Sunday, January 12, 2014

Part Time Employment

Scott Sumner notes that the U-6 unemployment indicator (which includes part time workers who would prefer to work full time) seems to be stuck at an elevated level.  The other indicators seem to be moving in a more correlated direction.

I updated some data from the BLS concerning part time work, and found this:

This is full time employment (blue, left) and part time employment (red, right) as a percentage of the labor force. (The bump in 1994 is due to a change in method.)  There is a pretty stable long-term level of part-time employment that was not very cyclical, until 2008.

The next graph separates total part time employment (green line) between part time employment for non-economic reasons (red) and part time employment for economic reasons (blue).

Here we see that in 2008, there was a 2% jump in part time employment.  This appears to result from a shift from full time to part time employment for about 3% of the labor force (this has rebounded by about 1%).  This movement into part time employment displaced about 1% of the labor force that had been working part time for non-economic reasons.  These former workers could have either become unemployed or they could have left the labor force.

This suggests that some of the decline in the labor force could be the result of unemployment among workers who were previously marginally employed.

I have been forecasting a strong continuing fall in the unemployment rate, but this does suggest that there is some employment slack that is being "hidden" by an unusual amount of buffering within the part time employment space.  Some rebound in employment in 2014 could result in a reshifting of these workers from part time back to full time employment.  Inflationary pressures that I might be expecting from a tightening labor market may not be quite as close as I have suspected.

The U-3 Unemployment rate is at 6.7%, about 1 3/4% above a healthy rate of around 5%.  But, because of this unusual shift into part time employment, the full time unemployment rate remains about 3% above the healthy range.

Looking at causes, I have zoomed in on the above graphs for these two graphs.  What we can see is that the shift happened entirely in late 2008 and early 2009.  I think this is a time frame that is too early to blame on Obamacare, and there isn't anything about the patterns in this data series that points to the minimum wage as the culprit.

Why is this pattern unique to this cycle?  Maybe it's just a product of the depth of the employment crisis this time.  If that is the case, and full time employment is now back in the range of the bottoms of several previous cycles, we will finally see a snap-back in part time employment.  I don't have a ready intuition for how this will play out as an influence on interest rates, inflation, total employment, or GDP.

1 comment:

  1. Fashion Jewellery or string tear drop earrings are the latest and hottest earrings, posing a great demand in the fashion world and it appears to be eye-catching in different colors perfectly adorning you and your wardrobe.
    Visit: Fashion Jewellery