Headwinds to Labor Market Recovery Part II: Excessive Slack in Work Week

A second headwind to the labor market recovery is excessive slack in current employees’ work schedules. In effort to retain valued employees while balancing lowered consumer demand, employers have reduced work schedules, dropping the average weekly hours worked.

Prior to the onset of the recession, the average work week was 33.8 hours, but as employers began reacting to the decline in consumer demand during the recession, the work week fell to a record low of 33.0 hours in October 2009. Recently there has been a slight improvement in the average work week, which stood at 33.3 hours in March 2010.

However, as the recovery continues in the manufacturing sector and spreads to the service sector, employers have ample flexibility to increase work weeks of existing employees before hiring new staff. To return to the average work week for the six years prior to the recession, employers would have to increase work weeks 1.5%, adding 62.9 million work hours per week for those currently employed.

Other posts in the series Headwinds to Labor Market Recovery
Part I: Slower Job Creation
Part III: Permanent Layoffs
Part IV: Housing Markets