About Those Part-Time Jobs

Mark Thoma analyzes the data on part-time jobs:

The first thing to note is that two of the subcomponents of part-time employment, part-time for economic reasons and part-time due to slack work, have been tracking the unemployment rate fairly closely. When this is combined with the fact that most of the variation in the unemployment rate is cyclical and not structural, it implies that the same is true for part-time employment: It is cyclical, not structural. Importantly, this also implies that one of the fears about the implementation of Obamacare — that firms would move workers from full-time to part-time work to avoid the requirement to provide insurance — has not materialized. More detailed analysis and support for this conclusion can be found in work by Dean Baker and Helene Jorgensen at the Center for Economic and Policy Research discussed in an article by Alain Sherter, and this article in Politico by Jared Bernstein and Paul Van de Water.

But what about the other component, part-time because full-time work is unavailable? That’s partly cyclical as evidenced by the run-up during the recession, but why has it leveled out instead of falling during the recovery phase of the cycle? That’s clearly not cyclical. Part of the reason for the leveling is easy to explain,. A large number of furloughed federal workers are showing up in this measure. But even if the federal workers are stripped out, the change does not track unemployment the way the other two measures do.There is something else going on.

One likely explanation is that there is still considerable uncertainty about the recovery, a double dip recession is not out of the question at this point, and firms are reluctant to make the commitment required when a full-time worker is hired. Another is that technology is changing the nature of the workplace and causing a shift toward part-time workers. But whatever the explanation, once federal workers on furlough are accounted for, this is a relatively small part of the overall part-time picture. The main takeaway is that contrary to speculation about technological change and part-time work, most of the variation is part-time employment appears to be cyclical rather than structural.

Dr. Thoma’s remarks are consistent with what I’ve been saying for some time: although technological change explains some of what we’re seeing, the bulk is more easily explained in other ways. Specifically, increased economic activity will produce more jobs.

My beef has been a difference of opinion in the sort of spending that will, in fact, produce more jobs. I don’t think that spending more on healthcare, education, infrastructure spending (defined as roads and bridges), investments in green technology or the other things that have been emphasized by the president will actually produce more jobs or, more precisely, will produce enough jobs. I think that what we have seen over the last five years is what happens when politics overwhelms policy. I expect politics to be important in determining policy but I don’t think that implies that every consideration other than politics must necessarily be subordinated to politics.

An example of this is the increase in the payroll tax (AKA “repealing the payroll tax holiday”) that was enacted into law late last year. It’s hard to imagine a measure better suited for reducing economic activity not to mention worsening income equality.

If the Obama Administration were interested in improving either income equality or the circumstances of the middle class other than rhetorically, it would push for a repeal of both sides of FICA.

Another aspect of our economic doldrums is that when rich people mostly consume goods that are imported from Europe, the rest of the people mostly consume goods that are imported from China, and we continue to import oil, it will necessarily slow down economic activity here. I recognize it’s actually more complicated than that but that’s the simple statement of affairs. But that veers into trade policy and that’s not what this post is about.