We at the Atlanta Fed have been arguing for some time that the unusually large number and share of workers employed part-time but wanting full-time work (counted in the Current Population Survey as part-time for economic reasons, or PTER) partly reflects slack in the labor market that is not reflected in the official unemployment statistics. We are in good company. Chair Yellen reiterated this view in her prepared remarks during Wednesday’s Federal Open Market Committee press conference. The good news is that the stock of PTER workers has declined by around 900,000 during the last year compared with a decline of fewer than 200,000 in 2013. Moreover, the CPS data suggest the decline is primarily because these workers have either found full-time work or are no longer wanting full-time work (that is, are working part-time for noneconomic reasons), and not because they have become unemployed or have joined the ranks of the discouraged outside of the formal labor market. Even better news is that the recent decline has been very broad based (see the charts).
Up until about a year ago, the overall decline in the number of PTER workers was driven primarily by those in middle-skill occupations in goods-producing industries and, to a lesser extent, in services-producing industries. But during 2014, the decline is also evident in services-producing industries among PTER workers in both low- and high-skill occupations—two categories that had not seen any material decline in their PTER ranks since the end of the recession. (A previous macroblog post discussed the various occupational skill categories.) There is still a ways to go, but these developments are very encouraging.
By Ellie Terry, an economic policy analysis specialist, and
John Robertson, vice president and senior economist, both of the Atlanta Fed's research department