Meet the Author

Dionissi Aliprantis |

Research Economist

Dionissi Aliprantis

Dionissi Aliprantis is a research economist in the Research Department of the Federal Reserve Bank of Cleveland. He is primarily interested in applied econometrics, labor and urban economics, and education. His current work investigates neighborhood effects on education and labor market outcomes.

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Meet the Author

Nelson Oliver |

Research Analyst

Nelson Oliver

Nelson Oliver is a research analyst in the Research Department of the Federal Reserve Bank of Cleveland. His primary interests include urban revitalization, housing policy, and applied microeconomics.

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12.04.12

Economic Trends

Market Sectors and the Decline in Average Hours Worked

Dionissi Aliprantis and Nelson Oliver

Since the 1960s, the average number of hours U.S. workers have put in on the job has been decreasing. We looked at recent trends in nonsupervisory employment and average hours worked within the goods-producing and service-providing sectors to identify the specific subsectors behind this change.

In the goods-producing sector, both durable- and nondurable-goods producers experienced significant downturns in the number of people they employed during the Great Recession and the decade before. In the durables sector, employment fell as much in some years before the Great Recession as during it. For example, employment fell 1.6 million between July 2000 and 2003 and again by 1.6 million between mid-2006 and February 2010 (the year before the recession, during it, and through the recovery). Similarly, employment in the nondurables sector shrank from 5.3 million to 3.7 million before the recession (January 1995 to December 2007) and declined further to 3.3 million by January 2010. In comparison, construction employment increased dramatically in the 15 years prior to the Great Recession, and then gave back most of those gains in the last recession. It is notable that even though the goods-producing sector was only 17.1 percent of the total private workforce in December 2007, it accounted for 46.7 percent of the decline in employment between December 2007 and June 2009.

 

In contrast to employment levels, average hours worked in the goods-producing sector did not experience major time trends in the decades before the Great Recession, though hours fluctuated in all subsectors. During the Great Recession, however, each subsector experienced large declines in average hours worked.

In the service-providing sector, the trends in employment and average hours worked have been quite different. The decrease in overall average hours is due to the growing number of people working in service-sector jobs in recent decades, combined with the fact that the average number of hours worked in that sector has been falling. The share of total employment in the service-providing sector has ballooned since the 1960s. In 1965, 61.4 percent of nonsupervisory positions were in the service sector. By 1985 it was 73.3 percent, by 2005, 82.3 percent, and by January 2012, 85.6 percent. Average hours worked per week in the service-providing sector decreased dramatically between 1965 and 1985, going from 37.4 to 33.0 hours. Since 1995 the average hours worked in the service-providing sector has remained relatively constant, and was 32.5 hours in January 2012.

The four largest service-providing subsectors were primarily responsible for these changes:  education and health, leisure and hospitality, professional and business, and retail trade services. In January 1975, these four subsectors represented 43.4 percent of private, nonfarm, nonsupervisory employment. This share has grown steadily, so that by January 2012 these four subsectors accounted for 62.3 percent of private employment.

Share of Overall Employment (Private, Nonfarm, Nonsupervisory)

Subsector

1965

1975

1985

1995

2005

2012

Education and health

8.1

9.7

11.7

14.6

16.6

19.3

Leisure and hospitality

8.1

9.3

10.3

11.6

12.4

13.1

Professional and business

8.3

9.5

11.0

13.2

15.0

16.0

Retail trade

 

14.9

15.8

14.9

14.3

14.0

Total for four subsectors

 

43.4

48.9

54.4

58.4

62.3

Source: Bureau of Labor Statistics, Current Employment Statistics.

 

With the exception of professional and business services, the average weekly hours in each of these subsectors has been below the average of all subsectors combined. Furthermore, the average hours worked in each subsector has experienced a net decline. The low and declining levels of average hours worked in these subsectors explains why, as the total share of employment has shifted to them, the overall average of hours worked per week has declined.

Average Hours Worked per Week by Service-Providing Subsector (Private, Nonfarm, Nonsupervisory) 

Subsector

1965

1975

1985

1995

2005

2012

Education and health

35.4

33.1

31.9

32

32.6

32.4

Leisure and hospitality

32.7

28.8

26.5

26

25.7

24.9

Professional and business

37.4

35.1

34.2

34.1

34.1

35.3

Retail trade

 

34.1

31.4

30.7

30.7

30.8

Total private average hours

38.7

36.1

34.9

34.5

33.7

33.8

Source: Bureau of Labor Statistics, Current Employment Statistics.

 

The analysis so far has considered only nonsupervisory employment and hours. If nonsupervisory positions have become a less significant share of employment in recent decades, the analysis would be less informative about current labor market conditions. Such a shift is plausible: Both increased automation and workers’ higher educational attainment might lead one to suspect that nonsupervisory positions have become a smaller share of employment in recent decades. Perhaps surprisingly, we find that the share of nonsupervisory employment has remained relatively stable since 1965. So it seems reasonable to interpret an analysis of nonsupervisory workers as representative of the labor market in recent years.