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Truths and myths about the rise of part-time jobs

Aggregate demand is the problem, not 'Obamacare'

July 31, 2014 6:00AM ET

When the Bureau of Labor Statistics announced that 288,000 jobs had been added in June, critics cried foul. They said the news was misleading: The details showed a deteriorating job market, which many critics blamed on the Affordable Care Act requirement that employers provide workers with health insurance or risk prosecution or penalties.

But an examination of the data tells an entirely different story about what has hobbled the recovery from the Great Recession, which started in December 2007 and ended in the summer of 2009.

June marked 52 consecutive months of job growth. However, the number of full-time jobs actually fell in June by more than 530,000 compared with May. Total jobs increased only because part-time jobs grew by about 800,000.

At first blush these numbers are alarming. But the details reveal a more nuanced, and in some ways more disturbing, picture.

Monthly job data are frequently revised. The initial job report for May has been revised upward by 7,000 jobs, the April report by 22,000 jobs. The June report will likely be revised, too.

Why revisions? The BLS rushes the report out just three or so days after the month is over. In addition, monthly data are volatile because of many factors, such as how many Sundays are in a month, when holidays fall and extreme weather events. Trend lines, not monthly snapshots, provide the best data. Monthly job reports should always be regarded as first rough drafts.

So let's look at what's happened to the mix of full-time and part-time jobs under President Barack Obama, including under the Affordable Care Act, which took effect only this year.

From his January 2009 inauguration through last month the total number of jobs increased by 6.8 million full-time jobs and just 387,000 part-time. That increase is smaller than the June figure because the number of part-time jobs fell earlier in his presidency.

But go back to 2000 or 2004 or 2007, the last peak year of the economy, and the picture is very different: Since 2007 full-time jobs are actually down by 1.6 million, while part-time jobs have grown by 2.7 million.

Part-time employment for economic reasons, all industries

Source: U.S. Department of Labor: Bureau of Labor Statistics via Federal Reserve Bank of St. Louis.

Most troubling of all, the number of people who want to work full-time but can find only part-time work shot up from 4.6 million in 2007 to 7.5 million last month. This involuntary part-time employment explains, statistically, the entire increase in part-time jobs in the last six-plus years. 

Had we maintained the 2007 ratio of full-time to part-time jobs today, we would have 2.5 million more full-time jobs and 2.5 million fewer part-time jobs, according to my calculations from the official data. We would still need another roughly 7 million jobs to fulfill all the demand people have for work.

The shift to part-time work took place before Obama’s policies had any effect and well before Congress passed the Affordable Care Act in March 2010.

Interpreting the numbers

So what do these numbers mean?

“It's really straightforward why we have low employment now,” said Heidi Shierholz, an economist at the nonprofit Economic Policy Institute, which looks out for the interests of workers. “Business executives and owners are smart. They will hire exactly the amount of labor needed to fulfill demand for their goods and services.”

The ability to buy goods and services — what economists call aggregate demand — is down because average incomes are down. Tax returns show that average real income declined in 10 of the 12 tax years since 2000. In fact, average income is down for every income class, including the very top, compared with either 2000 or 2007.

The U.S. has a long-term problem of too few full-time and too many part-time jobs. Solving that problem is actually simple: increase aggregate demand.

Increasing incomes would certainly increase demand, which in turn would secure those 9 million more jobs sooner rather than later, alleviating human suffering and ending the waste of needlessly idle hands.

Given the insignificant increase in part-time work under Obama, even including the June data that are likely to be revised, the Affordable Care Act is not the reason we have so many part-time jobs.

But what about workers whose bosses tell them their hours are being cut because of “Obamacare”? Those employers are either ill informed or lying. 

First, the data show clearly that the rise of part-time work, especially forced part-time, precedes any impact from the 2010 Affordable Care Act, which, again, did not take effect until this year.

Wait a minute, critics might say, employers who fail to buy health insurance for full-time workers face penalties and even prosecution. That is a widely told story, well known to those who get their information from demonstrably unreliable sources such as Rupert Murdoch’s Fox News and the opinion pages of his Wall Street Journal.

Yes, the law includes penalties, but it also bars enforcement.

Section 101 of the Affordable Care Act (page 131) says that in “any failure by a taxpayer to timely pay any penalty imposed by this section, such taxpayer shall not be subject to any criminal prosecution or penalty with respect to such failure” and the government “shall not” file a notice of lien or levy against the property of any taxpayer who fails to comply with the Affordable Care Act’s health insurance mandate.

What can be done

Putting the Obamacare myths aside, the U.S. has a long-term problem of too few full-time and too many part-time jobs.

Solving that problem is actually simple: increase aggregate demand. The fastest, smartest and most economically beneficial way to do that is by investing immediately in fixing up our decaying infrastructure.

If you want more jobs both now and long-term, tell your senator and your representative to invest in America’s future — especially in its roads, bridges and other infrastructure, the commonwealth property on which private wealth creation depends. Also tell them to stop cutting basic research budgets and start pouring money into laboratory work, where trained workers far outnumber available jobs.

As for the Affordable Care Act, on the basis of timing, law and logic it cannot be blamed for the problem of part-time jobs.

David Cay Johnston, an investigative reporter who won a Pulitzer Prize while at The New York Times, teaches business, tax and property law of the ancient world at the Syracuse University College of Law. He is the best-selling author of “Perfectly Legal,” “Free Lunch” and “The Fine Print” and the editor of the new anthology “Divided: The Perils of Our Growing Inequality.”

The views expressed in this article are the author's own and do not necessarily reflect Al Jazeera America's editorial policy.

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