The Part-Time Employment Story: Fact Versus Fiction

By Doug Short
October 28, 2013

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A few days ago my friend Jeff Miller, the CEO of New Arc Investments and mastermind of A Dash of Insight, posted a thoughtful assault on the many financial pundits who have argued that "the big employment theme for this year has been an assertion that new jobs were of low quality and mostly part-time."

Jeff included a chart from one of my monthly updates cited in his commentary.

Jeff explains:

It is pretty obvious from this chart that the part-time story is based upon the recession, not anything that has happened after 2009. We hope that Doug's commentary will soon catch up with the evidence.

I was a bit surprised to discover that Jeff considers my recent commentary on the trend in part-time employment to be incongruent with the evidence. My commentary included a close-up chart of full- and part-time employment since 2007 in a section entitled The Impact of the Great Recession. I introduced the chart with the following observations:

Here is a closer look [at full- and part-time employment] since 2007. The reversal began in 2008, but it accelerated in the Fall of that year following the September 15th bankruptcy of Lehmann Brothers. In this seasonally adjusted data the reversal peaked in early 2010. Over three-and-a-half years later the spread has narrowed a bit, but we're a long way from returning to the ratio before the Great Recession.

And here is close-up chart I was referencing:

I think Jeff's commentary is primarily aimed at pundits who attribute the rise in part-time employment to the impact of the Affordable Care Act (aka "Obamacare"), which was signed into law in March 2010 after months of congressional debate, a House vote in July 2009 and a Senate vote in November 2009. But did Obamacare cause the jump in part-time employment? Of course not. The increase was triggered by the Great Recession. Has Obamacare kept part-time employment higher than it would have been? Jeff says that "Personally, I think there is some tendency to part-time employment from ObamaCare."

That's pretty much what I wrote in my employment update on the topic:

Meanwhile, we can speculate that the Affordable Care Act (aka Obamacare) is playing a role in company decisions about full-time versus part-time employment. The $2,000 per employee penalty for companies that do not comply with regulations has influenced some to rethink their employment policies. In July the government pushed the start of the penalty from January 2014 to January 2015. But the anticipation of the penalty, even though delayed a year, will probably continue to influence the interim decisions of private employers.

If a picture is a worth a thousand words, here's a short essay on the chronology of the Great Recession, the spike in part-time employment, and some key dates in the Affordable Care Act. I've added a 12-month moving average to help visualize the trend. Note also that the timeline here stretches back to the turn of the century and gives us the part-time employment pattern before and after two recessions:

 

 

Aside from the causal relationship between the three things: 1) the Great Recesion, 2) the spike in part-time employment and 3) the Affordable Care Act (which Jeff and I appear to agree on), the real question is where this trend is headed. We can see that part-time employment continued to rise for nearly three years after the recession of 2001 ended. In contrast, after the NBER-declared end of the Great Recession in June 2009, part-time employment only rose for another six months and then began a painfully slow and limited decline. I say "limited" because the moving average is only 0.5% off its peak in early 2010.

To paraphrase what I've written elsewhere, the big question is whether the increase in part-time employment is the result of a structural change in the economy -- a change that was initially triggered by the Great Recession but that is now supported by continuing growth in technology-enhanced productivity. I'm referring to a wide range of technologies that support the globalization of the workforce and at the same time reduce the for need human labor -- in the US or abroad.

Time will tell. Meanwhile, we can certainly hope the small decline in the ratio of part-time employment since 2010 will not only continue, but also accelerate in the months ahead.

 

 

 

 

 


 

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