Aggregate Hours

Aggregate Hours

Investopedia / Mira Norian

What Are Aggregate Hours?

Aggregate hours is a statistic that is gathered by the U.S. Department of Labor (DOL). Aggregate hours represents the sum of hours worked by all employed people, either full- or part-time, during the course of a year.

Aggregate hours can also refer to the total hours worked by one sector or group of workers.

Key Takeaways

  • Aggregate hours reveal the total sum of hours worked by all employed people over the course of a year.
  • The Department of Labor (DOL) logs hours worked by full and part-time workers across the country as a whole, as well as per industry.
  • This data is used to measure the total labor required to produce real Gross Domestic Product (GDP).
  • Aggregate hours generally provide a better measure for total labor than the number of people employed because not everyone works the same amount.

Understanding Aggregate Hours

The DOL is a U.S. cabinet-level agency responsible for enforcing federal labor standards and promoting workers' wellbeing. The DOL publishes lots of different economic data and information related to the U.S. labor market. Among the various things it documents are the sum of all hours worked by full- and part-time workers across or within all industries.

The department computes average weekly hours by taking reported worker hours from each establishment and then dividing this number by the total number of all employees each of these establishments has on its payroll.

One of the DOL’s most closely monitored releases is its indexes of aggregate weekly hours. These are calculated by dividing the current month’s estimates of aggregate hours by the average 12 monthly figures for the base year, which is 2007.

Indexes of aggregate weekly hours and payrolls
Source: U.S. Bureau of Labor Statistics.

As you can see in the above table, data is broken down to summarise aggregate hours for the country as a whole, as well as per industry.

Special Considerations

Applications of Aggregate Hours

Gauging how many hours people are working is useful for several reasons. It indicates how much labor input is required to produce the current level of production output. It also gives policymakers and other interested parties, including investors, an idea of whether the economy is potentially slowing or accelerating. 

Aggregate hours statistics play a key role in measuring real Gross Domestic Product (GDP): a macroeconomic, inflation-adjusted measure that reflects the value of all goods and services produced by an economy in a given year. Unlike nominal GDP, real GDP can account for changes in price level and provide a more accurate figure of economic growth.

Aggregate hours are part of total labor calculations required to determine real GDP. For example, faster payroll growth and an increase in average weekly hours can drive aggregate hours up. Assuming stable productivity, more hours worked would mean more output. Therefore, if workers are producing the same amount of goods or services per hour, and are working more hours, than real GDP is higher.

The media sometimes makes a big deal about how many jobs were added to the economy in any given period. In reality, aggregate hours generally provide a better measure for total labor than the number of people employed. That's because not everyone works the same amount. Between the overtime hours, part-time and full-time jobs, the number of people employed cannot provide as accurate a quantifiable measure of total labor as aggregate hours can.

Article Sources
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  1. U.S. Department of Labor. "Table B-4. Indexes of Aggregate Weekly Hours and Payrolls for All Employees on Private Nonfarm Payrolls by Industry Sector, Seasonally Adjusted." Accessed Dec. 7, 2020.

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