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MainStreet Macro: Off the clock

February 27, 2023 | read time icon 4 min

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The number of hours people work during the week is an important signal of labor market activity.

Employers use the number of hours worked as a lever to control the quantity of output their employees deliver. They’re a consequential determinant of wages, profits, inflation, and the productive power of the economy.

Despite their importance, hours worked are notoriously difficult to estimate. While the 40-hour work week is the presumed standard, most people don’t actually work each week with that kind of precision. People can work full or part-time. They might work more hours one month and fewer hours another. 

To help fill the measurement gap, the ADP Research Institute has compiled a database of average hours worked per month, information drawn from the payroll data of roughly 10 million hourly workers. 

The data is drawn from the last paycheck of the month for workers paid weekly or biweekly.

The average number of hours worked rose in January 2023 to 35.56 from 34.81 in December, a month-over-month increase that follows a slight decline in hours worked from before the pandemic. Average hours worked were 35.96 in January 2020.

The labor market has been resilient in the face of inflation and higher interest rates. Hours worked, if they begin to decline meaningfully, could be an important signal of potential risks to that resilience.

As the world of work continues to evolve, we’ll be watching quantity of work as an indicator of change in the complex labor market. Correction: This post is an update to an earlier MainStreet Macro post that specified biweekly pays as weekly hours and thus overstated the decline in hours worked.