Still Falling Short on Hours and Pay: Part-Time Work Becoming New Normal

59 Pages Posted: 21 Dec 2016

See all articles by Lonnie Golden

Lonnie Golden

Pennsylvania State University - Abington College; Economic Policy Institute; Project for Middle Class Renewal

Date Written: December 5, 2016

Abstract

Key findings: Trends and causes of involuntary part-time employment.

The share of people working part-time involuntarily remains at recessionary levels. In 2015, there were 6.4 million workers who wanted to work full time but were working part time, accounting for 4.4 percent of those at work; this is roughly 2.0 million more involuntary part-time workers, or a 1.3 percentage-point increase in the rate of involuntary part-time employment prior to the recession. In fact, data from 2007 to 2015 show that involuntary part-time work is increasing almost five times faster than part-time work and about 18 times faster than all work. It is this rise in involuntary part-time work that is driving an overall increase in part-time employment generally, as the share of the workforce working part time voluntarily has been stable since 2007. Thus, the “new normal” of underutilized labor primarily reflects the increased employer use of part-time employees and not any increased preference among workers for part time employment. The currently elevated level of part-time work — and of involuntary part-time work in particular — is no longer “cyclical,” i.e., it does not reflect a delayed and slow recovery, although reaching full employment could eventually yield a diminution in part-time work as workers are able to secure full-time employment. The structural nature of today’s involuntary part-time employment is evident in the decrease in workers who say they are involuntarily part time due to slack work. Involuntary part-time work has gradually decreased since 2009 but almost entirely because fewer workers are working part-time hours due to “slack work or business conditions,” which had ballooned during the Great Recession. Slack work is an indicator of cyclical business lows. In contrast, the share of those working involuntarily part time because they “could find only part-time” work (i.e., employers were offering only part-time work, indicative of structural factors) is just as high as it was at the end of the recession in 2009. Involuntary part-time work and its growth are concentrated in several industries that more intensively use part-time work, specifically, retail and leisure and hospitality. Retail trade (stores and car dealers, etc.) and leisure and hospitality (hotels, restaurants, and the like) contributed well over half (63.2 percent) of the growth of all part-time employment since 2007, and 54.3 percent of the growth of involuntary part-time employment. These two industries, together with educational and health services and professional and business services, account for the entire growth of part-time employment and 85.0 percent of the growth of involuntary part-time employment from 2007 to 2015. Trends in the reason for part-time employment by industry also suggest structural factors in play. In 2015, involuntary part-time workers made up 7.8 percent of all those at work in the retail sector. That is 3.4 percentage points higher than before the recession started, in 2007. Roughly 60 percent of this growth in involuntary part-time work reflects those who “could find only part-time work.” Involuntary part-time work was an even higher proportion of employment, 10.4 percent, in the leisure and hospitality industry in 2015, up 3.6 percentage points from 2007. Roughly half of this growth in involuntary part-time work reflects those who “could find only part-time work,” indicating structural factors were at least as important as cyclical factors. The suggestion that the “shared responsibility provision” of the Affordable Care Act (ACA) is behind some of the shift toward part-time work is not supported by the data. The provision requires that certain employers pay a fee if they don’t offer a minimum level of health insurance to employees working 30 or more weekly hours. Had these health care-related labor costs prompted employers to reduce more positions to part-time hours, there would be a number of trends in the data that suggest a structural change in involuntary part-time working or hours worked, and these trends do not appear.

Certain groups of Americans are most vulnerable to the burdens of involuntary part-time work.

Hispanic and black workers have been hardest hit by the structural shift toward involuntary part-time work. Hispanics and blacks are relatively much more likely to be involuntarily part-time (6.8 percent and 6.3 percent respectively) than whites, of whom just 3.7 percent work part time involuntarily. And blacks and Hispanics are disproportionate shares of involuntary part-time workers: together they constitute just 27.9 percent of those “at work,” they represent 41.1 percent of all involuntary part-time workers. The greater amount of involuntary part-time employment among blacks and Hispanics is due to their both having a greater inability to find full-time work and facing more slack work conditions. Black and Hispanic women (and women of “other race/ethnicity”) are the groups most likely to experience involuntary part-time employment and represented 21.1 percent of all involuntary part-time workers in 2015.

Prime-age workers are a disproportionate share of involuntary part-time workers. Workers ages 25 to 54 comprised 57.8 percent (3.5 million) of all involuntary part-time workers (6.1 million) despite being only 44.0 percent of all part-time workers.

Men and women are similarly afflicted by involuntary part-time working — with an incidence of 5.1 percent among women and 4.0 percent among men.

The service occupations (e.g., healthcare support, food preparation, building and grounds maintenance, personal care, etc.) contribute the most to involuntary part-time employment, followed by sales. Service occupations provide 17.2 percent of all persons at work but represent double that share (34.5 percent) of all involuntary part-time workers. Sales and office occupations account for 26.8 percent of all involuntary part-time employment.

Part-time workers work about half as many hours per week as full-time workers, with the clear adverse consequence of a corresponding reduction in one’s weekly earnings.

The biggest disadvantage that part-time workers face is their relatively lower rates of pay and their benefit coverage. Prior research shows that the part-time wage penalty (the percent less in hourly wages that part-timers make relative to similar full-timers) is 19 percent for men and 9 percent for women. Part-time jobs, particularly those with the fewest weekly hours, also provide relatively less access to benefit coverage. Part-timers have only one-third the access to health insurance coverage as do full-timers — 22 percent compared with 73 percent.

Part-time workers must navigate varied and unpredictable hours. Part-time workers are much more likely to have work hours that vary from week to week — at a rate 2.5 times higher than among full-time workers. (Involuntary part-time workers face the most variability). Surveys show that part-timers also face greater irregularity in their work shift times and unpredictability in their work schedules.

Clearly part-time employment, especially involuntary part-time employment, has various adverse consequences. In addition to traditional expansionary policies that would heighten demand for more hours of labor, we need policy innovations to help curb the excessive use of part-time employment by many employers and address the harmful effects of involuntary part-time work. Remedies explored at the conclusion of this report include compensation parity for part-time jobs, reforms to unemployment insurance systems, an employee “right to request” changes in hours, and laws giving part-time workers priority access to increased hours of work that become available. Moreover, laws requiring that workers receive minimum pay for shifts that are canceled or schedules that are changed, along with unemployment insurance reforms would both incentivize reductions and mitigate the adverse impacts of involuntary part-time working.

Keywords: Underemployment; Part-time employment; Involuntary Part time work; Work Hours; Hours Mismatch; Employment Policy.

JEL Classification: J21; J23; J38; E24.

Suggested Citation

Golden, Lonnie, Still Falling Short on Hours and Pay: Part-Time Work Becoming New Normal (December 5, 2016). Available at SSRN: https://ssrn.com/abstract=2881673 or http://dx.doi.org/10.2139/ssrn.2881673

Lonnie Golden (Contact Author)

Pennsylvania State University - Abington College ( email )

1600 Woodland Rd.
Abington, PA 19001
United States
215-881-7596 (Phone)
215-881-7333 (Fax)

Economic Policy Institute ( email )

1660 L Street NW, Suite 1200
Washington, DC 20036
United States

Project for Middle Class Renewal ( email )

1408 W. Gregory Dr.
Urbana, IL 61801
United States

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