Boffo BLS Jobs Data! But — the New Jobs Are Only Part-time

BY Paul Solman  July 5, 2013 at 12:31 PM EST

“Boffo BLS Data Jumps Jobs #s!” That’s how Variety magazine might headline Friday’s unemployment data, were it in the reporting-on-business business. And at first glance, Variety would only be adding the spice of life to genuinely encouraging numbers: 195,000 more jobs in June than in May, according to the “establishments” surveyed by the Bureau of Labor Statistics; upward revisions totaling 70,000 for the previous two months.

As our economist friend at the University of Michigan Justin Wolfers put it in an early tweet this morning:

And so, in the lingo of my grandparents, what’s not to like?

Well, for one thing, the unemployment rate didn’t budge. Why? Because, according to the other monthly survey the BLS conducts — the “household survey” of 60,000 American households, surveyed door-to-door — roughly 200,000 more people entered the workforce in June than left it. From their responses to the survey takers, almost all of these new people found work of some kind. That’s the good news.

But given the size of the American workforce –156 million — that doesn’t represent much of an improvement, statistically speaking. It means we are, in effect, absorbing the rise in population, but not re-employing the jobless. As Binyamin Appelbaum put it in the New York Times’ Economix blog Friday morning:

“The employment rate has not moved much in recent years because job growth since the end of the recession has basically kept pace with population growth.

“The more familiar unemployment rate has declined significantly, but it counts people as unemployed only if they are looking for work.”

And indeed, the number of unemployed in America actually rose last month. Not by much, once the data are seasonally adjusted for the onset of summer. But there are still some 12 million people officially “unemployed” in this country, a country in which you must have, in the past seven days, both looked for work and worked not even one solitary hour to be counted as “unemployed,” which the BLS reports as “U-3″ (for “Unemployment 3″).

The government also reports a “U-4,” “U-5″ and “U-6,” however. They add in, successively, members of the workforce who have looked for work not in the past week but within the past year — so-called “discouraged workers” — and part-timers who tell the survey takers they are looking for full-time work.

U-6 includes all of these people. What happened to it in June? It rose — dramatically: from 13.8 percent to 14.3 percent. That’s mainly because those working part-time “for economic reasons” — i.e., through no fault of their own — skyrocketed by more than 300,000, even after the seasonal adjustment. (Unadjusted, the raw data show an increase of more than 800,000.)

The total? More than 8 million Americans who were working part-time, even though they say they want a full-time job — in addition, remember, to the 12 million officially unemployed. And if you count all part-time workers in America — those who worked between one and 34 hours in the past week — the total is now up above 27 million, several hundred thousand more than it was a year ago.

As Reuters’ Dhanya Skariachan and Jessica Wohl reported recently regarding a switch to part-timers at Wal-Mart: “The hiring strategy could save Wal-Mart money by trimming labor costs at a time when its margins remain under pressure.”

But Skariachan and Wohl add:

“It also could set an example for some other companies as they look for ways to cushion themselves from a potential rise in healthcare costs next year as a result of President Barack Obama’s health care reforms, according to industry experts and retail executives. [Wal-Mart spokesman David] Tovar said that the move wasn’t related to these reforms, commonly known as Obamacare, but he did acknowledge that it could take a year or more for temporary workers to receive health care benefits. Turnover in retail often occurs within the first few months.”

On this page, we calculate a number even more inclusive than the U-6. We call it, predictably enough, “U-7.” It adds to the part-timers and “discouraged” workers in the government’s U-6 everyone who tells the BLS they want a full-time job but can’t find one. Thus, it includes people who haven’t looked for work in the past 12 months — people the government drops from the workforce entirely. U-7, by contrast, treats these people as super-discouraged.

So what happened to U-7? It too went up substantially in June — from 16.18 percent in May to 16.30 percent, the highest since March.

Finally, the subject of our unemployment story Friday on the PBS NewsHour: youth unemployment. As we will report on the program, only one in four teenagers over the age of 16 has a job in this country. The official unemployment rate for this group? For kids who looked for a job in the last week and didn’t find even an hour’s worth of work, that is? Nearly 25 percent — the official unemployment rate in America in 1933 at the depth of the Great Depression.

And here now is a roundup of reaction to Friday morning’s numbers.

National Journal’s Matt Berman delivers some sobering context on just how much more of a recovery is needed:

“Eight and a half million Americans unemployed; 1.6 million Americans without a job for 27 weeks or more; 7.7 percent unemployment for Hispanics, 9.2 percent for blacks; 5.4 million Americans only able to find part-time work; 5.5 percent of Americans unemployed. This was what the jobs picture looked like in June 2008. And we’re still nowhere near approaching those numbers….

“And this is after an all-around, pretty good jobs report. But for the U.S. economy to just get back to the recession level of 8.5 million Americans unemployed, the U.S. economy would need more than 16 months of 200,000 monthly jobs added.”

Paul Vigna writes on the Wall Street Journal’s MoneyBeat liveblog:

“We know everybody’s still got fireworks ringing in their ears, and we all want to think that things are getting better and the dark times are behind us and it’s morning in America and all that, but the reality is just bluntly and dully different.

“This is a weak recovery, and it has dragged on for years without any real sign that it’s reached what the wonks like to call ‘escape velocity.’ We may be ‘getting there,’ but we don’t seem to be getting there very fast. If you don’t have a job, or are still trying to dig out from under the crash of 2008, ‘we’re getting there’ is cold comfort.

Anne Lowrey takes a closer look at the Affordable Care Act’s role in increasing part-time workers on the New York Times’ Economix blog:

“The Affordable Care Act gives employers an incentive to hire part-time workers rather than full-time workers, as they might be compelled to offer health coverage to the latter, but not the former. That’s why a number of big employers have started offering more temporary or part-time positions.”

And the Wall Street Journal’s David Wessel points out another way the federal government is affecting jobs numbers:

The announcement of June’s job numbers was endowed with added significance after last month’s market-spooking announcement from Federal Reserve Chairman Ben Bernanke that 7 percent unemployment might be an appropriate threshold for drawing down federal stimulus efforts. Reuters’ Lucia Mutikani weighed in on that front:

“The strong advance in the employment count provides support for the Federal Reserve to start to taper back on its quantitative easing in the near future,” said Kathy Bostjancic, director of macroeconomic analysis at the Conference Board….

“The employment report also showed weekly hourly earnings rose by the most since November. That, together with other relatively upbeat data on housing, auto sales and manufacturing, makes it more likely the Fed will proceed with its tapering plan.”



This entry is cross-posted on the Making Sen$e page, where correspondent Paul Solman answers your economic and business questions