How Many Are Out of Work, Really?

The Labor Department tracks a number labeled "part-time for economic reasons." This is the number of people who are working part-time, but want full-time work. The following table shows that data over the past 10 years.

The increase in part-time employment for economic reasons has more than doubled from what it was in 2005-2007 and nearly tripled from the number in 2000. The increase in implied total unemployment during this recession is probably not significantly skewed by people working part-time by choice. According to the Labor Department, 19.1 million people were working part-time by choice in May. The annual averages for the past 10 years have ranged from 18.8 million to 19.8 million.

Labor Force Statistics from the Current Population Survey Labor Department

The Labor Department defines a part-time worker as one working less than 35 hours a week. Following that logic, we can define full-time employment as 35 hours a week (instead of the traditional 40). Recalculating the implied total unemployment produces unemployment rates below zero in good times. This corresponds to more than 100% employment. Thus, either the Department of Labor determination of the labor force is wrong, or too low, or full-time employment must be greater than 35 hours a week.

Acknowledgement: This work was inspired by a comment made by a reader known to me by the nickname ciel. This alerted me to an article by John Jansen, which described work by Joe LaVorgna, Deutsche Bank's chief U.S. economist, relating loss in average weekly hours worked to be equivalent to the loss of 300,000 to 350,000 jobs for every 0.1 hours lost.

Ciel also pointed me toward an article by Shobhana Chandra, which provided further discussion of LaVorgna's analysis. These references discuss how recovery is difficult without an increase in hours worked.

In addition, the Chandra article contained the following: The average workweek has been drifting down in the last five decades as businesses attempt to increase efficiency, Labor figures show. With hours already so low, companies may now start firing more workers as demand slows, said David Rosenberg, chief North American economist at Merrill Lynch & Co. in New York. "Any reduction in demand and order books is going to be met disproportionately by cuts in headcount rather than cuts in hours,'' Rosenberg said in a note to clients.

>To order reprints of this article, click here: Reprints