A question of quality not quantity? Unemployment rates in the US could be masking another problem

It’s a familiar story across America: Since the recession, people are working again, but their jobs just aren’t good enough. Often, it’s because they’re forced to work part-time, and their employer won’t give them enough hours to make ends meet.

“What we hear in the field a lot is that people are hired with the assumption, if not promise, that they’ll get full-time hours. And most weeks they don’t,” said Lonnie Golden, an economics professor at Pennsylvania State University and the author of new research into part-time work published Monday by the left-leaning Economic Policy Institute.

Most metrics suggest the U.S. economy has snapped back substantially since the recession. In November, the U.S. unemployment rate fell to 4.6 percent, a level not seen since August 2007. The economy has created an average of 180,000 jobs a month so far this year, far above what’s necessary to keep the unemployment rate stable.

But it’s often the quality, not the quantity, of the jobs that is in question.

Many Americans are still cobbling together a living with one or several part-time jobs. Overall, the number of people working part-time has risen 9.1 percent from 2002 to 2016, and now totals 26.4 million, according to government data cited by Golden. But the number of people doing “involuntary” part-time work — that is, people who would like to work full-time but can’t find such work — is up 44.6 percent from 2002, to 6.4 million Americans.

As the chart below shows, 4.2 percent of American workers said they were involuntarily part-time in 2016 — a proportion that is down from the heights of the recession, but still elevated compared with figures before the financial crisis.

The situation is most acute for low- and middle-income earners, especially women. It disproportionately affects African Americans and Hispanics, who make up 27.9 percent of workers, but 41.1 percent of involuntary part-time workers. And unsurprisingly, it's most severe in workplaces that have traditionally relied heavily on part-time staff, including retail stores, car dealerships, hotels and restaurants.

Involuntary part-time work takes a “massive” toll on American workers, the EPI report says. Part-time jobs with unpredictable hours make it hard for workers to budget, and cut down the time they can spend with their families. These jobs often pay lower hourly wages, lack benefits such as health care or retirement savings, and don't qualify for government benefits such as unemployment insurance.

It seems particularly unfair, since these are people who have shown they are willing and able to work, Golden said in an interview. In fact, many Americans sacrifice sleep, family time and entertainment to work multiple part-time jobs, just to make ends meet.

While the U.S. economy looks strong by many measures, data on involuntary part-time work shows what Golden refers to as the recovery’s “soft underbelly.” He also sees signs of a bigger structural shift in how businesses are operating, toward relying more on part-time workers to provide flexibility and cut back payrolls. “One of the responses of firms in a competitive industry can be to shift not only ... labor cost to the employee, but the uncertainty of work to an employee. And that’s much more easily done with part-time jobs,” Golden said.

Golden proposes a number of policies to help workers who are stuck in part-time jobs against their wishes. He advocates policies that would deliver more compensation and benefits to part-time workers, including access to federal unemployment insurance. He proposes laws that would allow part-time workers to officially request more hours or be given more hours if they become available, and that mandate pay for workers whose shifts are changed or canceled.

The situation will improve, Golden says, if the U.S. economy continues to grow out of the recession. As the pool of unemployed people in the U.S. shrinks, employers will have more trouble finding workers. As a result, they will likely be forced to shift some part-time jobs to full-time work to attract good people.

Recent government data suggests this is starting to happen. In November, the U-6 rate, a broad measure of unemployment that includes part-time workers who would like to be working full-time, fell to 9.3 percent. That was the lowest reading since April 2008, indicating that the recovery is likely helping people who are underemployed, as well as unemployed, get back to work.

“We’re at a point in the recovery where the labor market has improved, but the last remnant or vestige of the recession is that there are more part-time jobs available. That’s what people take, but that’s not what they prefer,” says Golden. “It’s very encouraging that [the U-6 rate] is going down, and it can go down further if we address the underlying cause.”