A study that disputes recent reports claiming that undesirable and low-paying part-time jobs are overtaking full-time work, explaining how these reports overlook expansion in the labor force, confuse establishment and household data, and disregard differences in worker characteristics that can obscure relative wages.Employment (Economic theory)

Mark E. Schweitzer

Max Dupuy

English

Research Papers in Economics

eCONOMIC
COMMeNTORY
Federal Reserve Bank of Cleveland
February 1, 1995
Another Look at Part-time Employment
by Max Dupuy and Mark E. Schweitzer
Part-time workers are among the fastest-
growing segments of the U.S. job market.
When a record 456,000 jobs were cre-
ated during March, politicians and ad-
ministration economists hailed it as a
sign of a healthy economy. Few men-
tioned that 350,000 of those jobs were
part time—many with low pay and no
benefits.
—The Detroit News, April 8, 1994
1
The U.S. Department of Labor reports
that two of every three jobs created in
March were part-time positions. Since
1973, the number of Americans who
want full-time jobs but can only find
part-time work has nearly tripled....
—The Houston Chronicle, May 11,1994
2
O ince the end of the last recession in
1991, newspaper editorialists and other
pundits have frequently complained
about part-time work. They claim that
the labor market has changed fundamen-
tally for the worse and that part-time
jobs are displacing full-time positions at
an alarmingly rapid pace. The implica-
tion is that many Americans who want
full-time jobs are able to find only part-
time work.
This view is flawed for three main rea-
sons. First, the ranks of part-time work-
ers are not actually growing faster on
average than overall employment. Sec-
ond, survey data indicate that most part-
time workers would not take full-time
hours even if offered. Finally, although
part-time jobs sometimes pay less per
hour than full-time jobs, there are also
many well-paying part-time positions.
This Economic Commentary contests
misconceptions about part-time work,
examines part-time wages, and explains
how failure to allow for differences be-
tween part-time and full-time workers can
distort other labor market comparisons.
• Ask Employers or Workers?
Much confusion about the magnitude of
part-time employment growth arises from
inappropriate comparison of two different
data sources. Labor market developments
can be analyzed from the perspective of
either the employer or the employee.
Both types of employment data are re-
ported in the monthly Employment Situa-
tion release prepared by the Bureau of
Labor Statistics (BLS). Establishment
data reveal the number of employees that
firms retain in a given month, while
household data, based on the BLS's Cur-
rent Population Survey (CPS), include
employment questions addressed directly
to individuals.
In the establishment data section of Em-
ployment Situation, the BLS reports the
total number of people employed in that
month, both overall and in various in-
dustries. No distinction is made between
part-time and full-time positions.
3 The
net monthly change in employment —
the payroll number commonly cited in
newspaper headlines—can be deter-
mined by comparing data from two con-
secutive months. This net monthly
change is often misleadingly referred to
as the "number of new jobs created."
For example, according to The Detroit
News, "a record 456,000 jobs were cre-
ated in March."
4
Many commentators have taken issue
with employment growth in the cur-
rent economic recovery. Some say that
undesirable and low-paying part-time
jobs are overtaking full-time work.
Such reports overlook expansion in
the labor force, confuse establishment
and household data, and disregard
differences in worker characteristics
that can obscure relative wages.
In fact, the total number of jobs actually
created in March 1994 was much great-
er. The net monthly change of 456,000
jobs is just the difference between larger
amounts of gross job creation and de-
struction. This fine distinction becomes
important when attempts are made to
compare establishment data with house-
hold data in order to draw conclusions
about part-time work.
Unlike the establishment data, household
data differentiate between full-time and
part-time employment. Individuals (from
randomly chosen households) are asked
how many hours they worked in the pre-
vious week. If the answer is less than 35
(but greater than zero), the worker is
considered part time. Based on the CPS
conducted in March 1994, an estimated
22.5 million workers qualified for part-
time classification in that month.
Of course, this figure undercounts the
number of part-time positions. Some
people have multiple employers for a
total of more than 34 hours per week. Itis important to keep in mind the differ-
ence between part-time jobs and part-
time workers—that is, between house-
hold and establishment perspectives.
Still, commentators sometimes try to
compare household and establishment
data. For example, the writers quoted at
the beginning of this article assert that
most of the new jobs reported for March
1994 were part time. They seem to arrive
at this conclusion by juxtaposing the
establishment net job gain (456,000 posi-
tions) with the net growth in the number
of people working part-time hours
(350,000 individuals).
5
But this comparison of net changes from
two data sets has no real meaning (in fact,
the household survey actually indicated a
decline in total employment for March).
The two numbers simply don't provide
enough information to support even gen-
eral inferences about the proportion of
new positions that are part time. For
example, it is conceivable that most of the
(350,000 plus) new part-time workers
kept their previous jobs but had their
hours reduced, while most of the new
(456,000 plus) positions created were full
time. A great many other scenarios are
possible that would be consistent with the
