Federal Reserve: Involuntary Part Time Work 40 Percent Higher Than Expected

By:
Chris Gaetano
Published Date:
Apr 12, 2018
people-2563848_1920

A report from the Federal Reserve Bank of San Francisco said that the number of people who are stuck in part-time work but would really prefer full-time jobs is about 40 percent higher than one might normally expect at this point in the economic expansion, indicating that this is a long-term structural problem versus one that will dissipate through the business cycle. This is despite the overall unemployment rate being a near-record low of 4.1 percent. The Federal Reserve noted that the rate of those in involuntary part time (IPT) work is much higher, nearly an entire percentage point, than it was the last time the unemployment rate was 4.1 percent, in August 2000. 

"This represents about 1.4 million additional individuals who are stuck in part-time jobs. These numbers imply that the level of IPT work is about 40 percent higher than would normally be expected at this point in the economic expansion," said the Federal Reserve. 

The question, then, is why. The Federal Reserve believes this is almost entirely because of what industries managed to thrive in the wake of the financial crisis. Some of the strongest recovery over the years has been in the leisure and hospitality sector and the education and health-services sector, both of which are known for high rates of part-time employment. Adding onto this is the rise of gig economy jobs like driving for Uber or doing odd jobs on Task Rabbit. Given that these are now major parts of the economy, the Federal Reserve does not believe this will change anytime soon. 

"The shift toward service industries with uneven work schedules and the rising importance of the gig economy appear to be long-term trends that are unlikely to reverse in the near future. As such, in the absence of public policies aimed directly at altering work schedules, it looks like higher rates of involuntary part-time work are here to stay," said the Federal Reserve. 

Click here to see more of the latest news from the NYSSCPA.