and to have a proper safety and health plan in place. At a minimum, this means providing adequate cool water, rest breaks, and shade or a cool rest area. While some states may be slow to implement policies, local governments have taken steps to protect workers from the elements. However, states like Florida and Texas have even limited the power of local governments to require heat and water breaks for outdoor workers.

In the end, addressing the economic consequences of extreme heat isn’t just about responding to immediate crises; it’s about preparing for a future where such events are the norm rather than the exception. Thoughtful policy and innovative business practices can help workers navigate this dangerous environment and help ensure a productive and resilient economy.