Shift to "part-time workforce" not really happening
Labor Day weekend is an appropriate time to evaluate one of the most talked-about trends in hiring: The supposed shift to part-time employment.
If you follow the news, that is all you hear about. There have been many eye-opening statements that most of the new positions being created are part time or that the jobs are low-paying. Though they make for good stories and political commentary, there is little basis for those statements.
First, some explanation about the data. The Bureau of Labor Statistics (BLS) creates two monthly sets of employment numbers. One, the household survey, provides information on unemployment and the demographics (age, race, reasons for unemployment, etc.) behind the data. The second, the establishment report, gives the number of net new positions added by firms, and the industry and wage details.
The key point is the two reports survey totally different groups: individuals vs. firms. Though their patterns over time are similar, they measure different things. And in any given month, they can change in totally different ways. Indeed, sometimes company payrolls increase while the number of people working declines - and vice versa. That is just the way the surveys work.
Consequently, comparing data from the two monthly surveys at one point in time is meaningless, as it regards new jobs created that were part-time. And because there are no numbers in either report that detail the incomes of those finding jobs, no one can claim a certain percentage of the new jobs were low-paying.
We can, however, talk about the kind of part-time workers becoming employed. BLS recognizes that people work part-time for many reasons. Economic factors can be one reason: either only part-time work was available or slack working conditions limited hours. They are the workers we should be focusing on if the concern is the economy or corporate hiring practices are creating growing part-time employment.
The second reason is some people want to work part-time. Social or demographic reasons are important here. For example, many baby boomers are "retiring" but continuing to work by reducing their hours. The growing boomer "retiree" population implies increasing numbers of "part-timers by choice." Also, changing corporate flexibility is allowing parents and others to choose the part-time option. Firms retain productive employees by allowing them to work part- instead of full-time.
Because these two groups of part-timers work reduced hours for opposite reasons, they should be viewed differently, and data about part-time employment can be discerned by analyzing just the BLS household surveys. The number of people working part-time by choice is the larger of the two. In July 2013, the total was 18.8 million. In comparison, the number of people forced to accept part-time work even though they didn't want it was 8.1 million. In other words, 70 percent of all part-timers work reduced hours by choice.
When you look at which group experienced increased employment, the story becomes even less unsettling. Part-time work is really an issue only if the increasing employment is concentrated in the group that had no other choice. That is not the case. Between July 2012 and last July (a preferred time frame because it removes seasonal-adjustment aberrations), all of the additional people who took part-time positions wanted those part-time jobs. Their ranks increased by 260,000. In contrast, the number of people forced to take part-time work because of economic issues fell by 3,000.
Of the 2.1 million people who found employment over the last year, only 13 percent were part-timers. But part-timers constitute nearly 19 percent of all workers. That means full-time employment grew faster than part-time employment. And the unemployment rate of part-timers (6.2 percent) was lower than full-timers (7.6 percent).
Because the growing number of part-time workers over the last year wanted part-time jobs, not because business was bad or firms were hiring only part-timers, you cannot say those jobs were undesirable or unwanted. Indeed, they met the needs of people looking for work, and the firms doing the hiring benefited.
There is little doubt that companies are looking to cut back hours in response to rising benefits costs. But a part-time workforce has always been a corporate option. It hadn't been chosen because of productivity, turnover, and cost issues. Those factors haven't changed.
In the last year, it appears the great move to part-time work is still mostly talk and little action.
Joel L. Naroff is president and chief economist of Naroff Economics Advisors Inc. of Holland, Bucks County. Contact him at email@example.com.