Americans are working fewest hours on record

Unemployment is up again, and the average hours worked by those with jobs is at its lowest point in 45 years.

By , Staff writer

The US economy continued to lose jobs at a rapid clip in June, and millions of workers who have jobs are working less than they'd like.

These new employment indicators underscore that the US economy remains in tough shape, even as it appears to be transitioning from recession toward recovery.

The number of hours worked by people who have jobs fell to the lowest level in 45 years of record keeping – 33 hours per week on average – the Labor Department reported Thursday.

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The unemployment rate continued to climb to 9.5 percent in June. The net loss of 467,000 jobs was worse than expected, causing stock investors to send share prices down about 2 percent in morning trading.

Despite the sobering employment picture, other indicators still lead forecasters to expect economic growth to resume later this year. Moreover, the pace of job losses appears to be slowing, though it will likely take a while to restore a truly positive job climate.

"The private sector's total paid hours ... is now fewer than the total hours worked in June 1998," says Charles McMillion of MBG Information Services, in a report analyzing the labor figures.

That's an extraordinary downshift, he says. Until this recession, the total hours worked across the entire the economy have never been in a decline of that length. In fact, they have always increased by 10 percent or more in every 11-year period since records began in 1964.

While the average hours worked by individuals has generally been falling during those decades – and especially fast during recessions – the economy is also typically adding new jobs, so that the total hours worked overall increases.

This recession combines a steep loss in jobs while employers also cut back the number of hours their employees work. Many workers who want full-time work are instead employed part-time. In a dramatic example of cutbacks, many automotive plants in the Midwest are remaining idle for weeks on end. Meanwhile, the total number of jobs in the economy is fewer now than it was nine years ago, the first time that's been the case since the 1930s.

To many economists, the decline in hours worked suggests that gross domestic product (GDP) will decline in the second quarter. But they generally expect modest growth to resume later in the year, as credit conditions improve and a government stimulus plan provides some support. Often, employers will increase hours for current employees before hiring more.

Several other indicators are beginning to move in a positive direction:

• Outplacement expert John Challenger says corporate announcements of plans to cut jobs fell to a 15-month low in June.

• The National Federation of Independent Business says 10 percent of small businesses are planning to hire workers in the next three months. That's almost as many as those saying they plan to cut staff.

• Factory orders increased in May for the third time in four months, according to another economic report Thursday.

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