Part-Time America

There was some disappointing news in the jobs report last week that included a big jump of 247,000 in the number of "discouraged workers" in the workforce. There was also a big jump in the number of Americans who want to work full time but could only find part-time work.

July 5, 2013, 7:07 p.m. ET
Wall Street Journal

The U.S. labor market may be gaining a little more steam, judging by Friday's June jobs report. Imagine how much better it might do if ObamaCare weren't encouraging employers to hire so many part-time workers.

The Labor Department's survey of businesses found 195,000 net new hires in June, 202,000 in the private economy. Payrolls for April and May were also revised upward by a total of 70,000, which means the average for the last three months is about 200,000. That's up from the 182,000 monthly average over the last year.

One positive development is that the number of "long-time" unemployed, those out of work for six months or more, fell again and is down by one million workers over the past year. The dismally low labor participation rate ticked up to 63.5% from 63.4% in May as 177,000 more Americans entered the workforce, though the rate is still below the 63.8% from last June. Average hourly wages climbed a welcome 10 cents and for the first time hit $24.

The disappointments include a big jump of 247,000 in the number of "discouraged workers," those who have stopped looking for a job. This could be a one-month anomaly given the other increases, but it bears watching.

Also disappointing is the big jump in the number of Americans who want to work full time but could only find part-time work. That number leapt to 8.23 million, a 322,000 one-month increase. Total part-time employment rose by 432,000, more than double the total number of net new jobs.

The broadest measure of unemployment—which includes discouraged workers and those who can't find a full-time job for economic reasons—still totals more than 20 million Americans and the rate unexpectedly rose in June to 14.3% from 13.8%.

This could also be a one-month outlier, and at this stage of an expansion you'd expect the number of part-time jobs to be falling as companies do more full-time hiring. Yet as the nearby chart shows, the number of part-time workers who want full-time work has stayed stubbornly high. The number at this stage in the last expansion was closer to 4.5 million.

part time jobs

Retail (37,000) and leisure and hospitality (75,000) businesses accounted for more than half of the new jobs in June. And it's revealing that the average hours worked in retail have fallen to 31.4 from 31.6 hours a week over the past year, and the average hospitality job now is still 26.1 hours a week.

One explanation is almost surely ObamaCare. The law requires employers with more than 50 workers to provide health insurance to all employees or pay a $2,000 penalty per worker. The law also defines a full-time job as 30 hours a week. All of this gives businesses that operate on thin margins—and that's most businesses—an incentive to hire more part-time workers.

On Tuesday the Obama Treasury announced it is postponing this employer mandate until 2015, and perhaps this will encourage more full-time hiring. But thousands of businesses, especially in retail and fast-food, have already started to cap employment for many workers at 30 hours and they know their reprieve is only for a year. If President Obama really wants to spur hiring, he'd let Congress delay the employer mandate forever.

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