Written by Steven Hansen
Since the Jobs Report at the beginning of the month, pundits have been spewing over the inordinate employment gains of part-time workers – robbing the economy of the benefits of full-time employment.
Some blame it on the unintended consequences of Obamacare’s exception for part-time employees. Some blame it on a poor economy where employers do not want to commit to full-time employment. Pick your poison. It is not difficult to believe both factors are in play. But I pen this post believing another dynamic is also in play – a growing minority of the population only wants to work part-time.
First, it should be argued that part time employment is declining as the economy weakly grows – and the faster growth in part-time employment in the past few months (green circle in graph 1) is only noise.
Graph 1 – Ratio of Part-time Employment to Full-time Employment (seasonally adjusted)
If you look at the movement of the ratio in Graph 1 since 2010 – it is hard to argue that dynamics have changed due to Obamacare or economic conditions or a growing preference for part time employment. Yet there is evidence that a growing minority of the population is preferring part-time employment (green line in Graph 2).
Graph 2 – Part-time Employment (seasonally adjusted) – Total (blue line), Usually Work Part-time (green line), Want to Work Full Time (red line)
In Graph 2, both sides of the part-time employment is shown – those normally work part-time, and those who normally work full-time but are working part-time for economic reasons, slack work or business conditions. It is not clear whether some of those who normally work part-time would rather be working full-time. But it is clear that there has been little growth in full time employment during the last five months (blue line in Graph 3 and Graph 4).
Graph 3 – Employment Levels (seasonally adjusted) – Usually Employed Full Time (blue line, left axis), Usually Employed Part-Time (red line, right axis)
Graph 4 – Employment Index (seasonally adjusted) – Usually Employed Full Time (blue line), Usually Employed Part-Time (red line)
But there has been a fairly major jump in people who are employed part-time, and who normally work part-time (red line in Graph 3 and Graph 4). There is one more statistic which drives home a growing desire for part-time employment – the unemployment rate.
Graph 5 -Unemployed Part-time (seasonally adjusted) – Level (blue line, left axis), Rate (red line, right axis)
There has been little decline of part-time unemployment since the end of the Great Recession. But what one should notice is the INCREASE in the unemployment levels and rates in the last 5 months – all while part-time employment has increased significantly.
There are several possibilities on what is happening with part-time employment and unemployment:
- the seasonal adjustment / data gathering errors are growing at the BLS – and this is doubtful as we are looking at several months of data;
- a growing minority really wants to work part-time, and that business is finding better qualified workers in the part-time segment;
- the unemployed see more job opportunities in the part-time segment – and have shifted to looking for part-time work instead of full time.
As an analyst, there just is not enough information in cyberspace to “prove” what dynamics are driving the surge in part-time employment. Note that there have been several bigger moves since the end of The Great Recession than what we have just seen. We can’t even prove that what we see is anything more than noise.
Other Economic News this Week:
The Econintersect economic forecast for August 2013 again declined, and sees the economy barely expanding. The concern is that consumers are spending a historically high amount of their income, and several non-financial indicators are struggling or flat.
The ECRI WLI growth index value has been weakly in positive territory for over four months – but in a noticeable improvement trend. The index is indicating the economy six month from today will be slightly better than it is today.
Current ECRI WLI Growth Index
Initial unemployment claims grew from 326,000 (reported last week) to 333,000 this week. Historically, claims exceeding 400,000 per week usually occur when employment gains are less than the workforce growth, resulting in an increasing unemployment rate.
The real gauge – the 4 week moving average – improved from 341,250 (reported last week) to 335,500. Because of the noise (week-to-week movements from abnormal events AND the backward revisions to previous weeks releases), the 4-week average remains the reliable gauge.
Weekly Initial Unemployment Claims – 4 Week Average – Seasonally Adjusted – 2011 (red line), 2012 (green line), 2013 (blue line)
Bankruptcies this Week: Rural/Metro, Global Axcess
Data released this week which contained economically intuitive components (forward looking) were:
- Rail movements growth trend is currently accelerating.
All other data released this week either does not have enough historical correlation to the economy to be considered intuitive, or is simply a coincident indicator to the economy.