The post-pandemic labor market recovery has been surprisingly strong, characterized by low unemployment and booming job creation. However, a possible warning sign lies within the data—a decline in median hours worked and a rise in part-time jobs, according to an analysis conducted by the ADP Research Institute.
In December 2019, part-time jobs accounted for 43 percent of all hourly jobs, but by December 2023, they accounted for 47 percent, ADP found. During the same period, the median number of hours worked by hourly workers fell from 38.4 to 37.7 a week, a decline of almost two percent.
The ADP Research Institute examined the payroll records of private-sector, hourly workers, tracking about 13 million individual jobs each month. Lead data scientist Liv Wang, who conducted the analysis, stated, “The pandemic affected the labor market in ways small and large, including hours worked.”
Julia Pollak, the chief economist at ZipRecruiter, noted that the relationship between hours worked and the health of the labor market is complicated. She suggested that the data could be signaling that the labor market is not as strong as other measures indicate and that layoffs and job loss may be around the corner.
According to the Bureau of Labor Statistics (BLS), the workweek for all private-sector nonfarm workers ranged from 34.3 to 34.6 hours between 2015 and 2019. In February, the average workweek for all employees on private nonfarm payrolls edged up to 34.3 hours, at the bottom end of what’s considered healthy.
Pollak explained, “Below that tends to signal layoffs. Above that is not great either, like during the pandemic reopening period when companies that were short-staffed were excessively relying on overtime.”
It’s challenging to determine whether working hours are declining due to a rise in involuntary part-time work or if people are voluntarily working less. Pollak suggested that rising wages may enable employees to work less without reducing income, and factors like child care responsibilities and the gig economy may also impact the workweek.
Employers may be avoiding overtime labor costs and reacting to economic fluctuations by hiring more employees but giving them fewer hours instead of reducing headcount. Pollak also mentioned the rise in labor force participation among women and young people, who traditionally work fewer hours.
The ADP Research Institute found that adults 35 and younger are working an hour less than they did four years ago, while hours worked by older age groups remained steady. Women accounted for 47 percent of all hourly paid workers in December 2023 but made up 56 percent of all part-time hourly workers.
There has been an increase in wealth among every income level since the pandemic, with younger workers in front-line, hourly roles receiving the largest wage increases. Workers who stayed in their jobs were able to command more than five percent annual pay increases in 2022 and 2023, while job-switchers saw even higher pay gains.
Despite the declines in median and average hours worked, Pollak emphasized that it does not necessarily mean that individuals who previously worked 40 hours a week are now working fewer hours. It could be that the workforce has absorbed new marginal workers who are only prepared to work part-time when jobs are sufficiently attractive.
In conclusion, while the post-pandemic labor market recovery has shown strength in terms of low unemployment and job creation, the decline in median hours worked and rise in part-time jobs could be signaling underlying issues within the labor market. It’s essential for policymakers and employers to closely monitor these trends to ensure the long-term health and stability of the workforce.
