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Josh Ferrin, Deseret News
Involuntary part-time workers in U.S.

SALT LAKE CITY — Douglass Cole used to pull in a six-figure income as a graphic artist. On top of that, he had a freelance business on the side.

But that was back in the dot-com era. Things have changed since then.

"I love what I do, but it’s been an up and down experience," says Cole, who lost his last full-time job in a layoff two years ago. "I've had endless numbers of interviews. If I hadn't kept my side business going, I would have been in trouble."

Three weeks ago, Cole landed a part-time contract job doing graphics and illustrations for a few departments for The Church of Jesus Christ of Latter-day Saints. He is what the U.S. Bureau of Labor Statistics would call someone who is "part-time for economic reasons" or "involuntary part-time." According to the BLS, there are 8.6 million involuntary part-time workers in America — a number that jumped by 582,000 in September. In a political climate focusing on jobs and jobs numbers, the number of involuntary part-time workers became a talking point for pundits when employment numbers went up by 873,000 in September.

Some said the jump in the number of part-time workers was because of new campaign workers. Others say it is a sign of weakness in the economy and explains away the drop in unemployment. A closer analysis, however, shows something less conspiratorial.

The September spike

Paul Ashworth is the chief North American economist with Capital Economics, which is based in London and was, in 2010, the Wall Street Journal's forecaster of the year. He says there has been a sharp rise in the number of involuntary part-time workers since 2008 — but that a spike of more than half a million more involuntary part-timers in September was a quirk.

Ashworth says there were almost identical spikes in September 2010 and 2011 as well. "Which is a little bit disconcerting because these figures are supposed to be seasonally adjusted," he says.

"Something has changed," says Raymond W. Stone, an economist and managing director at Stone & McCarthy who sits on a BLS advisory committee, "but the seasonal adjustment factors, which are based on many years of history, have yet to fully capture that in the data."

Seasonal adjustment

"Seasonal adjustment" is a term that describes data which has had normal seasonal fluctuations taken out. For example, every Christmas season the number of workers goes up. If you compare December numbers to June numbers it will show this seasonally occurring difference — but it also obscures and distorts any broader employment trends.

The trick is to use historical data to take out the seasonal fluctuations in the numbers to drill down to meaningful statistics that can be used to compare data month-to-month. Sometimes it takes a few years before new seasonal trends are smoothed out of the data. If seasonal September spikes continue, the data will make it possible to take those seasonal changes out of the results.

In September, full-time employment also falls while part-time employment rises. One possible explanation is college students and high school students have full-time jobs in the summer and when school starts they go part time.

But even with a seasonal September rise in involuntary part-time workers, there hasn't been a seasonal drop in the unemployment rate. This September's unemployment numbers stand out on their own.

"If you see that (rise in part-time workers) in all these other years and that the unemployment rate those years did not change materially, it is hard to blame the drop in the unemployment rate on this," Stone says.

Ashworth also accepts the unemployment drop to 7.8 percent as a legitimate number from the BLS. "You are still left with an employment rate that is still very close to 8 percent," he says, "which before the recession was at 4.5 percent. Clearly it is still way too high."

Avoiding health insurance

The BLS identifies any worker who works less than 35 hours as part time. The Organisation for Economic Co-operation and Development, however, identifies people as part time only if they work less than 30 hours. Those five hours, Ashworth says, makes a difference in the numbers.

If you look at the OECD numbers, involuntary part-time workers are now at pre-recession levels. This means that the bulk of involuntary part-time workers work between 30 and 35 hours a week — just on the edge of being considered full-time workers.

Ashworth suspects the large number of involuntary part-time workers that are just below full-time may be due to health insurance.

"It is possible — although I have no evidence — that this is having an effect," he says.

By keeping some employees below the full-time threshold, businesses may be hoping to avoid the financial impact of federal health care law requirements that don't apply to part-time workers.

Although, Stone also suspects health insurance as the culprit. He says if somebody works 35 hours, the employer would have to pay for health benefits, and if they work less they do not. "Given the rising cost for health insurance for employers, maybe that is a contributing factor," he says.

Health insurance is also on the mind of Douglass Cole. He says he has no insurance coverage and hasn't since he lost his full-time job.

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"Ultimately it is about the economy," Ashworth says. "The labor market is still in a pretty poor state. It really doesn't matter if you are looking at the standard unemployment rate or if you add in those who are working part-time. The bottom line is there are still a lot of people who are unemployed who don't have the jobs that they want. There is an awful long way to go. I don't think anybody is suggesting we are where we should be."

Cole hopes he is where he should be and that his part-time job grows into a full-time job. Because he has seen ups and downs in his career, he stays hopeful.

"The economy has helped to create this situation," Cole says, then adds optimistically, "But it won't last."

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