The Wrongologist

What’s
Wrong Today:

The
economy added 192,000 jobs in March. Various pundits made a big deal of the fact that with last
month’s gains, the level of private sector employment was finally back to its
pre-recession peak. But all that means is that we’ve finally climbed out of the hole
that the recession dug in the nation’s payrolls; it’s certainly not enough jobs
to employ the growth in the working-age population over all that time.

And
it took more than six years just to repair the damage, compared with 2-4 years
in the previous three recoveries.

One
of the real tragedies of the recession and our weak jobs recovery is the
enormous number of people who work part-time
for economic reasons. The Bureau of Labor Statistics
(BLS) defines people in this category as:  

A little history: Before the 2001
recession, there were slightly more than 3 million workers in this category. By
September 2003, as the economy recovered, there were 4.84 million. Gradually, most
part-timers got full-time work, and the part-time number headed back down. In
April 2006, the number dropped below 4 million, but edged up again. Since
then, it has not returned to what “normal” meant before the 2001 recession:

When
layoffs soared during
the 2008 financial crisis, some people who kept their jobs were cut to part-time hours.
Then, during the recovery, many of the unemployed found part-time, rather than full-time
jobs. So the number of involuntary part-timers just exploded.

People in the “part-time
for economic reason” category peaked at 9.2 million in March 2010. The number
of part-timers had nearly tripled from the year 2000 and more than doubled from
before the financial crisis.

Since then, it has
been slowly declining, as more part-timers find full-time work. In March, it was at 7.4 million. The headline is that nearly five
years after the end of the recession, there
are still 80% more involuntary part-time workers than there were in 2007, and
130% more than in 2000.

There is clearly a business
logic at work. Companies use economic downturns to prune inefficiencies.
They are also making their workforces more flexible, bringing people in to work
only when absolutely needed. Some part-timers work irregular schedules, and are
kept on stand-by the rest of the time. This keeps the company from having to
include them in health care coverage or from accruing paid vacation time.

Many companies have
outsourced a portion of their staff to staffing agencies who recruit and pay their
workers. It can be a powerful tool to bring payroll expenses down, but it can
wreak havoc on the lives and incomes of workers.

Oh, and it is
terrible for the overall economy.

Back in September
2003, as hiring started to grow after
the previous recession, there were 2.26 million temporary workers out of 130.3 million total nonfarm employees. By June 2006, the number of
temps had jumped 17.8% to 2.66 million. Remember, the number of Part-Time workers today is about 7.4 million.

The chart below shows total non-farm employment and temporary
help employment, indexed to 100 in 2003:  

The chart shows that
temporary jobs dropped earlier, and faster than did total jobs. They
bottomed out at 1.75 million jobs when total employment bottomed out at 129.7
million.  

Since then, Temp jobs
have grown 62.4% from their post-recession low, while total non-farm employment
grew at 6.4% from its low, reaching 137.9 million.

Temp jobs have boomed
for structural reasons, including workforce flexibility and the big savings that accrue to companies on payroll expense and
employee benefits. Some of it is due to the way in which executives are
rewarded. It also explains some of the growth in earnings and share prices for
American firms.

The
other side of earnings growth is steady and relentless wage suppression.
Everyone knows that part timers aren’t worth what permanent workers are
worth. Thus, they have little to no bargaining power. We have seen this in the efforts of fast food workers to organize in the past few months.

There is little hope that this
trend will turn around. Temporary workers will not become full-time
employees in large numbers over the next few years, or indeed, possibly not before the next recession. Given population growth, it is possible that the
number of part-timers will never return to the levels we experienced in 2000.