Just when you thought that the United States’ labor market was improving, with employment gains averaging about 200,000 a month, along comes Mort Zuckerman, real estate magnate and chairman of U.S. News & World Report, throwing cold water on any optimism. The truth, wrote Zuckerman in the Wall Street Journal, is that, according to the Labor Department’s household survey, almost three-quarters of new jobs in 2013 have been part time. These need to be discounted in judging the economy’s strength, argued Zuckerman.
“At this stage of an expansion you would expect the number of part-time jobs to be declining, as companies would be doing more full-time hiring,” he wrote. “Not this time. In the long misery of this post-recession period, we have an extraordinary situation: Americans by the millions are in part-time work because there are no other employment opportunities.”
Ugh. To Zuckerman, work is increasingly catch-as-catch-can, with firms relying more “on independent contractors and part-time, temporary and seasonal employees.” He also blames the Affordable Care Act (”ObamaCare”), which has been criticized as discouraging full-time hiring. Companies with fewer than 50 full-time workers don’t have to provide health insurance; nor are part-time employees (defined as working less than 30 hours a week) entitled to company coverage. These are powerful deterrents to adding full-time workers.
On some counts, Zuckerman’s critique is overwrought.
For starters, it belittles genuine job progress. Gains since the recession’s trough in 2009, though inadequate, are still substantial. “Companies [now] seem to be holding on to their employees,” said economist Beth Ann Bovino of Standard & Poor’s. Initial weekly unemployment claims peaked at about 650,000; now they’re about half that, 334,000 in a recent week, she said. The official unemployment rate has dropped from 10 percent in October 2009 to 7.6 percent. A broader measure (called the U-6), which includes involuntary part-time workers and people out of the labor force who want a job, is down to 14.3 percent from 17.1 percent.
Nor is there much evidence that, in the recovery, part-time workers have represented a disproportionate share of new jobs. Economist Scott Anderson of the Bank of the West analyzed employment gains since January 2009 and found that in June part-time jobs accounted for 19.5 percent of total employment, “exactly the average share . . . since January 2009.” Part-time jobs sometimes surge for a few months, he noted, but then the rapid gains have been reversed.
Finally, Zuckerman doesn’t acknowledge that most part-time jobs are desired by workers. Of the 27 million part-time workers in June, slightly more than 19 million were voluntary: students splitting jobs and studies; retirees wanting extra income or human contact; and parents juggling the demands of jobs and child-rearing.
Still, the core of Zuckerman’s argument stands. This recovery, compared to its post-World War II predecessors, has been exceptionally weak. The number of part-time workers who would like full-time jobs (defined by the Bureau of Labor Statistics as 35 hours a week or more) has dropped very slowly. In May 2009, it peaked at 9.1 million; as of last month, it was 8.2 million. Moreover, the level was almost twice as high as before the recession — 4.2 million in December 2006. As Zuckerman argued, this suggests many companies are quietly shifting employment practices.
Firms seek to minimize fixed labor costs by using contractors, “temps” and part-timers. Obamacare intensifies the pressures, because the incentives against hiring full-time workers are so obvious. A survey by the New York Federal Reserve of manufacturers in the state found that 6.5 percent had already refrained from hiring or had fired workers to stay below the 50-worker threshold; 5.4 percent said they had substituted some part-time for full-time workers. (These firms apparently represented a large share of the companies subject to the threshold, because most firms had more than 50 workers. The average firm employed 218.) A survey by the Philadelphia Federal Reserve produced a similar response.
Up to a point, part-time jobs reflect the flexibility of the U.S. economy — but we are well beyond that point. They increasingly signify weakness.
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