Could 2% Fewer Work Hours Threaten Productivity?

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) unveiled some potentially concerning trends 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 for an individual job decreased from 38.4 to 37.7.

Despite significant focus on unemployment and job creation statistics, one key labor market performance indicator that’s often overlooked is the amount of time people are dedicating to their jobs.

ADPRI Senior Data Scientist Liv Wang said in an interview that a nearly 2% drop in median work hours among 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.

Drivers of Reduced Work Hours

The onset of COVID-19 led many workers, especially those who were furloughed, to seek opportunities in the gig economy, attracted by the flexibility to work whenever they want, with total control of work-life balance.

Then in the wake of the Great Resignation, significant post-pandemic pay increases in certain sectors made it possible for some to reduce their hours without losing income. For example, ADP data revealed that 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, reducing work hours is less painful than cutting employee head count. Overtime regulations have directly contributed to the reduction in median work hours in sectors like manufacturing and mining, according to Wang.

Certain Populations Working Less

ADPRI’s study found specific groups experiencing a noticeable decrease in work hours:

• Women: In December 2023, women accounted for 47% of all hourly-paid workers, but represented nearly 56% of all part-time hourly roles. Female hourly workers are putting in one hour less per week than they did back in 2019, while male hourly work hours remain around 40 hours weekly. The gender gap in weekly work hours has expanded from 4.4 to 5.4 over four years.
• Adults 35 and younger: Young adults are working one hour less per week than they did in 2019. Meanwhile, the work hours of older age groups held steady. Wang suggested this may be due to a lack of career advancement opportunities and distributed hours from working multiple gig jobs.
• Highly compensated workers: Between June and December 2023, top earners worked fewer hours each month compared to the previous year. Five-percent annual pay increases for those remaining in their jobs in 2022 and 2023 helped offset the impact of reduced hours. Wang noted, “More than 40% of the people who work less, they still make more than a year ago.”
• Employees at small businesses.

The quarterly ADPRI Today at Work Report being released March 21 offers a comprehensive overview of the data.

If the top brass is concerned that decreased work hours might affect 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 seek new growth opportunities, potentially reducing the 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

Instead of focusing on hours worked:

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