High growth rate of labor hours per worker signals low future stock returns and high future hiring rate. As labor hours are substituted for hiring, hiring becomes less responsive to future discount rate. The growth rate of the number of labor hours per worker does not appear to be related to future profitability. Our findings are largely consistent with a dynamic labor hours asset pricing model that features large asymmetric costs in adjusting the number of workers and small costs in adjusting the number of hours per worker.