Higher numbers of unhappy U.S. part-timers might be here to stay

The share of workers who wish they were working more but can’t land full-time jobs might remain elevated even as the economy improves, new research suggests.

The share of the labor force working part-time for economic reasons, rather than by choice, shot up to a peak of more than 6 percent in the wake of the 2007-09 recession, from around 3 percent prior to the downturn.

While a weak economy increased the share of involuntary part-timers by about 2 percentage points between 2006 and 2010 — the year the rate peaked — long-term changes in the economy have also played a role. Structural shifts in the labor market might have swelled the group by an extra percentage point over the same period, according to research released Monday by Rob Valletta and Catherine van der List at the Federal Reserve Bank of San Francisco.

Why? Part of it has to do with wages, as evidenced by the differences between states with high shares of discontented part-timers and states with lower levels, the research suggests. Higher wages may increase the number of involuntary part-time workers as employers aim to trim labor costs.

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Industry structure might be another factor: Places where a larger share of employment comes from service industries, especially wholesale trade and leisure and hospitality, tend to have more people working part-time for economic reasons.

And demographics count. With fewer young people around, the number of workers pining for more hours creeps up.

How permanent the structural factors will prove is unclear, the authors write. If persistent, they “may keep the level of involuntary part-time work associated with the Federal Reserve’s maximum employment goal above the levels observed before the Great Recession.”

Fed policy makers see the still-elevated share of involuntary part-time work as evidence that labor-market slack persists. If the structure of the economy has changed so that a portion of those workers are just stuck, though, it means there’s less room for improvement and more of a new job-market reality.

There have been other signs of labor-market strength to hearten Fed officials. While the unemployment rate edged up to 5.5 percent in May from 5.4 percent, it remains close to the Fed’s 5 percent to 5.2 percent range they consider full employment. The number of workers saying they’re so discouraged by job prospects that they’ve stopped looking fell last month to its lowest level since October 2008.

The San Francisco Fed paper marks the latest chapter in an ongoing debate about whether stubbornly high part-time employment results from a weak recovery or from a more permanent change in the economy.

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