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Should we worry about the surge in part-time workers?

Pace Of Job Growth Slows Down, 7.8 Unemployment Rate Remains UnchangedPace Of Job Growth Slows Down, 7.8 Unemployment Rate Remains Unchanged

The most recent jobs report was pretty darn good, showing that the economy added 282,000 jobs and that the unemployment rate declined to 6.1%—the lowest it has been since September 2008.

But not everyone was pleased with the release. Economic bears dug through the numbers to find data to support their belief that the economic recovery is not quite as robust as some of us think. The winning bear argument was put forward by investment advisor Mike Shedlock and picked up later by the Wall Street Journal’s opinion page: that while the report showed an increase in jobs, it also showed a large decrease in full-time employment of 523,000 positions. As Mort Zuckerman wrote in the Journal:

The Obama administration and much of the media trumpeting the figure overlooked that the government numbers didn’t distinguish between new part-time and full-time jobs. Full-time jobs last month plunged by 523,000, according to the Bureau of Labor Statistics. What has increased are part-time jobs. They soared by about 800,000 to more than 28 million. 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.

The 282,000 new-job figure and the 523,000 decline in full-time jobs figure come from separate surveys, which together make up the monthly jobs report from the Bureau of Labor Statistics. The 282,000 figure comes from a survey of roughly 390,000 businesses that employ 47 million nonfarm wage and salary workers across the country. It gives us a portrait of, among other things, the total number of new jobs created each month.

The household survey, meanwhile, gathers information from 50,000 homes each month, is the source of the data from which the Labor Department calculates the unemployment rate. It’s also the source of data on the number of hours worked each week, and what number of workers are considered full time or part time (the Labor Department considers people who work more than 35 hours per week full-time).

According to the Labor Department, the margin of error for the household survey is 400,000, while margin for the business survey is 100,000. The large margin of error for the household survey makes it difficult to draw any conclusions about a single month’s reading. The decline in full-time jobs could have been anywhere from 923,000 to 123,000. A much better way to evaluate the state of full-time employment would be to look at trends over a longer time horizon. And, like many other measures of the U.S. economy, the full-time labor situation is steadily improving:


Of course, this chart shows that the economy has yet to recover the number of full-time jobs that it lost during the recession, and if you only concentrate on full-time jobs, the recovery looks less robust.

But how much can we glean from the Labor Department’s classification of part-time workers? It breaks down part-time workers into those who are working fewer than 35 hours a week for economic reasons and noneconomic reasons. It labels those voluntarily working part-time, or because of things like competing family obligations, as working part-time for noneconomic reasons. This is supposed to be the good kind of part-time work and, as Jared Bernstein, an economist with the Center on Budget and Policy Priorities, points out in the chart below, it’s this kind of part-time work that has been on the rise:


So, all is well, right? Not exactly.

First of all, the distinction between working part-time for economic and noneconomic reasons isn’t as clear as you would think. For example, should a mother who works part-time so that she can care for a young child be classified working part-time for economic or noneconomic reasons? If she is forgoing work simply because she wouldn’t be able to afford childcare even if she worked full time, that would certainly seem like an economic motivation and not a noneconomic one.

At the same time, calling someone who works 36 hours per week a full-time worker and one who works 34 hours part-time is arbitrary. If, for instance, a freelance video editor becomes productive enough that he can support himself with 30 hours of work per week, that’s preferable compared to a retail worker who can barely scrape by on 40 hours per week. And we should expect that as society becomes wealthier, more people will choose to work less and enjoy more leisure time. It’s not entirely clear what the growth in voluntary part-time workers actually means for the economy, and the Labor Department data isn’t specific enough to tell us whether we should be concerned.

It probably makes more sense to focus on worker productivity and average hourly pay. These numbers tell us if the median worker’s labor is becoming more valuable and whether his economic situation is improving, irrespective of the number of hours he chooses to work. To be sure, these numbers paint a troubling picture. Those figures have been flat, and if U.S. economy bears want to point to a cause for concern in the labor markets, it should be these numbers, and not the mix of part and full-time jobs.