Many U.S. workers trapped in part-time limbo
WASHINGTON — The labour-market recovery Federal Reserve chair Janet Yellen seeks is proving incomplete as many U.S. workers languish in part-time jobs.
Forty-nine per cent of people working less than 35 hours per week in 2012 and desiring full-time work were able to find such a position within a year, a c - cording to research by the Federal Reserve Bank of Atlanta. That’s down from 61 per cent in 2006.
In addition, the almost three million Americans unemployed for at least 27 weeks are more likely to accept part-time jobs than counterparts out of work for shorter periods, according to a Chicago Fed paper. That means underemployment, a hallmark of the slow and uneven recovery from the recession, won’t quickly dissipate, backing policy-makers such as New York Fed president William Dudley who counsel patience in removing stimulus.
“Slack is going to be gradually picked up, rather than just disappearing overnight and causing an upturn in wages,” said Emanuella Enenajor, an economist at Bank of America in New York. “It buys the Fed time to keep policy accommodative.”
Eugene Grace, from Minneapolis, is among those struggling. He lost his fulltime human resources job at a medical devices company in 2006, stayed home to care for his five children, then took temporary and parttime work to pay the bills.
Those jobs have ended, so he’s searching again for any position to show employers he’s staying active.
When he was first unemployed, Grace, 54, said he probably wouldn’t have settled for part-time work. Now, “that’s more recent work experience that I could put on my resume.”
About 26 per cent of people hired following longterm unemployment get stuck in part-time limbo, compared to 18 per cent of those jobless for less than 27 weeks, according to the Chicago Fed’s research.
Once employed parttime for economic reasons, workers in goods-producing industries such as manufacturing have better odds of landing full-time work than service-producers like Grace, the Atlanta Fed found. Both have a lower chance of making that jump than they did prior to the 18-month recession that ended in June 2009, the deepest in the post-Second World War era.
From 1998 to 2007, about one in five service employees involuntarily clocking part-time hours remained in that status after a year, according to the Atlanta Fed’s research. Today, it’s closer to one in three.
For goods-producing industries, the share of involuntary part-timers was about 22 per cent as of July compared with 16 per cent seven years earlier. Still, that’s down from a peak of about 30 per cent in December 2009.
“It doesn’t seem to be something specific to a characteristic of the worker,” said John Robertson, a senior economist at the Atlanta Fed. “We just don’t have enough full-time jobs being created.”
Some 7.3 million people were involuntarily working part time in August, compared with 4.6 million in December 2007 at the outset of the recession.
“There are still too many people who want jobs but cannot find them, too many who are working part time but would prefer full-time work,” Yellen said Sept. 17 in Washington after the central bank’s last policy meeting. They form part of the “significant under utilization of labour resources” that’s keeping a lid on wages, she said.
The elevated number of part-timers — and the fact their transition to full-time work has slowed — could have several causes.
The type of jobs created in the U.S. has shifted during the recovery. The number of people employed by bars and restaurants has climbed 13.4 per cent since the last recession ended, while total employment has grown by 6.2 per cent.