Hourly workers — especially women and young adults — are working less than they did before the pandemic, according to an intriguing report out this morning, Emily writes.

Why it matters: The drop is the latest indication of how the U.S. labor market has been reshaped since Covid hit.

Driving the news: Median weekly hours worked fell to 37.7 in December 2023 from 38.4 in 2019, according to the report from ADP Research Institute, an arm of the U.S. payroll processing company.

• That's a meaningful decline — nearly 2%.

What's happening: We don't know exactly why the numbers moved, but the data offer clues. For starters, higher wages likely made it possible for some people to work less.

• Folks who changed jobs in 2022 saw their wages rise a stunning 16.4%, per ADP data, compared to 5% gains for those who stayed in the same job.
• So, a good chunk of people worked less but saw an increase in their annual pay.
• In December 2023, for example, 44% of workers whose hours were reduced still saw an increase in their annual gross pay because their hourly wage went up so much.

Zoom in: A look at who, precisely, is working less also helps explain things. These folks include:

Women: In 2019, women worked 4.4 hours less per week than men, who worked 40 hours. That gap has since widened to 5.4 hours, with men's time staying steady. This may have to do with child care, says Nela Richardson, ADP's chief economist.

• As the cost of care has skyrocketed and become more difficult to find, women might have to work less at their jobs in order to work more to care for children.
• Plus, the industries that saw bigger declines in hours worked — health care, leisure and hospitality — are dominated by women. Women are also more likely to work part-time.

Young adults: Those under 35 are working an hour less per week than they did in 2019. They may not need to work as much as older Americans and can choose to work less. "They don't have the same responsibilities. It's just you," Richardson says.

Zoom out: This isn't just a wage story, says Richardson. A "psychological shift" happened in the pandemic that caused people to reevaluate their work lives, in some cases spurred on by remote or hybrid work options.

Reality check: It's also possible that the decline in hours worked might be a decision being made by employers, rather than workers.

• Some think the tight labor market — and the elevated rate that some workers were quitting — prompted companies to start hoarding workers, hiring more than they needed, and giving them fewer hours.
• Or, in response to higher labor costs, they cut worker hours to avoid overtime pay.
• Plus, more folks are working part time — 47% of hourly roles were part time in December 2023, up from 43% in 2019.

Context: For the report, ADP parsed payroll records, tracking about 13 million hourly jobs at private non-farm employers.

The big picture: Even as hours declined, the job market has been remarkably strong. Unemployment has been under 4% since December 2021.

• And, at the macro level, productivity has surged — that means more workers are doing more per hour worked.

💼 Most U.K. firms involved in a four-day workweek experiment are sticking with it. (CNBC)

🚢 China circumvents U.S. tariffs by shipping more goods via Mexico. (FT)

💳 Senate Republican demands Biden block CapitalOne/Discovery. (Axios)

Japan's stock market reclaimed the high-water market set before its asset bubble burst in the early 1990s, Matt writes.

Why it matters: It's a reflection of how a couple of strategically important corporations find themselves at the epicenter of two key economic trends at the moment: the AI boom and worsening relations between China and the West.

State of play: The Nikkei closed at a new record high of 39,098.68 today, topping the all-time closing high reached on Dec. 29, 1989.

Context: The collapse of the Nikkei was a harbinger of what would become a large-scale crash for financial assets, real estate and the banking system.

• The crash would sink the Japanese economy into a deflationary funk, known as the "lost decade," that extended well beyond the 90s.
• After peaking in 1995, Japan's GDP didn't reach that level again until 2010, according to IMF data.

Driving the news: The recent surge for the Nikkei has been supercharged by the AI gold rush, with large Japanese exporters of semiconductor equipment soaring over the last year.

• Both Tokyo Electron, which makes semiconductor manufacturing equipment, and chip-testing equipment maker Advantest, a supplier to Nvidia among others, have seen their share prices more than double — in U.S. dollar terms — over the last year.

Be smart: These two companies have the second- and third-largest weightings in the Nikkei 225, a price-weighted index similar to the Dow Jones Industrial Average.

• That means their surge has been a major driver in the index's overall increase.

The bottom line: Japan's chip-making prowess — and close political ties with the U.S. — put it in prime position to cash in on the AI frenzy, as its capital and corporations enjoy relatively easy access to the U.S.

• This is a marked distinction from China, whose economic, technological and political connections to the U.S. and Europe have deteriorated sharply over the last few years.

On the other hand: The Nikkei's run shouldn't be confused for an overall boom in the Japanese economy, as it reflects the idiosyncratic AI explosion.

• In fact, Japan slipped into recession at the end of 2023.