Dark side to jobs report: Big drop in hours worked

Rex Nutting @ Market Watch:

Shorter work week equivalent to 500,000 jobs lost

WASHINGTON (MarketWatch) — The April employment report exceeded expectations, with 165,000 jobs created and a welcome drop in the unemployment rate to 7.5%.

But there was a dark side to the report: Total hours worked fell sharply, and the total amount of money earned by U.S. workers actually declined from the month before.

“Aggregate weekly hours” is an obscure series of data in the jobs report, but it’s vital to understanding how strong the economy is performing. As the name implies, it measures the total number of hours worked, which is what matters for sizing up overall growth in the economy.

Usually, we focus just on the number of new jobs created and the unemployment rate, but the number of hours we work matters just as much, if not more, to our economic well-being.

MarketWatch

Hours worked in April fell 0.4%, equivalent to the loss of more than 500,000 jobs.

Think of it this way: If companies had hired all 12 million unemployed people in April, but had cut everyone’s hours in half, the unemployment rate would have fallen to zero, but we’d be much worse off. Our paychecks would be much smaller, and the economy would contract violently.

In April, companies hired 165,000 more workers, but they cut everyone’s hours (on average) by 12 minutes. That doesn’t sound like much of a decline, but spread out over the 135 million-strong work force, the decline in hours worked is the equivalent of firing more than 500,000 workers while keeping hours steady.

The 0.4% decline in hours worked in April means the economy isn’t quite as strong as you’d think on first glance.

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