Writing at the Wall Street Journal over the weekend, Mort Zuckerman took the same dim view of the June unemployment report that I did:
There has been a distinctive odor of hype lately about the national jobs report for June. Most people will have the impression that the 288,000 jobs created last month were full-time. Not so.
The Obama administration and much of the media trumpeting the figure overlooked that the government numbers didn’t distinguish between new part-time and full-time jobs. Full-time jobs last month plunged by 523,000, according to the Bureau of Labor Statistics. What has increased are part-time jobs. They soared by about 800,000 to more than 28 million. Just think of all those Americans working part time, no doubt glad to have the work but also contending with lower pay, diminished benefits and little job security.
On July 2 President Obama boasted that the jobs report “showed the sixth straight month of job growth” in the private economy. “Make no mistake,” he said. “We are headed in the right direction.” What he failed to mention is that only 47.7% of adults in the U.S. are working full time. Yes, the percentage of unemployed has fallen, but that’s worth barely a Bronx cheer. It reflects the bleak fact that 2.4 million Americans have become discouraged and dropped out of the workforce. You might as well say that the unemployment rate would be zero if everyone quit looking for work.
Last month involuntary part-timers swelled to 7.5 million, compared with 4.4 million in 2007. Way too many adults now depend on the low-wage, part-time jobs that teenagers would normally fill. Federal Reserve Chair Janet Yellen had it right in March when she said: “The existence of such a large pool of partly unemployed workers is a sign that labor conditions are worse than indicated by the unemployment rate.”
Funny how the pro-Obama media just plumb forgot to mention that the Federal Reserve chief advised curbing our enthusiasm over reports that showed part-time positions replacing full-time work. I’m still amazed anyone could report the June numbers as a “triumph” with a straight face. There’s nothing to celebrate about losing half a million full time jobs in a single month. It’s not a sign of recovery; it’s the sign of an economy and workforce adapting to a miserable New Normal.
Zuckerman mentions something else the media just kind of forgot to tell you: ObamaCare is a major force behind the transition to part-time America.
But there is one clear political contribution to the dismal jobs trend. Many employers cut workers’ hours to avoid the Affordable Care Act’s mandate to provide health insurance to anyone working 30 hours a week or more. The unintended consequence of President Obama’s “signature legislation”? Fewer full-time workers. In many cases two people are working the same number of hours that one had previously worked.
Since mid-2007 the U.S. population has grown by 17.2 million, according to the Census Bureau, but we have 374,000 fewer jobs since a November 2007 peak and are 10 million jobs shy of where we should be. It is particularly upsetting that our current high unemployment is concentrated in the oldest and youngest workers. Older workers have been phased out as new technologies improve productivity, and young adults who lack skills are struggling to find entry-level jobs with advancement opportunities. In the process, they are losing critical time to develop workplace habits, contacts and new skills.
It is sometimes argued that greedy employers love turning full-time jobs into cheaper part-time positions, but that’s obviously not true, because they didn’t start doing it on a large scale until the Affordable Care Act gave them strong incentives to back away from full-time work. We could have been changed into Part-Time America at any time before Barack Obama came along. It is significant that it didn’t happen until he got his hands on the economy.
As for Zuckerman’s observation about the particularly severe pinching of the workforce at the entry and exit ends of the spectrum – young and older workers – the productivity provided by new technology shouldn’t be a permanent, insurmountable obstacle to keeping older people employed. That’s particularly true when new technologies tend to be user-friendly; keeping the accumulated experience and proven reliability of an older worker is well worth the minimal expense of updated training.
But why the heck are we dealing with “young adults who lack skills?” We have the most expensive education system in the world. The very same user-friendliness should ease their entry into the workforce. (I don’t want to go all fuddy-duddy on anyone, but you kids would not believe what it was like to use electronic systems in the Seventies and Eighties.) Zuckerman is dead on point when he warns about how delayed entry into the workforce, due to poor education and a lack of entry-level jobs, will haunt this generation for years to come.
Part of that entry-level choke is happening because full-time career positions are evaporating, forcing more experienced workers to take positions formerly viewed as welcome slots for young people. Zuckerman proposes that part of this is due to lower rates of capital investment, coupled with something that looks disturbingly like an employment death spiral, especially when you consider that much of the growth we’ve experienced is due to monetary policies that can’t last forever:
Why haven’t increases in labor productivity translated into higher household income in private employment? In part because of very low rates of capital spending on new plant and equipment over the past five years. In the 1960s, only one in 20 American men between the ages of 25 and 54 was not working. According to former Treasury Secretary Larry Summers, in 10 years that number will be one in seven.
The lack of breadwinners working full time is a burgeoning disaster. There are 48 million people in the U.S. in low-wage jobs. Those workers won’t be able to spend what is necessary in an economy that is mostly based on consumer spending, and this will put further pressure on growth. What we have is a very high unemployment rate, a slow recovery and across-the-board wage stagnation (except for the top few percent). According to the Bureau of Labor Statistics, almost 91 million people over age 16 aren’t working, a record high. When Barack Obama became president, that figure was nearly 10 million lower.
Pardon me for putting this in such blunt terms, but atrophied capital spending isn’t entirely bad news to people who hate capitalism, or who think it can only be “fixed” by giving government more control over it. (There are people who don’t quite “hate” capitalism, but lean toward the latter proposition.)
A part-time workforce is more compliant. They’re more dependent on government subsidies to make ends meet. They’re less sympathetic to the people who employ them, less invested in the companies they work for, both emotionally and literally. They work hard, but they never get ahead, and that makes them understandably bitter. They don’t see themselves as having much skin in the game, when a discussion of economic liberty versus government control ensues. That all goes double for people who aren’t working at all, or who only find employment sporadically.
If the only long-term solution is to increase capital investment, but conditions have been created through tax policy and regulations that make such renewed investment unattractive, then it won’t happen voluntarily… and the acolytes of Big Government will have more support when they announce they can make it happen, by enforcing greater government control over capital. The employment collapse of the Obama years is not bad news at all for those who relish the opportunity to make that case. They’ll find an especially sympathetic audience among young people with immense student loan debt burdens who can’t find decent jobs. To a large extent, Part-Time America is just one more manufactured crisis.