The Myth of the March Madness Attack on American Business

The sports world is full of traditions. And as we prepare to enter mid-March, one annual custom continues on. Of course, I’m talking about the endless stories about how much March Madness costs the American economy in lost wages.

This year’s figure, diligently compiled by outplacement firm Challenger Gray Christmas, puts the total assault on productivity at $1.8 billion. And that’s down from a record high of $3.8 billion in 2006.

So how can we tolerate such a loss each and every year? And what has changed to slash this financial havoc by more than half?

Calculating the “Damage”
First, a quick look at where this $1.8 billion number comes from. Challenger Gray Christmas first looked at an MSN survey from 2009 says 45% of Americans planned to enter at least one college basketball pool last year. Well then, according to them, that must apply to every single worker included in payroll employment (129,526,000) which means that 58.3 million workers will be participating in office pools.

Already this starts to fall apart. Almost half of the American workforce will participate in March Madness? Really? But let’s keep going.

So, take that 58.3 million people, and assume that each worker makes an average of $18.70/hour (according to the Bureau of Labor Statistics). That’s more than $6 bucks every 20 minutes. So if each worker (stay with me here) spends 20 minutes every workday of the first week of March Madness (5 days) on non-work related activity, then ta-da, $1.8 billion in damages.

Because, you know, every single minute you’re at the office, you’re working.

This assumes that March Madness will take away from actual work, as opposed to just reallocating some of the slack-off time already built into each workday. Or that the morale and team-boosting effects of participating in an office pool doesn’t have any sort of positive productivity result.

The Truth Behind the Decline
So why the huge decline from previous years? In 2006, Challenger Gray Christmas counted all 16 days of the tournament in their estimate. They used to assume each day was of equal weight. After getting called on it over the years by multiple keen observers, Challenger Gray Christmas now only counts the first week of the tournament, assuming that’s when people are most interested in researching teams and are following the early rounds, which consist of multiple day games. After the end of the first round, many casual observers lose interest (after sadly watching their bracket crumble). Plus, the majority of games are during non-work hours in later rounds.

Overall, these figures have huge, unrealistic assumptions built into them. About half of the workforce participates. Every one of those workers spends 20 minutes everyday for an entire week following the games instead of working. That every minute of every workday you are actually working. That there are no positive effects that come from co-workers being involved in a group exercise like this. And so on.

Good PR. Bad Math.
You have to hand it to them. Every year, Challenger Gray Christmas gets their name in media all over the globe with these stats. But as soon as you dive into their methodology, it doesn’t hold up.

So if you’re a sports fan, don’t feel guilty spending a bit of your workday following the action. It’s not going to create billions in damages.

Hopefully you’re not reading this blog post while you’re at work, otherwise you are hurting the already distressed American economy. Maybe I should issue an annual press release titled “Websterism Costs American Employers About $36 in Lost Wages Each Year.” The newspapers would eat it up, year after year, and I would continually get my name in print.

Actually, I might be onto something.