With the unemployment rate near a 50-year low and businesses hiring left and right, it would seem the American worker is hustling like never before just to keep up with the rising cost of living.
But not everyone is hustling equally.
According to payroll provider ADP and its Research Institute, the highest-earning workers, as well as young workers and female workers, are putting in fewer hours than they did before the pandemic.
The average workweek in 2023 was the lowest in five years, ADP found.
“For significant cohorts of the population, including women, they’re working less now than they did before the pandemic,” said Nela Richardson, chief economist at ADP. “There’s never been more people working in America, and yet individuals on average are working less.”
ADP tracked 13 million hourly workers who kept the same job for four years ending last December—meaning, the drop in hours wasn’t because people were laid off or switched jobs. And while it’s not clear if workers or employers initiated the drop, the pullback among the highest paid provides a clue, Richardson said.
Workers in the highest-paid 25%—those making $79,500 or above—had the largest drop in hours worked. The lowest paid, on the other hand, are working more.
What’s more, a significant portion of people working fewer hours saw their incomes rise, not fall—indicating that less work isn’t necessarily a bad thing for the budget bottom line.
“The mixed blessing of those double-digit wage gains [during the pandemic] is some people are able to make the same salary by working fewer hours a week,” Richardson said. “We think this is a complication of the fact that some people experienced higher wage gains, and also had more flexibility to design their own schedules.”
“If you make a median $80,000 a year…for the most part you’re not in the leisure and hospitality sector,” she said. “You might be a knowledge worker, and that means you might have more flexibility now than before—whether it's doing more gig work, or having more flexibility over your hours.”
Other groups working fewer hours include women, as well as workers under 35, ADP found—workers who are either required or able to prioritize other aspects of their lives besides paid labor.
Historically, a large drop in hours worked is a bad sign: It means there's less work for employees to do, and is often a first step employers take before laying off staff. But that may not be the case this time, economists said.
“Ordinarily it’s a signal that demand is weak or there isn’t as much for people to do,” said Andrew Hunter, deputy chief U.S. Economist at Capital Economics.
But since companies have been hiring and overall layoffs remain low, there may be a different explanation: that “firms are hoarding workers, in a sense.”
“In response to softening in demand, companies have been loath to lay anyone off. So instead there's this idea that they might keep their workers but just work them less intensively,” Hunter said.
Richardson has a similar take, noting the pandemic made companies realize “they can’t grow it and shrink [headcount] on demand, and they’d rather have a deep bench and give each worker less playing time.”
“That would be a huge shift from how they were thinking about talent before the pandemic,” she said.
It’s also possible the change is an outgrowth of the disillusion with work many experienced during the pandemic and the Great Resignation, when tens of millions of people quit their jobs and went into business for themselves, leading to a normalization of the “work to live” perspective and an insistence on work-life balance.
Of course, this wouldn’t be the first time that workers gravitated toward higher pay and less work. Over the centuries in which humanity went from primarily agrarian to an industrial and now postindustrial society, the workweek has shrunk dramatically, and more so in the social democracies of Western Europe. Indeed, compared with other developed nations, American workers still put in much longer hours than most, even with the recent tick downward.
"If you look at average hours worked across various countries, there's huge variation, and the U.S. Is pretty close to the top there," said Hunter. "You could argue there's scope for Americans to work less, [but] that’s not for me to say."
If you cut back on your hours, contact Irina at [email protected].