Is Part-Time and Temporary Employment the ‘New Normal’?

Is Part-Time and Temporary Employment the ‘New Normal’?

In a new report, the Economic Policy Institute finds that “an ongoing structural shift toward more intensive use of part-time employment by many employers is driving the elevated rate of involuntary part-time work” in the US, leaving 6.4 million American workers with part-time hours when they would prefer to be working full-time:

Not getting enough hours is the “time-related” type of underemployment, a phenomenon where people may be working but not up to their desired amount, and it is a sign of labor underutilization in the economy. The monthly rate of workers in the U.S. labor market who are working “part time for economic reasons”—who are considered “involuntary” part-timers because they want to and are available to work full time—is the most consistent indicator of such underemployment. That rate is higher now that it was before the Great Recession and during the depths of the early 2000s recession. That it remains stubbornly high indicates that there is more labor market slack than is captured by the unemployment rate alone. …

This report suggests that, in addition to cyclical forces (in this case, lingering effects of the recession), there is an ongoing structural shift in many businesses toward more intensive use of part-time employment, driving the elevated rate of involuntary part-time employment. Increased employer use of part-time positions is particularly evident in industries in which part-time jobs are already more prevalent, such as retail, and hotels and food service.

Dan Kopf at Quartz highlights some updated research from economists Alan Krueger and Lawrence Katz (whose work we’ve looked at before) finding that from 2005 to 2015, almost all of the new jobs created in the US economy were not traditional full-time jobs but rather temporary, contract, or “gig economy” work:

“We find that 94% of net job growth in the past decade was in the alternative work category,” said Krueger. “And over 60% was due to the [the rise] of independent contractors, freelancers and contract company workers.” In other words, nearly all of the 10 million jobs created between 2005 and 2015 were not traditional nine-to-five employment. …

Katz and Krueger found that each of the common types of alternative work increased from 2005 to 2015—with the largest changes in the number of independent contractors and workers provided by contract firms, such as janitors that work full-time at a particular office, but are paid by a janitorial services firm.

The decline of conventional full-time work has impacted every demographic. Whether this change is good or bad depends on what kinds of jobs people want. “Workers seeking full-time, steady work have lost,” said Krueger. “While many of those who value flexibility and have a spouse with a steady job have probably gained.”

As the labor economy transforms from one based on an expectation of long-term, full-time employment to a norm of more precarious, part-time or temporary employment has many implications for employees, employers, and governments alike. Mindful of that shift, Personnel Today reported last week, the UK’s Work and Pensions Committee has launched an inquiry into the welfare system’s ability to account for the growing number of workers earning a living in the “gig economy”:

The DWP inquiry, which joins a raft of other political and legal probes into the gig economy, will consider how the self-employed, who often have variable income, are treated when applying for universal credit and other benefits, such as housing benefit and tax credits. The committee also invites submissions on how self-employed people should be encouraged to save for retirement and if they should be required to enrol in a pension. …

Frank Field, chair of the Work and Pensions Committee, said, “The welfare state was created in an era when relatively secure long-term full-time employment and traditional families dominated.”

He continued: “The labour market is changing very quickly: self-employment, uncertain hours, insecure short-term contracts and gig work are becoming ever more prevalent. We will be investigating the extent to which the welfare system can adapt to these challenges and what may need to change.”