”If you go all the way back to the recession, our average number of employees per restaurant may have dropped modestly. But that’s simply a function of lower sales volume.”

DON FOX, CEO, Firehouse of America LLC, Jacksonville, Florida; 800+ restaurants staffed mostly by part-time workers

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U.S. labor market conditions improved significantly in 2014, but 6.8 million people who wanted full-time jobs were still working part-time. The number of people in this category, which the U.S. Bureau of Labor Statistics defines as working “part-time for economic reasons,” or PTER, remained unusually large even though most of the jobs created in recent years have been full-time.

Many economists, including those at the Atlanta Fed, have noted that the still-elevated level of part-time employment indicates the labor market still has underutilized resources, or slack. That is slack that the official unemployment rate does not capture. In 2014, Atlanta Fed research explored trends in PTER employment to help clarify how much remains to be done to achieve full employment. Data that inform researchers about the health of the economy will help the Federal Open Market Committee decide when to begin raising the federal funds rate.

PTER trends vary by type of job

Although the number of people working part-time involuntarily remained elevated in 2014, there was progress. That number fell by about a million last year, compared to a decline of only 160,000 in 2013. What’s more, the decline in the number of PTER workers was widespread across industries and occupational skill levels, which is a change from previous years, according to the Atlanta Fed’s analysis. In previous years, declines in the number of involuntary part-time workers occured largely in goods-producing industries. However, in 2014, service-providing industries also had notable declines.

This is significant because service-providing industries account for nearly 85 percent of PTER employment, much of it among low- and middle-skill occupations. The PTER share of employment in these types of jobs remained elevated at 6.7 percent in the fourth quarter, nearly 3 percentage points above the prerecession level, despite last year’s broader decline in the number of involuntary part-time workers.

PTER Rate by Industry

  • Manufacturing: 2%

    After peaking at 4%, the PTER share of employment has declined faster for manufacturing jobs than for those in service-providing industries.

  • Leisure and Hospitality: 9%

    Similar to many service-providing sectors, the PTER share of employment in leisure and hospitality has declined slowly since peaking at 11%.

  • Retail and Wholesale Trade: 7%

    The share of people working part-time involuntarily in retail and wholesale trade jobs has fallen only slightly from a peak of 8%.

industries high pter

How We Use the Current Population Survey

Economic policy analysis specialist Ellie Terry discusses the Census Bureau’s Current Population Survey, and how the Atlanta Fed uses data from the survey in its research.

A permanent or cyclical trend?

A key question is whether monetary policy can address the elevated level and share of involuntary part-time work. In other words, are these conditions tied to ups and downs in the economy—or cyclical changes—or they are the result of more lasting, secular—or structural—changes? Research seems to indicate that there are elements of both.

Employers in an August 2014 survey noted two main reasons for increased reliance on part-time employees within their own firms: a higher cost of employing full-time workers relative to part-time employees and weak business conditions. The first reason is more of a structural issue; it’s not tied to a dip in the business cycle, for example, or a fall in demand. The second reason is cyclical. In the survey, the equal weighting respondents gave to both the cyclical and structural factors suggests both elements are at play.

As Fed Chair Janet Yellen noted in an August 2014 speech, “the sharp run-up in involuntary part-time employment suggests that cyclical factors are significant.” Yet as the U.S. economy continues to gain strength and create more full-time jobs, the number of people working part-time involuntarily is likely to decline further.

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