All of the Increase in Part-Time Jobs in 2013 is Due to the Changing Employment Patterns of Women

The household employment data from Friday’s BLS Jobs Report reveal a surprising and distressing pattern.  The full-time employment of women has declined by 119,000 (about one-quarter of one percent) between December 2012 and July 2013 (based on the seasonally adjusted series).  In contrast, the part-time employment of women has surged since December 2012.  The employment situation has been quite different for men, however.  Full-time employment of men has increased by about one half million since December 2012 while part-time employment has dropped slightly.

While it is true that for men and women combined more than three-quarters of employment gains in 2013 are from part-time jobs, this is due only to the changing employment patterns of women.  The surge in part-time employment in 2013 is due to women shifting from full-time to part-time jobs.

Many pundits have surmised that the shift from full-time work to part-time work in 2013 is a consequence of the Affordable Care Act (Obamacare).  If this hypothesis is true, Obamacare has had a much bigger impact on the employment patterns of women than men.  This is consistent with the notion that women’s labor supply is much more elastic (price responsive) than men’s and that women are employed disproportionately in jobs and sectors where part-employment is a viable alternative to full-time work.

The following table presents the data for employment changes in terms of number of jobs as well as percentage changes from the BLS household survey.

Group

Change in Employment December 2012 to July 2013

Percentage Change in Employment December 2012 to July 2013

Women Part-Time

+597,000

+3.43%

Women Full-Time

-119,000

-0.24%

Men Part-Time

-36,000

-0.35%

Men Full-Time

+504,000

+0.77%

The Full-Time Jobs Deficit

Although the economy has recovered from the depths of the recession of 2007-2009, there are 4.25 million fewer payroll employees than there were in September 2007 according to the Bureau of Labor Statistics (BLS).  It is more troubling that there are 6.05 million fewer people working full-time than in September 2007 according to the BLS household survey.  There are over 8 million people working part-time for economic reasons, most of them due to slack work.   The deficit in full-time jobs relative to the pre-recession economy is a symptom of a weak economic recovery.

No group has seen a bigger shift to part-time employment than young adults age 20 to 24.  In the past five years young adults in this age group have seen a 23.3% decrease in full-time employment and a 22.4% increase in part-time employment (relative to population).  The following chart shows that 37.6% of employed adults age 20 to 24 now work part-time.  This is the highest fraction since the BLS began reporting these figures.  Between 1994 and 2007 the share of part-time work increased from 27.4% to 28.4% for this age group.  Since the recession the part-time employment rate has risen dramatically.

The increase in part-time employment relative to full-time employment over the past decade is attributable to many factors including the weak recovery, rising cost of health care benefits, economic uncertainty, and the changing demographics of the U.S. labor force.  One of the main reasons why adults age 20-24 are working part-time in record numbers is that new graduates are struggling to find jobs in their fields.  Thus young workers are settling for part-time work as they wait for the economy to improve so they can pursue their careers.  Fewer full-time jobs results in lower tax revenue, higher deficits and slower household formation.  When new college graduates end up in part-time jobs and move back in with their parents it is bad news for the housing market and construction sector.

The Slow Growth in Full-Time Jobs

Full-time employment of adults age 20 to 54 has grown substantially slower than part-time employment during this economic recovery.

  • Part-time employment grew annually by 0.73% from May-July 2010 to May-July 2012.
  • Full-time employment grew annually by 0.22% from May-July 2010 to May-July 2012.
  • The fraction of workers with part-time jobs has remained above 16% since 2009, about 3% higher than the average from 2000-2008.
  • There are about 3.2 million fewer full-time workers than what was typical for the U.S. workforce from 2000 to 2008 (holding constant total employment).

The millions of under-employed adults age 20 to 54 are both a symptom and a cause of the weak economic recovery.

Another indication of the problem of under-employment in this recovery is evident in the BLS Displaced Worker Surveys of 2010 and 2012.  The survey focuses on workers who lost jobs they held for at least three years prior to being displaced.  A “displacement” is a job separation that occurred because:  “a plant or company closed or moved, there was insufficient work” or the “position or shift was abolished.”  The survey asks people who were displaced in the past three years whether they were re-employed and if so, whether their new job is full-time or part-time.  The 2010 and 2012 Displaced Worker Surveys indicate that an unusually high fraction of re-employed workers have only found part-time work.

