US Companies Choose "Reduced Working Hours Instead of Layoffs"... Preserving Workforce Despite Economic Downturn

Reduced Weekly Working Hours in the US
Increase in Employment and Decrease in Layoffs
Companies Facing Labor Shortage Reluctant to Cut Staff
Low-Wage Workers Relieve Overwork

It has been revealed that American companies are reducing employees' working hours in preparation for an economic recession. Employers who experienced labor shortages during the COVID-19 outbreak are conserving their workforce instead of cutting jobs despite business difficulties.

According to the U.S. Department of Labor on the 18th (local time), the average weekly hours worked by employees in private companies in the U.S. in May was 34.3 hours. This figure is lower than 2019 (34.4 hours), which had the shortest average weekly working hours since 2009.

[Image source=AP Yonhap News]

While working hours decreased, the total number of employees working increased. The number of workers employed last month was 339,000, bringing the total number of employed people this year to 1.6 million. The number of laid-off employees also decreased by 13% in April compared to the same month in 2019.

In this way, American companies are devising measures to increase the number of employees while reducing working hours as a cost-saving measure. Unlike before, when layoffs were the first step to reduce costs, companies are responding to the economic slowdown in a different way.

Experts analyze that companies are reluctant to lay off employees after experiencing severe labor shortages due to COVID-19. Aichi Amemiya, Chief U.S. Economist at Nomura Securities, explained, "In the past, reduced working hours were a sign of layoffs, but it has changed significantly since COVID-19," adding, "Employers are hesitant to lay off employees needed when the economy recovers due to employment trauma."

This phenomenon has allowed low-wage workers who suffered from overwork to work normal hours. The average overtime hours for factory workers last month was 3.6 hours, down from 4.1 hours during the same period last year.

Especially in service sectors such as hotels and restaurants, which heavily rely on part-time workers, weekly working hours have decreased by about 5% compared to the peak of COVID-19. Lawrence Roberts, CEO of the restaurant chain El Pollo Loco headquartered in California, emphasized, "We have hired enough staff so that employees no longer need to work overtime."

Omer Sharif, chairman of the U.S. investment analysis firm Inflation Insight, told the WSJ, "Since COVID-19, companies have hired many workers, leading to a division of labor," and analyzed that the activation of hiring by companies has partially resolved the chronic labor shortage.

This content was produced with the assistance of AI translation services.