March Madness Report – Office Pools Cost Millions, But Boost Morale

by Challenger Gray and Christmas

The main action for the 2015 NCAA men’s basketball tournament gets underway Thursday, March 19, but the viral phenomenon known as March Madness officially sets in on Monday, March 16. That is when workers across the country begin clogging the company internet with efforts to craft a winning bracket for their workplace and non-workplace betting pools.

It is estimated that more than 60 million Americans fill out tournament brackets. Many of these individuals, including the President of the United States, take time out of their workday to complete these brackets, as well as conduct the research needed to make informed selections.

Of course, the distractions do not end with filling out the bracket. Even more productivity is lost over the first two full days of tournament play (Thursday and Friday), when a dozen games are played during work hours.

It is an annual tradition that has become woven into the fabric the American workplace and society at large. However, there is a cost in terms of lost wages paid to distracted and unproductive workers, and, this year, the cost could reach as high as $1.9 billion. Said John A. Challenger, chief executive officer of Challenger, Gray & Christmas:

That figure may be on the conservative side, considering this year could garner a lot more interest from even casual basketball fans eager to see if Kentucky can continue its undefeated season through the tournament.

If Kentucky plays their first tournament game during the workday, it wouldn’t be shocking if every single working person in the state called in sick for the day or took an extra-long lunch break.

Challenger’s estimate is based on the number of working Americans who are likely to be caught up in March Madness; the estimated time spent filling out brackets and streaming games; and average hourly earnings, which, in January, stood at $24.78, according to the Bureau of Labor Statistics.

The challenge is estimating the number of people who participate in March Madness pools. A 2009 Microsoft survey, estimated that 50 million Americans participate in March Madness office pools. A 2014 article at Smithsonian.com put the number of Americans “filling out brackets” at 60 million.

Meanwhile, a 2012 MSN survey found that 86 percent of workers will devote at least part of their workday to updating brackets, checking scores and following games during the tournament. If that survey sample was representative of the US workforce, it means that the number the working Americans with “March Madness” could reach 119 million.

Furthermore, the MSN survey indicated that 56 percent of workers planned to spend at least one hour on March Madness activities. Assuming that holds for this year’s tournament, that is roughly 77.7 million workers who will each cost their employers an average of $24.78 in wages for an hour of wasted productivity. That comes to a total of $1.9 billion for the group. (77.7 million X $24.78)

Even with the most conservative estimates, March Madness is still costly. A 2013 survey by CareerBuilder.com found that 19 percent of private sector workers participated in March Madness office pools. Based on the latest private-sector payroll data from the Bureau of Labor Statistics, the 19 percent represents about 22.3 million workers.

Each hour of unproductive work time for these 22.3 million March Madness pool participants costs the nation’s employers $552.6 million. Said Challenger:

Of course, the 22.3 million figure leaves out public-sector workers. However, they too get caught up in March Madness. In fact, the most powerful public-sector worker in the country – President Obama – has filled out a bracket each year he’s been in office,

While some might argue that measuring productivity for salaried workers, including the president, is very difficult. After all, these workers are not confined to a 9-to-5 workday. So, if a little time during the workday is spent filling out a bracket, that work will be made up at another time.

However, it is important to remember that hourly-wage earners number 77.2 million, representing more than 52 percent all workers. And, it is not just low-skilled minimum wage earners who are clock punchers. Many professionals, the most notable being attorneys, charge for their services on an hourly basis.

Additionally, while it may have once been true that only deskbound office workers with internet access were at risk of being distracted by the tournament, now anyone with a mobile phone can get in on the action. Armed with ubiquitous tablets and smart phones, even hourly workers in the field may be consumed by the tournament.

So, employers should ban workplace pools and block access to streaming sites, right?

Absolutely not.

This tournament and the betting and bracket-building that come with it are ingrained in the national fabric. Trying to stop it would be like trying to stop a freight train. When even the president finds time to fill out a bracket, an employer would be hard pressed to come up with a legitimate reason to clamp down on March Madness activities.

Any attempt to do so would most likely result in long-term damage to employee morale, loyalty and engagement that would far outweigh any short-term benefit to productivity.

If anything, employers should embrace March Madness and seek ways to it as a tool to boost employee morale and engagement. For example, creating a company-wide office pool that is free to enter and offers a free lunch or gift card for the winner could help build camaraderie and encourage interaction among co-workers who may not typically cross paths.

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Key March Madness Stats

EMPLOYMENT/WAGE STATS

138,728,000 Total nonfarm payroll employment in January (BLS)

116,976,000 Total private-sector, nonfarm payroll employment in January (BLS)

$24.75 Average hourly earnings of all employees on private nonfarm payrolls in January (BLS)

NUMBER BETTING/FILLING OUT BRACKETS

50,000,000 Estimated number of Americans participating in MM office pools, based on 2009 Microsoft survey

60,000,000 Estimated number of Americans who “fill out a bracket each year,” according to March 2014 article on Smithsonian.com.

22,000,000 Number of private sector workers who participated in MM office pool, based on 1-in-5 (19%) respondents to a November 2013 CareerBuilder.com survey. Applied to the BLS count on private, nonfarm payroll employees of 116.3 million (116.3 mil X .19 = 22 million).

11,000,000 Approximate number of people filling out brackets on ESPN.com during 2014 Tournament.

NUMBER OF VIEWERS

16.3 million Gross total of viewers of Turner Sports’ coverage of semifinal rounds on TBS, TNT, and TruTV in 2014.

21 million Number of viewers for CBS coverage of 2014 NCAA national championship.

102 million Total number of unique viewers for entire 2014 tournament.

9.9 million Number of unique viewers who streamed games on NCAA March Madness Live in 2014

HOURS WATCHED

377 Average number of minutes each of the 102 million unique viewers watched throughout the 2014 tournament

15.1 million Total number of live hours streamed on March Madness Live in 2014

1.5 hours Average number of hours streamed per unique user (15.1 mil/9.9 mil)

86% Percentage of respondents to 2012 MSN survey who said they will devote at least part of their workday to updating brackets, checking scores and following games during the tournament. If that holds this year, more than 119 million workers will be distracted by March Madness. (.86 X 138,728,000, which was total nonfarm employment in January, according to BLS).

56% Percentage of workers who planned to spend at least one hour of their workday on March Madness activities (MSN, 2012). If that repeats this year, approximately 77.7 million workers, based on total nonfarm payrolls as of January 2015

POSSIBLE IMPACT

$1.24 billion Total in “lost wages” for each hour spent on March Madness activities, based on 50 million workplace March Madness bracket-ers (50 mil X $24.75)

$544.5 million Total in “lost wages” for each hour, based on more conservative estimate of 22 million workers in March Madness office pools. (22mil. X $24.75)

$1.9 billion Lost wages resulting if MSN Survey is correct in its estimate that 56% of all workers, or 77.7 million people, will spend at least one hour of their workday on March Madness activities. (77.7 mil X $24.75)

$367.5 million Lost wages resulting from the 9.9 million March Madness Live users, who spend an average of 1.5 hours streaming games (9.9 million X $37.13, which is the amount earned in 1.5 hours of work, based on hourly rate of $24.75)