There may be a dark lining to the sunny June employment report, which recorded an increase of 288,000 payroll jobs for the month. Most — or all — of the increase may have been part-time jobs. If that’s a trend, it could signal a weaker economy. It could also vindicate critics of the Affordable Care Act (the ACA or Obamacare). They have argued that the added costs of providing health insurance for full-time workers would cause many firms to emphasize part-time employment.
Is it a trend? Writing in the Wall Street Journal, Mortimer Zuckerman — real estate developer and editor in chief of U.S. News & World Report — says yes. Some data seem convincing. In June, part-time jobs (defined as less than 35 hours a week) increased by 1,115,000, reports the Bureau of Labor Statistics (BLS); full-time jobs fell by 708,000.
“Just think of all those Americans working part time, no doubt glad to have the work but also contending with lower pay, diminished benefits and little job security,” wrote Zuckerman.
The administration differs. After the release of the June jobs report on July 3, the White House Council of Economic Advisers noted that “the 1.4 million jobs added in the first half of this year are the most in any first half since 1999.” The strong increase in payroll jobs suggested that the weakness in the first quarter’s gross domestic product (GDP) was a fluke, reflecting bad weather or statistical gaps.
Who’s right? Unfortunately, we don’t know. The official job statistics aren’t conclusive. The BLS does two job surveys. They don’t always agree. That’s the case here.
The payroll job figures came from a monthly survey of 554,000 business locations (“establishments”). Hence, this survey is called the “payroll” or “establishment” survey. Firms are asked the number of people on their payrolls, their pay and occupations. With this data, the BLS makes estimates for the entire economy. The payroll survey produced June’s 288,000-job gain.
But the payroll survey can’t estimate unemployment, because it doesn’t know how many people want a job and can’t find one. For that, the BLS turns to its “household” survey: monthly interviews with 60,000 Americans. Do they have a job? If so, is it part-time or full-time? If not, are they looking for one? If jobless, for how long? By the household survey, June’s job increase was 407,000 (about 40 percent higher than the payroll estimate), consisting of that whopping — 1,115,000 — increase in part-time jobs offset by the 708,000 loss in full-time jobs.
So two surveys produce two estimates of June’s job change and one survey (the household) attributes all the gain to part-time work. Note that critics such as Zuckerman are engaging in a bit of statistical razzle-dazzle by describing the entire 288,000 payroll gain as part-time jobs. They have imposed the household survey’s result on the payroll survey. That’s an assumption, not a fact.
Between the two surveys, many economists trust the payroll figures more. The reason: Its sample size is larger, reflecting a third of all non-farm employment; by contrast, the personal interviews involve less than 1 percent of U.S. households. “There’s a lot of volatility in the household survey,” says economist Chris Christopher of Global Insight. Seasonal adjustments are especially tricky.
One month’s gain or loss in part-time jobs is often reversed the next month. That has happened over the past year. From June 2013 to June 2014, the household survey shows a job gain of nearly 2.15 million, with more than 90 percent of the increase occurring in full-time jobs. Moreover, the small year-over-year increase in part-timers occurred entirely among workers who didn’t want full-time work. This would include some students, retirees and dual-earner couples. Slightly less than a fifth of all jobs are part-time; of these, almost three-quarters are voluntary in this sense.
Still, the economy could be slowly acquiring a part-time bias, as Zuckerman worries. The Great Recession doubled the number of part-time workers who wanted full-time jobs. It’s still more than 3 million higher (almost 75 percent) than in 2007. Moreover, the incentives from Obamacare to hire part-time workers — defined by the ACA as less than 30 hours a week — are powerful; companies with 50 workers or more would have to pay thousands to buy insurance for their workers. The next few employment reports ought to tell us whether June’s figures were a statistical blip — or the start of a part-timers’ boom.
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