The Nasty Secret About America’s Job Market

Cashier at Walmart checkout

Walmart cashier | Chris Hondros/Getty Images

By all appearances, it seems like the American economy is back on its feet. Businesses are getting back on their feet, and as a result hiring additional employees to staff their firms. Many of the best jobs out there pay high wages, and the unemployment rate has held steady at around 5% for the past year, according to the Bureau of Labor Statistics. For all intents and purposes, there are reasons to be optimistic about the economy.

But once you dig past the headline unemployment rate, things get a little cloudier. A significant portion of Americans are considered to be “long-term unemployed,” and haven’t been able to find a job for extended periods of time. In other cases, older generations are finding jobs, but at the expense of younger workers looking to fill those same positions. But the biggest unresolved problem is that American’s part-time workforce has grown significantly, and experts aren’t sure it will ever shrink back to pre-recession levels.

A ballooning part-time workforce

It’s amazing what 10 years and a recession in between can do to the part-time labor force. According to data from the Federal Reserve Bank of St. Louis, in March 2006 there were about 3.9 million part-time workers in the United States who preferred to have full-time positions, but were forced to take part-time jobs instead because of the economy. The Bureau of Labor Statistics, who tracks those employment numbers monthly, refers to these people as “involuntary part time” workers.

In the throes of the recession in March 2010, the number of involuntary part-time workers was up to more than 9.2 million people, roughly a 132% increase from four years earlier. That number has since come down to just over 6.1 million people in March 2016, a 33.7% drop from recession levels. However, it’s still about 54% higher than pre-recession figures, a significant increase to say the least. Many experts believe the number of involuntary part-time workers could stay at a similar level indefinitely — if not become the new “normal.”

It’s fairly normal to see higher levels of involuntary part-time workers following a recession, but the most recent recovery is different than previous ones. The rate of involuntary part-time workers often follows the trends of the unemployment rate, suggesting natural business cycles are partially responsible. However, a paper released by the Federal Reserve Bank of San Francisco in 2015 reported that the percentage of involuntary part-time workers was 30-40% higher than in previous recessions, meaning business cycles aren’t the only factor at play.

Instead, the authors of the paper believe there are also structural changes happening in certain industries like retail and hospitality. These industries and others are changing the makeup of their workforce, which is occasionally forcing employees into part-time positions, when they would rather be working full-time hours.

Fewer young workers, rising costs of Obamacare

According to the report, the percentage of voluntary part-time workers has decreased, especially among younger workers. Employees younger than 25 typically make up a large portion of the voluntary part-time workforce, working in jobs after high school or during college. However, the percentage of workers in that age group has dropped from 23% in the 1970s to around 12% in recent years, decreasing the number of people who willingly take part-time jobs. To fill those positions, the authors posit, employers require older employees to take fewer hours than they would like.

As the Fed and CNN Money point out, moving more people into part-time positions could also be a way to save money on health care. The Affordable Care Act required employers to provide health care for a larger portion of workers, and employers save money if a larger portion of their employees are on part-time hours without benefits. In addition, employers in states with high minimum wages could be using part-time laborers to keep overall employment costs lower, the Fed suggests.

Part-time problems

Though working 34 hours per week (the general cutoff for part-time vs. full-time work) can still seem like a full week, part-time workers have a significantly harder experience making ends meet. About 25% of part-time workers live in poverty, CNN Money reports. That’s compared to just 5% of full-time workers who experience the same financial strains.

To make ends meet, more and more part-time workers are turning to the rising gig economy to put extra cash in their pockets. This can include becoming an Uber driver, freelance worker of some kind, or other job that depends on short-term contracts for work. The gig economy is great for people who need extra income in a pinch, but it’s popularity also exacerbates the part-time problem. If companies and people can pay less for a contract-like position instead of a full-term employee, they’re going to be inclined to do so. As a result, experts believe this is another factor that could keep involuntary part-timers firmly in their positions, with less hope of finding a full-time position.

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