Over the past year, the Federal Reserve has rapidly increased interest rates to bring inflation under control. As a result, inflationary pressure has begun to ease, and the economy has shown signs of softening in recent months. However, the labor market remains strong — or “out of balance” according to Fed officials. Basically, demand for labor is outstripping labor supply. But why? The answer, according to my research, is not primarily that fewer people are working. It’s that those who do work are choosing to work fewer hours.
Is the Tight Labor Market Due to Fewer Workers — or Fewer Hours Worked?
New research finds that some employees, particularly high-earning men, are choosing to work less.
February 16, 2023
Juan Moyano/Stocksy
Summary.
The labor market remains incredibly tight in the U.S. which usually means fewer people are working. In this case, though, it’s mostly that workers are choosing to work fewer hours. Specifically, higher-earning men have chosen to cut back their hours worked perhaps because the pandemic made them reassess their priorities. That could signal a wider trend toward better work-life balance as more and more workers adjust their work lives to make a similar decision.