Big Repairs Still Needed To Fix the American Jobs Picture

A significant structural change in US labor markets has come to light in the years since the financial crisis, and that is our economy’s composition of full time vs. part time jobs. The US in the previous decade shouldered nearly five full time jobs for every part time job. But that ratio changed, rather dramatically, after 2008 and has not really recovered. | see: Total Full Time/Part Time Jobs in USA 2002-2012.

No doubt, a few economists and some business leaders will be inclined to argue that the trend is not entirely negative. Fair enough. Perhaps it indicates flexibility in US labor markets, especially as the economy tries to recover through the formation of small business.  Also, it makes sense that an economy trying to recover would first add back part-time work in equal amounts to full time work, before stepping up to the array of benefits extended to the full time worker. But therein lies the problem: American workers desperately need health-care coverage, which is not typically offered to part-time workers. Meanwhile, deleveraging of household balance sheets since the high debt levels of 2007 has been mild. The result is yet another way to see how deeply consumer demand is restrained: there’s not enough work to both pay down debt, and restart consumption.

Until the US confronts the reality of health care costs, and the outstanding debt levels of households, there should be little expectation that sectors like housing will see much of any recovery. While its true that reduced consumption more generally, compared to the excesses of the past few decades, is a long-overdue change that the US economy sorely needs, it is also true that any desired shift to a more productive economy in which output rises faster than consumption will not likely occur on the back of part-time work. It sounds so boring to say: the US economy needs a return of high-paying, full-time jobs. If this does not occur soon, the associated political unease will continue to fester and a new conversation about health-care policy, one that is less partisan(?), will have to ensue.

–Gregor

  • KitGreen

    “flexibility in… labor markets” seems to be an increasingly international euphemism to describe a system that leads to increased profits for employers and less reward for employees.
    Is someone able to explain to me why we should see this as a positive matter?

  • gregor.us

     Agreed. If flexibility is the means by which to regain full employment, it’s a positive. But as you say, if it becomes part of a fabric in which we downgrade or suppress everyone into low paid work without benefits, then it becomes cynical. I’d say we’re closer to the latter at this point, for sure.

    G

  • Zlati Petrov

    This seems consistent with a number of factors we have seen develop over the past decade.

    First, the way the benefits system seems to work, there is a huge jump in labor costs from part-time to full-time employees. The costs of hiring full-time workers are soaring and employers are resorting to the easiest way to save money: hire part-time.

    According to FRED, the cost of benefits has risen by no less than 51% in the past ten years alone and kept rising throughout the recession.

    This is just business people being rational. You don’t want to tame this ridiculous growth in the cost of having employees on full-time payroll? Fine, we just switch to hiring part-time.

    Second, a lot of jobs growth has come from the leisure/hospitality and retail trade sectors which are typically pretty part-time heavy by their nature.

    Third, I would suspect that manufacturing jobs are generally full-time. The collapse in manufacturing employment during the recession (especially in the automotive sector) could be driving a lot of this.

  • ouchosparks

    Labor surplus is a capitalist’s delight.  The outer limit ( too much of even a good thing is bad) is civil and social unrest.  But, it is quite likely that US elites are nonplussed by that prospect, having caused massive public investment in our 21st century Police State.  Put another way, they would far rather see blood flow, cities burn, and massive unrest than lose one nickel. 

  • http://profile.yahoo.com/C63XGUGQB4ZNFHKFQI6HROXA4I Angelina

     If you don’t mind, you may check
    “—datebi.c/O/m—-” , I am a member there, it’s for seeking people
    with bi-sexual orientatioin. Hope you can like it. lol~ just check it out,
    nothing lose if you don’t like. Best wishes.

    U can also send mails to me if U don’t mind and I’d
    like to talk with U very much

  • http://www.facebook.com/Zoe.George3 Zoe George

    …”a more productive economy in which output rises faster than consumption”….

    Every country in the world is trying to have output rising faster than consumption. But it is totally impossible for the global economy to work that way. The only way in which the global economy, and each country in it, can work is if output = consumption. The wherewithal to consume can only be sustained by equivalent output.