The following chart illustrates the fraction of re-employed displaced workers who held only a part-time job in all of the Displaced Worker Surveys from 1996 to 2012.

A comparison across surveys indicates that:

  • More than 15% of workers who had found work after displacement from a longer lasting job were working part-time in surveys that asked about  job losses from 2007 to 2011.
  •  About 10% of workers who had found work after displacement from a longer lasting job were working part-time in surveys that asked about  job losses from 1993 to 2007.
  • Workers displaced since 2007 have been 1.5 times more likely to be re-employed at a part-time job.

The weak economic recovery has resulted in a stubbornly high unemployment rate, discouraged jobless workers from looking for work and caused the labor force participation rate to fall well below pre-recession levels.  There are also several million more adults now working part-time compared to the pre-recession labor market.  BLS surveys indicate that some of these “new” part-time workers were displaced from jobs they held for years prior to the recession of 2007-2009.  Consequently the national unemployment rate of 8.3% substantially understates the degree of underutilization of human capital in our economy.

Vanishing Full-Time Jobs for Young Adults

According to the latest figures from the Bureau of Labor Statistics, more and more young adults are taking part-time rather than full-time jobs.  While the number of young adults age 20-24 has increased by 6.78% over the past four years, full-time employment has plunged by 17.1%.  In contrast, part-time employment for young adults has increased by 37.2% over the past four years.  Put somewhat differently, in May of 2008 71.7% of employed young adults had full-time jobs.  In just four years the fraction of employed young adults with full-time jobs is 60.4%.

It’s not clear what has caused this sharp shift from full-time to part-time work for young adults.  One possibility, that requires further investigation, is that college and junior college students are delaying their graduation because they face such a weak labor market after graduation.  These students may be staying in school, taking a few more courses while working part-time jobs, rather than starting their post-college careers.

Part-Time Recovery

The unemployment rate and the monthly change in total payroll employment are clearly the most widely watched labor market indicators.  Neither of these statistics measures an important consequence of the 2008 recession: adult men are working part-time at record rates.  As the labor market turns the corner in 2012 the most important leading indicator may be the fraction of adult men employed in part-time jobs.

The following figure shows that the fraction of employed men who work part-time nearly doubled between 1986 and 2011.   By 2011 about one third of employed men age 20-24 worked part-time, and 7.4% of employed men age 25-54 held part-time jobs.  About 80% of the increase in part-time work for the 25-54 age group occurred during the 2008 recession.  About 2.5 million full-time jobs were lost during the recession for men in the 20-24 and 25-54 age groups.  It is less well known that the recession caused about 1.5 million adult men in these age groups to switch from full-time to part-time work.  The patterns are somewhat different for women, but I will leave that for another post.

The following chart shows that the overall employment to population ratio dropped by 11.4% for men age 20-24 and 6.7% for men age 25-54 between January 2008 and January 2010.  These large employment declines understate the depth of the downturn because they treat all jobs the same, whether they are part-time or full-time.  The full-time employment to population ratio dropped by 13.8% for men age 20-24 and 8.9% for men age 25-54.  These precipitous drops in full-time employment rates were accompanied by increases in part-time employment rates of just over 2%.

The labor market has been slowly recovering since January of 2010.  The following chart shows that the overall employment to population ratio for men age 20-24 grew by 4% over the past two years.  The length of the workweek did not change much for these younger men because about two thirds work full-time, and full-time employment growth was about double part-time employment growth.

The employment to population ratio of men age 25-54 has grown by 1.5% since January of 2010.  The full-time employment rate increased by 2% while there was a slight decrease of 0.5% in the part-time employment rate.  The length of the average workweek increased slightly over the past two years these men as some part-time jobs were replaced by full-time employment.

A necessary component of a solid recovery is the transition to full-time work for the (at least) 1.5 million adult men who work part-time jobs because of the weak economy.  This change will not appear as an increase in payroll employment or a reduction in the unemployment rate.  A key leading indicator that that the economic recovery is finally gaining strength will be more substantial decreases in the fraction of adult men who work part-time.

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