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.
Reblogged this on bears, goats, and strawberries and commented:
Why would anyone work; when it costs more to go to work than not work? Economics 102….oh, you did fail 101. No wonder this place sucks.
Sometimes I feel as though I’m working part-time because the salaries are not comparable to the cost of living here in New York. It’s a real struggle for full-time employees, so I can only imagine what it’s like for those who are forced into part-time working conditions.
That is the real problem – wages are not keeping up with the cost of living. The part time work problem is secondary, but worrisome all the same if it keeps growing.
Doesn’t the cost of living issue fall into the hands of the policy makers and the employers?
Not really, it’s a free market thing. Rent goes up, food goes up, gasoline goes up, etc. Raising the minimum wage would help life everyone, but in a weak job market it would be tough to do. I expect the job market to improve dramatically in the next two years, but that’s an eternity when you don’t have the scratch to pay the rent *this* month.
I hear that!
Employers are stressing flexibility all around & so the lack of full time jobs is only to be expected if you ask me. I do think it is a feature of the new world we live in.
It does seem to be part of a general trend, yes. It’s just one step up from the “gig economy” we’ve talked about before.
Good that you came back to it after 2 years. It would be good to have a big update on jobs since you used to write about it a lot more.
A good point – what is the state of jobs 5.5 years after the trough? I will get on that.
Good blog. I think a rate increase is not in the cards given this.
Where we stand now, we’ll find out in an hour. 🙂 Betting money right now is forward guidance for a rate hike in September without one right now. I still think we should have a small one now to show the markets who is boss. It’s hard to say the stock market is properly valued no matter how you look at it.
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