It’s easy to overlook the significance of Labor Day. With all the stress and clutter of everyday life, the holiday often gets dismissed as simply a long weekend marking the end of summer. But Labor Day represents much more than that. It stands to honor the achievements of the American workforce and the contributions it has made to the economic and social success of this country. Successes that didn’t come easily. And as the United States continues to look inward in recent years, taking a long, hard look at its systems and policies, some unsavory realizations have unfolded. One of which is the stubbornly high number of people trapped in involuntary part time work.
What exactly is involuntary part time work?
Involuntary part time refers to workers who would prefer a full-time job but, for a variety of economic factors, cannot find or attain one. It is a common occurrence when a country’s economy suffers a downturn, as employers find ways to do more with less. Hours are cut, wage growth stagnates, and people take what they can to get by.
Generally speaking though, the current of involuntary part time work flows in a cyclical recovery motion. As an economy turns around and unemployment drops, so too does the number of people working involuntary part time. But a recent report from the Federal Reserve Bank of San Francisco reveals that while that still holds true, the overall trend of involuntary part time has shown a startling upward trajectory. In fact, the report states that despite the unemployment rate being at near-record lows, the number of people stuck in part time jobs is about 40% higher than what would normally be expected at this point in the economic bounce-back.
What does the data signify?
Frankly, this is alarming. It suggests that involuntary part time work may be a more serious symptom of a permanent structural problem. So, how did we end up with this form of hidden unemployment? “Changes in industry composition account for almost all of this slow shift toward increased involuntary part time work,” writes Rob Valletta, Vice President in the Economic Research Department of the Federal Reserve Bank of San Francisco. As employment opportunities rise faster in areas like hospitality, retail, and service, more Americans find themselves pushed into part-time work with uneven schedules.
And yes—millions of people love their part-time jobs, preferring the less consistent hours or the extra family time. But it’s a lifestyle that doesn’t fit everyone. And those who find themselves working part time because they can’t find viable full-time employment, often struggle to adapt to a variable schedule, lower pay, and little to no benefits.
How does this play into wage growth?
Furthermore, according to recent findings in a paper published last month on Underemployment in the US and Europe this stubbornly high level of underemployment is “a large part of the reason why wage growth has been so weak in the US post-recession.” Authors David Bell and David Blanchflower write that when a large pool of underemployed workers exists in an economy, its very existence “may exert more downward pressure on wages” because it serves as a sort of “reserve army” that can replace full-timers at lower cost and lower risk. “Employers are likely aware who the underemployed are and that they are willing to work longer hours at current or reduced wage rates. Underemployment is personal in a way that unemployment is not,” they continue.
This trend, of industries relying more heavily on part-time employment, is a sign the Economic Policy Institute says that America has undergone an “incomplete recovery” from the Recession. One that can only be remedied with careful public policy aimed at improving the quality of part-time work. “Clearly something is fundamentally wrong with the earnings and economic experiences of working Americans,” echoes The Century Foundation. This calls for a new set of tools and way of thinking—and remedies “that outlast recessionary periods.”
What can I do about it?
Obviously, this is a complicated topic that can’t be solved (or even fully unpacked) in a blog post. And no amount of data is ever going to completely capture the working experience of every American—involuntary part time included. There are many variables that simply can’t be measured. But what the numbers do show is that a new trend is emerging, an alarming one that is affecting the quality of employment available to workers.
John D. Rockefeller once said, “I believe in the dignity of labor, whether with head or hand; that the world owes no man a living but that it owes every man an opportunity to make a living.” As the cost of living continues to rise, wage growth continues to stall, and millions of people find themselves still struggling in part-time jobs, what kind of opportunities are really available?
This Labor Day, let’s rightfully celebrate the low unemployment rate. But let’s also spare a thought for all the underemployed Americans out there still struggling to get back on their pre-Recession feet. Maybe you’re one of them. Or maybe you used to be. Maybe you have a cushy full-time gig with great benefits that you love going to everyday. Whatever your situation, let this holiday serve as a reminder that the American workforce can’t be reduced to data on a spreadsheet. No matter how good the numbers look, the working poor exists in every economy. Stay thoughtful and stay informed. Keep an open mind when it’s time to vote. And whatever you are, be a good one.
Success is often determined by the way we greet opportunity. Do you feel opportunity has been lacking in your own work experience? Share your thoughts in the comments.