Are you not working a full 40 hours a week, though you would like to? A solid 4.1% of all workers report that they are, in technical terms, “Part Time for Economic Reasons”, which is to say that they’d jump at the chance for a full time job but don’t have one yet. It’s a decent improvement from the 5.3% in this position two years ago, when we last looked at the problem, but it’s still not good.
Worse, the San Francisco Federal Reserve, who studies the phenomenon, has come to believe that it’s a feature of the new economy.
Barataria last took up this question in 2013 when the SF Fed last issued a report on the problem. This goes back to the definition of “unemployment”, which careful observers know means a lot of different things to different people. Where the headline unemployment rate, or U3, stands at 5.5% the broader and more believable U6 is still at 10.8%.
Or, if you believe Donald Trump, the real unemployment rate is 18-20%. But that’s a PFA number, a number he Pulled From … the Air.
The main difference between the two rates is that U6 counts those who are unable to land a full time job even though they’d like one. It’s proven to be one of the most stubborn features of the job market since the deepest part of the downturn in 2010. Where the overall job picture has improved decently, the forced part-timers are declining much less rapidly.
In terms of the number of workers stuck with short hours, it is even more dramatic than as a percentage. 2.4M people fall into this category, about the same number over the last five years:
We can see why the SF Fed is worried about this enough to study the problem, but the results of their work are far from encouraging. In cyclical terms, they’re guessing that the worst is over in terms of people being thrown into part-time work. But those left? It’s what we call “structural”, or the new baseline for workers from here forward. It seems to be the nature of the new economy that we have in which this vital component of U6 is stuck a full percent or so higher than it was:
What does this mean in terms of unemployment? If only the popular media used U6 as an indicator of unemployment we can imagine that this would be a huge issue that would be used to point out what a terrible failure (insert one: Congress, Obama, the Fed, the Oligarchy) is. But we don’t. As long as we use U3, which doesn’t include forced part-timers, the problem is remarkably invisible.
Except to the Federal Reserve, that is, where U6 has been a component of Yellen’s Dashboard. If the Fed has not raised the Discount Rate when you are reading this, the stubbornly high U6 is probably the main reason they balked. And, of course, to the 1 in 25 workers who can’t get the hours.
Where will it go from here? According to the SF Fed, nowhere. But why? They don’t offer any solid reasons as to why the demand for part-time workers is so high that it forces people into the pool, but speculate that it has to do with high labor costs in some places. In California, for example, the forced part-timers are an astonishing 8% of the population. But that’s hardly a satisfactory explanation – or a solid pointer to a course of action that might improve the situation.
The SF Fed didn’t go as far as to speculate that health care benefits, which kick in over 30 hours in the week. Avoiding that cost may indeed be part of the problem, so this report could become political fodder in election season. The net rise of about 1.2% in structurally forced part timers might well be a result of the Affordable Care Act. That is about 1.7M people affected.
Whatever the reason, part-time work appears to be a growing feature of the new economy. The number of people stuck with less than 40 hours a week of work, not by their choice, is stubbornly high.