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Part-Time Positions Dominate Jobs Picture

Part-Time Positions Dominate Jobs Picture


Friday, forecasters expect the Labor Department to report the economy added 175,000 jobs in August and the unemployment rate remained steady at 7.4 percent. Although in line with the pace of recent months, jobs gains have been heavily weighted toward part-time positions.

Since January, 936,000 additional Americans report working part-time, while only 27,000 more say they have obtained full-time positions. The shift to part-time workers, partially a reaction to Obamacare health insurance mandates, puts downward pressure on wages and benefits in low-paying industries, like retail and restaurants, and widens income inequality.


Expectations of permanently slower growth are hardening disturbing changes in the structure of the labor market and social conditions. These days, new college graduates often work at unpaid internships while taking part-time jobs at places like Starbucks to meet minimal living expenses. And they are putting off marriage and childbearing, which also drags on consumer spending and growth.

Adding in discouraged adults, who have quit looking for work altogether, and part-timers who want full-time employment, the unemployment rate becomes 14.0 percent.

In the second quarter, GDP growth was 2.5 percent, owing to an increase in business inventories, stronger exports, and weaker imports.

The boost from stronger U.S. sales abroad and fewer imports are not expected to continue because of China’s resurgent manufacturing and Japan’s policy of targeting the U.S. auto industry and other manufacturers with an artificially cheap yen.

Inventories cannot grow forever, and in the end consumers and business investment must pick up the slack.

Despite greater optimism as expressed by consumers and small businesses in sentiment surveys, initial readings for third quarter consumer spending are quite weak, and growth in industrial production and manufacturing, as tracked by the Federal Reserve, has slowed. Consequently, economic growth may be expected to slide back to about 2 percent in the second half.

The protracted delay in determining appropriate U.S. military action in Syria has added to uncertainty and pushed up oil and gasoline prices. These will drag on consumer spending, business investment, and job creation in the third quarter.

Even with more full-time positions, the pace of jobs creation is well short of what is needed. About 360,000 jobs would lower unemployment to six percent over three years, but that would require GDP growth in the range of four to five percent.

Stronger growth is possible. Four years into the Reagan recovery, after a deeper recession than President Obama inherited, GDP was advancing at a 5.1 percent annual pace, and jobs creation was quite robust.

Factors contributing to the slow pace of recovery include the remaining large trade deficits on oil and manufactured products from China and elsewhere in Asia. Together, these are directly subtracting 4 million full time jobs. 

Absent U.S. policies to develop more oil offshore and in Alaska and effectively confront Asian governments about their purposefully undervalued currencies and protectionism, the trade deficit will continue to tax growth and steal American jobs. 

Dodd-Frank regulations make mortgages, refinancing, and home improvement loans much more difficult to obtain. Consequently, the recovery in housing construction, though welcomed, remains lackluster as compared to past recoveries.  In turn, this slows expansion in building materials, major appliances, furniture, and other durable goods. 

The high cost and slow pace of regulatory reviews are a constant complaint among businesses and curb investment spending, and Washington shows no signs of listening. Regulations to protect the environment and accomplish other goals should be subject to the same efficacy standards the market applies to commercial technologies–regulatory assessments and enforcement are needed but must be delivered cost effectively and quickly to add genuine value. 

Many businesses with overseas opportunities remain tentative about adding capacity and hiring workers in the United States. Instead, they look to Asia where government policies are more accommodating and prospects for growth remain stronger.

Without better trade, energy and regulatory policies, the pace of jobs creation will not pick up.

Peter Morici is an economist and professor at the Smith School of Business, University of Maryland, and a widely published columnist. Follow him on Twitter.

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