Part-Time Employment

by Reihan Salam

Briefly, John Taylor is pessimistic about the increase in part-time employment captured by the latest BLS household survey:

Many have noted the large September increase in “part-time employment for economic reasons” reported in the BLS household survey. The 582,000 increase in these part time jobs caused total employment to rise by 873,000—a major reason for the decrease of the overall unemployment rate, and the broader U-6 measure of labor underutilization—which adds in this part-time employment—did not decline at all. 

Taylor goes on to describe Joe LaVorgna’s theory that the increase in part-time employment reflects hiring by the presidential campaigns, an idea that comports with the gain in “non-private” employment and 20-to-24-year-olds. He then offers a broader observation:

Surges in part time employment frequently occur in times of economic stress. Consider, for example, all the months in which part time employment rose by 500,000 or more. There are 13 such monthly increases in the BLS data base—Jan 1958, Mar 1958, Jan 1975, May 1980, Oct 1981, Feb 1982, Feb 1991, Sep 2001, Nov 2008, Dec 2008, Feb 2009, Sep 2010, Sep 2012. With two exceptions, every one of these occurred during recessions when the economy was sharply contracting. The two exceptions are in the current recovery, which is another measure of its weakness.

Even more troublesome is that in the past 6 months of the recovery, the entire employment increase was more than accounted for by part time jobs: Total employment rose by 940,000 from March to September and part time employment rose by 941,000. This deterioration in the labor market is consistent with the dip in economic growth to 1.3 percent in the 2nd quarter. It too is not a sign that the economy is improving.

Over the longer term, one wonders if we will also see an increase in voluntary part-time employment, particularly if the recent increase in means-tested social transfers represents a new normal as the economy recovers. One could argue that this would represent a positive outcome, as it would mean an increase in leisure time that could be used in a variety of ways, e.g., improving the quality of civic life by joining the neighborhood watch or coaching a local sports team or even editing, revising, and creating Wikipedia entries as opposed to increasing the number of hours devoted to consuming televised entertainment. Yet it could also represent a negative outcome, e.g., if it leads to the deterioration of economically valuable job-specific skills that might be called upon in the future, though that is more likely to flow from exit rather than a reduction in hours engaged in market production. 

The Agenda

NRO’s domestic-policy blog, by Reihan Salam.