same numbers. Clearly, a casual compari-
son of household and establishment data
can create a misleading picture.
• Relative Trends in Part-time
and Full-time Work
Fortunately, it is feasible to use house-
hold data alone to compare part-time
trends. Overall, the number of people
who work less than 35 hours per week in
a given month certainly has grown sig-
nificantly, from 15.6 million in January
1979 to 20.8 million in December 1993
(see figure I).
6 But the labor force has
also expanded. This is a fairly obvious
point that some observers fail to take
into account. The Houston Chronicle, for
example, rightly mentions the growing
number of part-time workers, but ne-
glects to place this in the context of a
growing labor force. (It specifically re-
fers to part-timers who "want full-time
jobs," a distinction examined in the next
section.)
Since the mid-1980s, a reasonably con-
stant fraction (between 18 and 20 per-
cent) of employed Americans have
worked part time in each month. In some
months, the number of part-time workers
grows rapidly, only to shrink again in the
next month—hence the bumpy texture
of the "part-time" line in figure 1. It is
critical, therefore, to evaluate trends, not
just individual months in isolation. The
Detroit News and Houston Chronicle
both focus on March 1994, a month with
stronger-than-average part-time growth.
They do not refer to February, which had
weaker-than-average growth. As a re-
sult, they describe a situation more dire
than is justified. In any case, part-time
workers do not appear to be a rapidly
growing segment of the labor market.
• How Part-time Workers
Explain Themselves
Discussions about trends in part-time
employment are usually rooted in under-
lying conceptions about its desirability.
Part-time work is frequently described as
a type of unemployment or as a symptom
of an unhealthy economy. But not all
part-time workers would prefer to work
full time. What workers say about their
preferences is the key to understanding
the desirability of part-time employment.
Part-time workers are classified as "vol-
untary" or "involuntary" based on their
answers to CPS questions. The involun-
tary category comprises people who
claim they would rather work full time,
but could get only part-time hours (be-
cause of slack work at their regular job,
or because they couldn't find a full-time
position). Voluntary part-time workers
are those who say they have other com-
mitments or simply don't want to work
full time.
Voluntary part-time workers account for
most of the growth in total part-time
employment over the last 30 years (see
figure 2). Still, it is also true that the frac-
tion of employed Americans involuntar-
ily working part time increased from
about 3 percent in the late 1960s to a
high of just over 7 percent during the
1981-82 recession. From 1982 to 1990,
that figure declined steadily to 4.5 per-
cent before rising again during the
1990-91 recession. The fraction stood at
5.5 percent in December 1993, just be-
fore the CPS underwent a major revision.
Before 1994, the questions regarding
reasons for part-time work were asked in
a relatively imprecise way. Individuals
claiming to have worked between one
and 35 hours in the previous week were
asked for an explanation.
7 The inter-
viewer would interpret the answer to fit
one of 15 categories, which could be fur-
ther broken down into voluntary and
involuntary sets.
This question sequence was revised in
January 1994. Part-time workers are now
explicitly presented with a list of possible
explanations if they do not answer
clearly. Most important, there is now a
separate question that asks, "Could you
have worked full time if the hours had
been offered?" Under the old format, the
interviewer had to sort often-vague
answers into the voluntary and involun-
tary categories; the new format makes
the question forthright.
The revision has had a significant effect
on the aggregate data. The measured
number of voluntary part-time workers
shot up 2.1 million between December
1993 (the last month before the revision)
and January 1994. The number of invol-
untary workers fell 1.2 million.
8 Al-
though the change in the survey obscures
trends, the new questions confirm that
many part-time workers believe it is in
their own interest to work less than 35
hours per week.
• Part-time Wages
Part-time workers are often character-
ized as underpaid and lacking in bene-
fits. This is true in many cases—the
median part-time worker earned just
under $6.50 per hour in 1993, compared
to about $10 per hour for the median
full-time worker.
However, when generalizing about mil-
lions of workers, it is important to look
beyond the medians. A comparison of
the distributions of part-time and full-
time wages serves this purpose (see fig-
ure 3).
9 The two distributions overlap
substantially, indicating a large number
of workers in both categories at each
wage rate. In fact, 27 percent of part-
time workers earn more than the median
full-time worker. The major difference
between the distributions results fromFIGURE 1 U.S. EMPLOYMENT: FULL TIME VS. PART TIME'
Millions of persons
100
Millions of persons
30
1979 1981 1983 1985 1987 1989 1993 1995
FIGURE 2 REASONS FOR PART-TIME EMPLOYMENT
3
Millions of persons
20
1956 1961 1966 1971 1976 1981
FIGURE 3 1993 WAGE DISTRIBUTIONS
1991 1996
10 30 35 15 20 25
Dollars per hour
a. Vertical line at January 1994 denotes survey revision. All data are seasonally adjusted.
b. Percent of workers within 25 cents of wage rate.
SOURCES: BLS household data for nonagricultural wage and salary earners (figures 1 and 2);
and authors' calculations from CPS raw data (figure 3).
40
the relatively larger concentration of
part-time workers in the $2.50 to $6 per
hour range. Forty-five percent of all
part-time workers fall within this cate-
gory, compared to 24 percent of full-
time workers. This difference is mir-
rored in the $10 to $25 per hour range,
which accounts for 44 percent of full-
