Behind the indicators: Job quality vs. job quantity
The Fed is keeping a close watch on the number of part time workers that has increased after reaching a five-year low.
Keil Hubert is a part-time writer and cyber-security consultant.
He is also an indicator.
He’d rather not be. But he is.
“Since April of 2013 I’ve applied for 476 positions, not one of which has led to an actual offer for full-time work.”
Hubert reached the maximum number of years allowable at his government job, and had to retire from public service. But at age 45 he isn’t ready to retire, and finds himself routinely overqualified for many private sector jobs. So, he is left working part time.
“Even with part time and unemployment benefits it’s not enough to get by,” he says. “It’s a little frustrating.”
Hubert is what the Bureau of Labor Statistics calls a part-time worker “for economic reasons.” It means that he is looking for full-time work but can’t find it. His situation is invisible if one looks only at the unemployment rate (6.2 percent), but it’s still important because it’s a glimpse into job quality, as opposed to quantity.
“It’s an indicator of job market slack,” says Gary Burtless, economist at the Brookings Institution. “A lot of Americans have been forced to accept jobs in part-time positions when they would prefer to work full time.”
Ten years ago, about 4.5 million Americans fit that bill. Today, around 7.5 million do. That’s up slightly from 7.3 million in January, though the number fluctuates regularly.
This is tied to the long term unemployed – those out of work for six months or longer – whose levels have also been slower to come down, says Burtless. “That is pushing a lot of Americans to take second or third or fourth or fifth choice jobs rather than the jobs and occupations and levels of hours they would prefer,” says Burtless.
Perhaps one of the most important “quality of jobs” indicators is wages and compensation, says Joe Kalish, Chief Global Macro strategist with Ned Davis Research. “One of the indicators that’s really been getting a lot of attention on the part of Federal Reserve Chair Janet Yellen and other members as of late, is what’s going on with wages and compensation.” This, says Kalish, “is where we really haven’t seen much of a pick up at this point,” despite four years of recovery.
Given the state of indicators regarding the quality of jobs and the tightness of the labor market, the Fed is unlikely to put the brakes on and raise interests before June of 2015 by Kalish’s estimate.