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Could 2% Fewer Work Hours Threaten Productivity?

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The American workweek is shrinking. Part-time work is on the rise at companies like yours, yet hourly employees are putting in fewer work hours per week than they did just a few years ago.

Utilizing payroll data to track about 13 million individual jobs each month from October 2019 to December 2023, the ADP Research Institute (ADPRI) published some potentially concerning findings in a report on its Data Lab:

  • In December 2019, 43% of all hourly jobs in the U.S. were part-time, but by December 2023, they accounted for 47%.
  • The median number of weekly work hours per individual job fell from 38.4 to 37.7.

With all the attention paid to unemployment and job creation statistics, a labor market key performance indicator that gets overlooked is how much time people are devoting to their jobs.

ADPRI Senior Data Scientist Liv Wang said in an interview that a cumulative drop of almost 2% in median work hours for 13 million people is significant. “It sends signals to employers about how [employees] want to work … what the workers … demand for their work schedule,” she commented.

What’s driving the reduction of work hours

Beginning with COVID, many workers (especially those who found themselves furloughed) gravitated to opportunities in the gig economy. The flexibility to work whenever they want, with total control of work-life balance, proved to be appealing.

Then in the wake of the Great Resignation, historically high post-pandemic pay gains in some sectors provided opportunities to put in fewer hours without sacrificing income. For example, ADP data showed that after the pandemic, job-changers were able to command annual pay increases of more than 16% in June 2022.

And for employers closely tracking overtime pay and employee benefit costs, it’s less painful to cut work hours than it is to cut employee headcount. Overtime rules had a direct impact on decreases in median work hours in manufacturing and mining, Wang said.

Certain populations are working less

ADPRI’s research found that the decline in work hours is particularly prevalent among:

  • Women: While women represented 47% of all hourly-paid workers in December 2023, they made up a majority (almost 56%) of all part-time hourly workers. Females who are paid by the hour are putting in one hour less per week than they did back in 2019. Time worked by male hourly workers, by contrast, is still about 40 hours a week. Over the past four years, the weekly work hour gender gap has widened from 4.4 to 5.4.
  • Adults 35 and younger: Young adults are also working an hour less per week than they did four years ago. Meanwhile, the work hours of older age groups held steady. Wang hypothesized that it’s from a lack of career advancement opportunities and distributed hours from working multiple gig jobs.
  • Highly compensated workers: Between June and December 2023, the highest quarterly wage earners put in fewer hours each month than the corresponding months of the previous year. The 5% annual pay increases in 2022 and 2023 for job-stayers helped offset the effects from reduced hours, said Wang. “More than 40% of the people who work less, they still make more than a year ago,” she said.
  • Employees at small businesses.

For a deeper dive into the data, check out the cover story of the latest quarterly ADPRI Today at Work Report, which gets released March 21.

If the top brass are concerned that people don’t need to work as much, and that a drop off in employee work hours will translate into lost productivity and profits, here are some strategic talent solutions to consider.

Embrace flexibility

Wang said the data points to a strong desire for flexible work for work-life balance. Options you can offer include:

  • Remote work, compressed workweeks and/or flexible start/end times.
  • Trying out a four-day workweek for specific teams or departments to assess the impact on productivity and employee well-being, and
  • Job sharing arrangements for full-time roles.

Address the needs of different demographics

To support the specific populations putting in less time on the job, you can:

  • Offer childcare resources, flexible schedules and/or employee assistance programs to your working parents, particularly to women who may be reducing their work hours.
  • Prioritize attracting and retaining young talent by offering competitive wages and mentorship programs, and fostering a positive work culture that prioritizes well-being.
  • Develop upskilling and reskilling programs to help high earners find new challenges and growth opportunities within the company, potentially reducing their need for additional hours.

Rethink performance management

To find out the needs of those different demographics:

  • Maintain open communication with employees regarding work hour expectations, scheduling changes and flexible work policies.
  • Conduct surveys and hold focus groups to understand employee preferences and concerns regarding work hours and flexibility, and
  • Be transparent about compensation structures and how performance will be evaluated under flexible work arrangements.

Communication and transparency

There are alternatives to focusing on hours worked:

  • Consider measuring performance based on achieved outcomes and goals.
  • Utilize project management tools and time tracking software to measure productivity and effectiveness, and
  • Train managers to effectively lead and evaluate remote/flex working teams.

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