Post-Meltdown Economy Creates Lousy Part-Time Jobs

Catherine Rampell had an excellent story yesterday, "Part-Time Work Becomes Full-Time Wait for Better Job," about the growth of an underemployed underclass in the United States:

In March, 7.6 million Americans who want more hours were stuck in part-time jobs, about the same as a year earlier and three million more than there were when the recession began at the end of 2007. 

These almost invisible underemployed workers do not count toward the standard jobless rate of 7.6 percent. A broader measure, which includes the involuntary part-timers as well as people who want to work but have stopped looking, stands at 13.8 percent.

Rampell's Saturday unemployment stories are becoming a regular feature, and I hope the New York Times keeps running them. I think Rampell has accomplished a couple things in her unemployment reporting. First, she always draws attention to the broader measure of unemployment, what's known as U6, in contradistinction to U3, the standard unemployment rate. Second, she consistently points out that the jobs being created in this post-meltdown economy are bottom-of-the-barrel, low-wage positions:

Even for those who have been able to take advantage of the better job market, the opportunities have not been good. Since the economy began to recover almost four years ago, hiring has been concentrated in relatively low-wage service sectors, like retailing, home health care, and food preparation, and in contingent jobs at temporary-hiring companies. For example, nearly one out of every 13 jobs is at a restaurant, bar or other food-service establishment, a record high. 

Household incomes have been stagnant throughout the recovery, and actually fell in the latest report, according to Sentier Research. As a result, economists and policy makers have been expressing concerns about not only the pace of hiring but the quality of new jobs as well. 

“It’s important to look at the types of jobs that are being created,” Sarah Bloom Raskin, a member of the Federal Reserve Board, said in a recent speech. “Those jobs will directly affect the fortunes and challenges of households and neighborhoods as well as the course of the recovery.”

Obamacare is likely a factor in the growth of part-timers. Next year as part of the Affordable Care Act any employer who has 50 or more full-time workers will have to provide health insurance:

Paul Dales, senior United States economist for Capital Economics, said, “There is another reason to believe that part-time employment will stay higher for longer, namely the incentives to employ part-time workers created by Obama’s health care reforms.” 

Starting in 2014, employers that had an average of at least 50 full-time employees in the previous calendar year will have to provide health insurance or face penalties. Some companies and franchise locations, like Darden Restaurants, which operates brands like Red Lobster and Olive Garden, suggested last year that they might seek to limit full-time staff to avoid activating this mandate.