- [Narrator] When people clock into work,
economists are watching.
Going back to the 1950s,
the change in the number of hours people work
has been a warning sign.
Before almost every recession,
that number has dropped,
and today it's happening again.
- The average number of hours worked each week
has declined from pretty high levels to 2019 levels
and even maybe a little bit below.
- [Narrator] But this time,
economists aren't so sure
this dip means the U.S. is headed for a recession.
Here's why hours worked is a recession indicator,
and why this slowdown could be different.
Hours worked is basically what it sounds like,
the amount of hours per week
that private sector employees punch in.
Since businesses are more likely to adjust hours
before hiring or laying off workers,
these changes can signal increases or decreases
in overall economic activity.
- But if the consumers are spending less,
spending less, spending less,
companies are gonna start to feel that pressure.
They're going to first start to cut hours,
if they have that ability,
because they don't really wanna cut workers.
- [Narrator] Economists have been looking at it for decades.
A scholar in the 1980s
said cutting hours in manufacturing
was so cyclically consistent
that it was a major leading indicator.
But despite this history,
some think this usually reliable recession indicator
could be a false alarm this time
because unusual post-pandemic factors are at work.
Today in the private sector,
manufacturing, transportation, construction,
retail and hospitality working hours are going down.
The overall average declined to about 34 hours in May.
That's down from a peak of 35 hours in January, 2021,
and is below the 2019 average before the pandemic.
- It's hard to argue
that the economy is struggling at this current moment.
The concern, and I guess
which is always the million dollar question,
is why can't you predict a recession or anything like that?
And that's because the turning point,
it happens very fast.
- [Narrator] Growth has begun to slow
or turn negative by one measure,
and some employers may be responding by cutting hours,
like engine company American Fleet.
- They had a huge overtime bill in 2021 and 2022.
They were just like,
were flooded with so much demand they couldn't keep up,
and now they've cut all those overtime hours
and they're having their workers
do sort of like random other stuff
and preparing for business to pick up again.
But yeah, no overtime hours anymore.
- [Narrator] The company said it isn't planning layoffs
and it'd do everything it could to keep workers.
And other employers are cutting regular hours too.
In June, the number of part-time workers
who want to work full-time jumped 452,000,
the biggest increase in three years.
- First thing they're gonna do is kinda cut back hiring,
and cut back hiring may necessarily
also be cutting back available opportunities
for part-time work.
And then the next piece would be cutting back hours
within the employees that work there already.
And then the final piece is letting them go.
- But while employers are cutting hours,
they're also adding workers,
something they don't usually do when layoffs are ahead.
In the first 1/2 of this year,
U.S. employers added an average of 278,000 jobs each month.
And in May, there were 14% fewer layoffs
than in the average month in 2019.
- This has been the toughest hiring environment
we've ever seen,
and we do not wanna be laying people off.
Nah, we're just gonna hang onto them and ride through this.
- [Narrator] By riding out tough times with more employees,
economists think workers can stop overworking
and return to manageable hours.
And one study from Washington University in St. louis
suggests many people are working less
because they want to.
- Maybe expectations about jobs have changed,
expectations about work-life balance,
working from home.
I think those are conversations
that we're still trying to work out in the labor market.
- [Narrator] Taking the post pandemic factors into account,
the hours worked indicator may defy history this time.
- Those make it seem
that the decline we're seeing right now
is maybe not as ominous as it would normally be.
(bright music)