Lots of Hiring, but Not So Much Working

This could be ominous. With growth now slowing—and by one measure, negative—some employers might be responding by cutting hours, perhaps in preparation for recession. 

“In the past, reducing working hours has been a reliable harbinger of a wave of layoffs,” said Aichi Amemiya, senior U.S. economist at Nomura Securities. 

This time, that recession signal might be a false alarm because unusual postpandemic factors are at work. Indeed, even as employers cut hours, they are also adding workers—something they don’t usually do when contraction looms. Payrolls rose by 339,000 in May and by nearly 1.6 million for the year to date. Layoffs were nearly 13% lower in April than in the average month in 2019, according to the Labor Department. 

The expense and trauma of hiring have left employers unusually eager to avoid shedding staff they will need when business picks up again, according to Amemiya. “That’s quite different from the past,” he said. 

Businesses are finally able to hire for long-unfilled positions, allowing overworked staff to return to more normal hours. Finally, workers are opting to work less, possibly because of a shift in work-life priorities.

In May, the average factory worker had 3.6 overtime hours, down from 4.1 a year earlier. 

Throughout much of the pandemic, American Fleet was churning out diesel engines for trucking companies. The Springfield, Mo., business couldn’t hire fast enough, said sales manager Mark Patterson. “We can do 30 engines a month easy, and last year we were sometimes doing 40—the guys were working overtime to get it all done,” he said. 

Then, earlier this year, roaring growth came to an abrupt end. Orders for American Fleet’s engines are down around 40% as consumers’ pandemic-driven goods-buying binge waned, leaving truckers sitting idle. The company shifted from desperately posting job ads online to cutting worker hours. 

Normally, reduced worker hours would signal impending job cuts. But Patterson said American Fleet isn’t planning layoffs because mechanics are so hard to find. With fewer orders to fill, workers are prepping engine blocks and upgrading equipment. He is optimistic that sales will start to pick up again based on containership arrivals, but that will take time to filter through.

“There’s such a shortage of labor we’ll do everything we can to keep everybody because you’re afraid you won’t get them back,” Patterson said. “The labor situation is the hardest we’ve ever faced, and we’ve been in business 35 years.”

For many employers—especially in lower-paying industries requiring in-person interaction—critical positions went unfilled, so work was spread across fewer employees—pushing up the number of hours each worker put in. 

Droves of workers have since rejoined the labor force, allowing businesses that had operated short-staffed to fill critical roles. “We’re getting more people back to work, and that’s allowing some of the work to get split up,” said

At hotels, restaurants and shops, which are relatively more reliant on part-time workers, the workweek has dropped around 5% from pandemic peaks—compared with a 2% decline for the economy as a whole. 

The restaurant chain El Pollo Loco said it has been able to hire enough people for its locations so that workers no longer need to skip breaks or take overtime.

“Our restaurants are basically fully staffed,” Laurance Roberts, chief executive of the Costa Mesa, Calif.-based company, told analysts recently. 

“We’ve gotten past the point where supply was a major constraint—where restaurants had to close on certain days or for certain hours because there weren’t enough workers,” said Stephen Juneau, economist at Bank of America Merrill Lynch. “We’re now operating in a ‘business as usual’ way, but that doesn’t mean that the labor market isn’t still very hot.”

Casey’s, a convenience-store chain, said employees are staying at their jobs longer. That resulted in 20% fewer overtime hours in its latest quarter as stores no longer needed to rely on having fewer employees work more. 

A slightly different measure offers another possible reason the job market remains tight as hours drop: People are working less simply because they want to. 

During the pandemic, U.S. workers began spending fewer hours in their jobs, according to a paper by the economist Yongseok Shin and colleagues at Washington University in St. Louis. Their research draws from the Census Bureau’s survey of households, reflecting how many hours respondents and other household members actually worked. That differs from the better-known survey of employers, which is based on how many hours per job businesses paid workers for. 

That trend has kept building even as the impact of Covid has faded. Outside of the early months of the pandemic, the average worker is now putting in fewer hours than at any point since 2014, during a slow recovery from the 2007-09 global financial crisis. 

Survey data suggests this reflects a shift in priorities catalyzed by the pandemic, which remote work likely helped facilitate, making it easier for people to log off early without worrying about bosses looking askance, said Shin. 

That the work-life reset affected everyone simultaneously could also be a factor, he added. Workers before the pandemic likely worried about being passed over for promotions or a bonus if they worked less than their peers. “But with enough people choosing to work fewer hours at the same time, they don’t have to worry about losing standing in the economy,” said Shin. “That’s why I think this is a stable trend.”

—Sarah Chaney Cambon contributed to this article.

Write to Gwynn Guilford at [email protected] and Austen Hufford at [email protected]

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