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Too many part-timers signal weakness

WASHINGTON - Just when you thought that America's labor market was improving, with employment gains averaging about 200,000 a month, comes Mort Zuckerman, real estate magnate and chairman of U.S. News & World Report, throwing cold water on any optimism.

The truth, writes Zuckerman in The Wall Street Journal, is that, according to the Labor Department's household survey, almost three-quarters of new jobs in 2013 have been part-time.

These need to be discounted in judging the economy's strength, argues Zuckerman.

"At this stage of an expansion you would expect the number of part-time jobs to be declining, as companies would be doing more full-time hiring," he writes.

"Not this time. In the long misery of this post-recession period, we have an extraordinary situation: Americans by the millions are in part-time work because there are no other employment opportunities."


To Zuckerman, work is increasingly catch-as-catch-can, with firms relying more "on independent contractors and part-time, temporary and seasonal employees."

He also blames the Affordable Care Act, also known as Obamacare, which has been criticized as discouraging full-time hiring.

Companies with fewer than 50 full-time workers don't have to provide health insurance; nor are part-time employees (defined as less than 30 hours a week) entitled to company coverage.

These are powerful deterrents to adding full-time workers.

On some counts, Zuckerman's critique is overwrought.

For starters, it belittles genuine job progress. Gains since the recession's trough in 2009, though inadequate, are still substantial.

"Companies [now] seem to be holding on to their employees," says economist Beth Ann Bovino of Standard & Poor's.

Initial weekly unemployment claims peaked at about 650,000; now they're about half that, 334,000 in a recent week, she says. The official unemployment rate has dropped from 10 percent in October 2009 to 7.6 percent.

A broader measure (called the U-6), which includes involuntary part-time workers and people out of the labor force who want a job, is down to 14.3 percent from 17.1 percent.

Nor is there much evidence that, in the recovery, part-time workers have represented a disproportionate share of new jobs.

Economist Scott Anderson of the Bank of the West analyzed employment gains since January 2009 and found that in June, part-time jobs accounted for 19.5 percent of total employment, "exactly the average share . . . since January 2009."

Part-time jobs sometimes surge for a few months, he noted, but then the rapid gains have been reversed.

Finally, Zuckerman doesn't acknowledge that most part-time jobs are desired by workers.

Of the 27 million part-time workers in June, slightly more than 19 million were voluntary: students splitting jobs and studies; retirees wanting extra income or human contact; and parents juggling the demands of jobs and child-rearing.

Still, the core of Zuckerman's argument stands. This recovery, compared to its post-World War II predecessors, has been exceptionally weak.

The number of part-time workers who would like full-time jobs (defined by the Bureau of Labor Statistics as 35 hours a week or more) has dropped very slowly.

In May 2009, it peaked at 9.1 million; as of last month, it was 8.2 million.

Moreover, the level was almost twice as high as before the recession - 4.2 million in December 2006. As Zuckerman argues, this suggests many companies are quietly shifting employment practices.

Firms seek to minimize fixed labor costs by using contractors, "temps" and part-timers.

Obamacare intensifies the pressures, because the incentives against hiring full-time workers are so obvious.

A survey by the New York Federal Reserve of manufacturers in the state found that 6.5 percent had already refrained from hiring or had fired workers to stay below the 50-worker threshold; 5.4 percent said they had substituted some part-time for full-time workers.

(These firms apparently represented a large share of the companies subject to the threshold, because most firms had more than 50 workers. The average firm employed 218.)

A survey by the Philadelphia Federal Reserve produced a similar response.

Up to a point, part-time jobs reflect the flexibility of the U.S. economy - but we are well beyond that point.

They increasingly signify weakness.



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