time workers and for a solid 23 percent
of part-timers.
Information on benefit levels for both
full-time and part-time workers is much
more limited. The best information comes
from the Employment Cost Index, which
reports average benefit receipts by em-
ployment categories. In March 1994, the
average part-time compensation package
included $1.83 per hour in benefit costs
(20.8 percent of total compensation
costs), compared to $5.77 for full-time
jobs (29.9 percent of total compensa-
tion).
1
0 Unarguably, part-time positions
entail fewer benefits, but not all part-time
jobs completely lack them.
Two important determinants of lower
part-time compensation are worker skills
and education. Rebecca Blank has pre-
sented evidence that part-time workers—
both voluntary and involuntary—may, on
average, have less education and experi-
ence than full-time workers in similar
jobs.
1
1 She suggests that for workers
with identical skills (some of which are
not well measured by available data), the
difference between part-time and full-
time wages is much smaller.
• The Bigger Picture
In any case, there are clearly some dis-
tinctions between part-time and full-time
workers—not just in terms of compensa-
tion and job quality, but also in terms of
worker preferences and background.
Failure to allow for these differences can
cloud understanding of labor-market
conditions.
For example, in a previous Economic
Commentary, we compared wages in the
goods-producing and service-producing
sectors.
1
2 Because workers are not
exactly alike in every industry, average
wage differences don't shed much light
on the structure of wages. Instead, we
tried to answer a more interesting ques-
tion: What are similar workers paid in
each sector? In order to do this, we sepa-
rated workers into groups by education
and experience. By the same logic, we
decided to focus on full-time workers.
In 1993, the median full-time goods-
producing worker earned 10 percent
more per hour than the median full-time
service-producing worker. For part-time
workers, the difference between the
median hourly wages was 21 percent.
For all workers—both part-time and
full-time—the hourly gap was 20 per-
cent, reflecting the greater share of part-
timers in the service-producing sector.
But we have seen that part-time work
owes as much to worker characteristics
as to the nature of employers. If the
desired comparison is between wages
offered by employers to comparable
workers, isolating the role of part-time
employment is essential.
• Conclusion
Part-time employment entails some pos-
sible public policy concerns. For exam-
ple, involuntary part-time employment
often expands quite sharply during re-
cessions, indicating a loss of economic
resources. Also, there may be unmeas-
ured aspects of part-time jobs, other than
wages, that are important for determin-
ing the quality of employment opportu-
nities. These are complex issues, which
require contemplation of the advantages
and costs of the full-time workweek for
both firms and workers.On the other hand, part-time work is
often wrongly denigrated in simple, dra-
matic terms. Many reports claim that
part-time jobs are rapidly coming to
dominate the job market, and that they
are unwanted and uniformly low paying.
These misconceptions should not guide
evaluations of the health of the economy.
• Footnotes
1. See Helen Fogel, "Employers Call Part-
timers Essential; Experts Say Workers Ulti-
mately Suffer," The Detroit News, April 8,
1994.
2. See Ron Carey, "A Part-time America Will
Not Work—Must Have Full-time Jobs, Bene-
fits," The Houston Chronicle, May 11, 1994.
3. The BLS publishes an average hours sta-
tistic, which is calculated from establishment
data. However, it doesn't provide much useful
information about part-time work, because it
also includes full-time and overtime hours.
4. All data in this section are from the origi-
nal March 1994 Employment Situation. The
BLS has since made revisions.
5. The Detroit News appears to use the
growth in the number of people involuntarily
working part time, which was actually
349,000 (seasonally adjusted) between Feb-
ruary and March. The total number working
part time rose only 194,000 (seasonally
adjusted) during the same period.
6. More precisely, this refers to wage and
salary earners in nonagricultural industries. In
December 1973, 13.4 million people were
working part time.
7. The monthly CPS questions always per-
tain to the week prior to the survey date.
8. The overall number of part-time workers
increased because of a revision to the ques-
tion sequence that identifies people who
work very few hours per week as part of the
labor force. According to the BLS, many
women who work part time were counted as
not working in the previous survey.
9. These distributions have been smoothed
to counteract sampling problems and to
emphasize their general shapes.
10. Focusing on the insurance component
(which includes health coverage), part-time
workers receive, on average, $.30 per hour in
benefits versus S1.48 for full-time workers.
11. See Rebecca M. Blank, "Are Part-time
Jobs Bad Jobs?" in Gary T. Burtless, ed.,
A Future of Lousy Jobs? The Changing
Structure of U.S. Wages, Washington, D.C.:
Brookings Institution, 1990.
12. See Max Dupuy and Mark E. Schweitzer,
"Are Service-Sector Jobs Inferior?" Federal
Reserve Bank of Cleveland, Economic Com-
mentary, February 1, 1994.
Max Dupuy is a senior research assistant and
Mark E. Schweitzer is an economist at the
Federal Reserve Bank of Cleveland.
The views stated herein are those of the
authors and not necessarily those of the Fed-
eral Reserve Bank of Cleveland or of the
Board of Governors of the Federal Reserve
System.
Federal Reserve Bank of Cleveland
Research Department
P.O. Box 6387
Cleveland, OH 44101
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Another look at part-time employment

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