People are working less. Who – and why?

When analysts and policymakers check the health of the labor market, unemployment and job creation typically dominate the conversation. By that measure, things are going well. U.S. unemployment was 3.7 percent in January and the economy added an average of 197,000 non-farm private jobs a month in 2023, according to government data.

Those upbeat headlines, however, have obscured a less-obvious trend. Yes, more people are working. But hourly workers as a group are putting in less time than they did just a few years ago.

Measuring hours worked

The ADP Research Institute examined the payroll records of private, hourly, non-farm workers, paying close attention to people who were paid weekly or bi-weekly. We isolated discrete employee-employer pairs to identify and track about 13 million individual jobs each month.

Looking at our sample from October 2019 to December 2023, we measured average weekly hours worked within a given month for each job, then calculated the median of those observations.

Why are hours worked important? Labor inputs to the economy rely not only on the number of people employed, but how much time those people devote to their jobs.

The pandemic affected the labor market in ways small and large, including hours worked. Opportunities in the gig economy offered workers the promise of flexibility. Historically high post-pandemic pay gains in some sectors gave people the opportunity to put in fewer hours without sacrificing income.

Employers, too, made changes. It can be easier for a company to cut hours than reduce employee headcount, for example. Regulations governing overtime pay and employee benefits can factor into these decisions.

In short, the labor market changed in ways that can’t be told by the unemployment rate alone.

The shrinking workweek

While the post-pandemic job recovery was strong, it was accompanied by a rise in part-time labor and a decline in median hours worked.

In December 2019, part-time jobs accounted for 43 percent of all hourly jobs. By December 2023, they accounted for 47 percent.

At the same time, U.S. hourly workers have been putting in less time on the job. Between December 2019 and December 2023, the median number of hours worked fell from 38.4 to 37.7 a week, a decline of almost two percent.

Who’s working less?

The people driving this four-year decline in hours worked fall into four main groups: Women, young adults, highly paid workers, and employees at small businesses.

Adults 35 and younger are working an hour less than they did four years ago, while hours worked by older age groups held steady.

Employees at small companies have typically put in fewer hours each week than their counterparts at large companies, but they, too, are working less than they used to.

Education and health services and leisure and hospitality were among the sectors most affected by the pandemic. Neither has recovered fully from pandemic job cuts, and both currently face labor shortages. Yet people in these industries are working less, too.

Even white-collar jobs haven’t been immune to a reduction in median hours worked. A burst of information industry hiring during the pandemic was followed by layoffs at large technology companies, leading to a 10 percent reduction in hours worked between October 2019 and October 2023, one of the biggest declines of any industry.

If workers insist on putting in fewer hours, or if their organizations force cuts, it could be another drag on the employment recovery.

High earners are cutting back

As the economy roared back after the pandemic, job-stayers¹The ADP Research Institute tracks individuals working the same job over a 12-month period to identify their year-over-year change in annual total hours, annual gross pay, and annual average hourly pay rate. If a job is paid only part of the year, an annual equivalent is estimated. This matched sample yields more than 7 million hourly paid job-stayers each month. were able to command more than five percent annual pay increases in 2022 and 2023, ADP payroll data shows.

For people who changed jobs, the numbers were even higher. In June 2022, job-switchers recorded a 16.4 percent pay gain, according to ADP data. This historic jump helped offset the effects of the reduced hours that followed.

Between June and December 2023, the highest quartile earners put in fewer hours every month than they had worked the year prior. The lowest earners continued to add hours despite big post-pandemic pay increases. But that growth in hours slowed after pay gains peaked in mid-2022.

While earners with the highest annual gross pay—those in the fourth quartile making a median of about $79,500 a year—are working fewer hours than they did a year ago, workers in the first and second quartile—with median pay of about $16,100 and $35,400, respectively—are putting in more.

In other words, while wages in general have risen, most of the people who worked fewer hours were higher wage earners whose pay increases helped offset the effects of reduced hours on annual earnings. In 2022, annual pay for more than half of these workers was higher, even though they worked fewer hours.

Among people who worked fewer hours than a year ago, a majority have a higher hourly wage. Wages in general are rising, so we’d expect hourly wages to be rising even for workers whose hours got reduced. These hourly wage increases offset the effect of reduced hours on workers’ annual gross pay. For example, in October 2022, 52 percent of workers whose hours were reduced saw an increase in their annual gross pay because their hourly wage had grown so much. By December 2023, that number had dropped to 43.7 percent — still more than 4 in 10 workers.

 The reign of the female part-timer

While women accounted for 47 percent of all hourly paid workers in December 2023, they made up more than half of all part-time hourly workers.

Now females who are paid by the hour are putting in an hour less per week than they did in 2019. Time worked by male hourly workers, in contrast, is little changed at about 40 hours a week.

Over the past four years, the hours-worked gender gap has widened from 4.4 to 5.4 hours a week.

Our takeaway

The pandemic impact on hours worked is persistent but varies across demographic groups, wage level, company size, and industries.