Business Ethos Blog

An Army of Underutilized Labor

Dr. David Mielke, Retired Dean, College of Business at Eastern Michigan University

During the campaign we were told of the millions of new jobs created since 2008 and that the unemployment rate had dropped below 8%.  The focus now is on the “fiscal cliff”.  However, we have a more serious long term problem so while trying to get a deal to avert the fiscal cliff, will anyone look longer term?  It is necessary and the “Right Thing to do”.   Let’s look at some issues:


1. The number of Americans now working part-time has soared to 8.3 million.  Up 313,000, almost the entire job growth in the past two months.


2. Our unemployment rate is 7.9%, but 14.6% when accounting for involuntary part-time workers.


3. The number of full-time workers has declined by 5.9 million since 2007, while the number working part-time has jumped 2.6 million.


4. Since 2007, low wage occupations have grown nearly 3 times faster than mid-wage and high-wage jobs.  Low wage jobs were 21% of losses during the recession, they have accounted for 58% of new jobs and these have the highest percentage of part-tme.  By contrast mid wage jobs had 60% of the losses but have been 22% of the recovery.  Higher wage lost 19% and have recovered 20% of the total jobs.


5. The lower wage occupations that have seen the most growth are retail salespersons, food preparation workers, laborers and freight workers, waiters and waitresses, personal and home-care aides, office clerks and customer representatives.  Over the past 2 years food service, retail and employment service industries added a total of 1.7 million low wage jobs, 43% of America’s net job growth.


6. To make matters worse, low wage jobs have seen pay decline by 2.1%, mid wage jobs decline 2.0% over the past year.


7. ObamaCare will accelerate the trend to part-time workers because they are not covered by employers.  We have already heard of restaurant chins reducing the number of full-time people and converting them to part-time.


We are at a critical point for economy and the trend to part-time is being seen more and more as a long term trend and a structural problem rather than something that will be better when the economy turns around.  Congress and the President must deal with the “fiscal cliff” but they can’t do so again with a couple of short-term, one year fixes.  They must look at the longer term and the structural trends we see in the labor market.  It is the “Right Thing to do.”  Unless we do, we will continue to see a shrinking middle class and a nation of part-time people.  The Pew Research Center found that one-third of Americans now view themselves as lower class or lower middle class, up from one quarter in 2008.  Unfortunately, they may be right as we still have 23 million people unemployed or underemployed—and no plan for our administration!