Involuntary part-time employment has fallen by 670,000 over the last year, however it's still up by almost 3 million from its pre-recession level. While there would seem to be a very simple and obvious explanation for this one -- weak demand in the economy -- you can't employ many people saying the obvious. Hence we see a lot of nonsense in the media on the topic.

The latest installment comes to us from McClatchy News Service. The story is that the problem is skills and employer sanctions in Obamacare.

"One reason is a gap in the kinds of skills needed to find work in an increasingly technological workplace. Many employers also remain uncertain about the economy and hesitant about deeper financial commitments.

"And hiring part-time instead full-time employees is one way that some businesses are getting around the costs of a mandate in the health care law that requires employers with 50 or more full-time workers to provide insurance coverage beginning in January."

Let's see, the problem is a gap in skills. So employers have those full-time jobs out there, the problem is that workers just don't have the skills needed to fill them.

Let's assume this is true. Imagine you're one of those frustrated employers. You have all this demand for your service or product, but the dolts coming through your door just don't have the skills needed for your increasingly technological workplace. What might you do to solve this problem?

That's right, you could raise wages. This way you would pull away the workers who have these skills from your slow moving competitors.

There is a problem here. We don't have any major sector of the economy with rapidly rising wages. (Yes, North Dakota has rapidly rising wages and it employs about 0.3 percent of the workforce.) This indicates that we either don't have a skills gap or if we do it exists primarily among employers who don't understand how labor markets work.

A piece of data that doesn't fit well with the skills gap story is that the sector with the most rapid growth since the downturn has been the leisure and hospitality sector, which has added 1,120,000 jobs (total employment in all other sectors together is still below the pre-recession level). This sector is not generally considered to be at the center of the technological revolution. It also has an averagework week of 25.1 hours.

The Obamacare part of the story also doesn't fit the data. Employers would have thought that the employer sanctions applied for the first half of 2013 until the Obama administration announced a waiver in July of that year. During this period there was a modest increase in the share of the workforce working 25-29 hours, just under the 30 hour cutoff for the sanction. However this increase was totally at the expense of the share working less than 25 hours. The portion of the workforce putting in more than 30 hours a week actually increased.  

In short, there is zero reason to believe that the increase in involuntary part-time employment has anything to do with either a skills gap or Obamacare. There is a simple explanation based on inadequate demand since we haven't filled the gap created by the collapse of the housing bubble. Unlike the more complicated explanations, this one fits the data.

About the Author

Dean Baker is co-director of the Center for Economic and Policy Research in Washington, DC.  He is frequently cited in economics reporting in major media outlets, including the New York Times, Washington Post, CNN, CNBC, and National Public Radio.  He writes a weekly column for the Guardian Unlimited (UK), the Huffington Post, TruthOut, and his blog, Beat the Press, features commentary on economic reporting.  His analyses have appeared in many major publications, including the Atlantic Monthly, the Washington Post, the London Financial Times, and the New York Daily News. He received his Ph.D in economics from the University of Michigan.

Recommended Books

Getting Back to Full Employment: A Better Bargain for Working People
by Jared Bernstein and Dean Baker.

This book is a follow-up to a book written a decade ago by the authors, The Benefits of Full Employment (Economic Policy Institute, 2003). It builds on the evidence presented in that book, showing that real wage growth for workers in the bottom half of the income scale is highly dependent on the overall rate of unemployment. In the late 1990s, when the United States saw its first sustained period of low unemployment in more than a quarter century, workers at the middle and bottom of the wage distribution were able to secure substantial gains in real wages.

Click here for more info and/or to order this book on Amazon.

The End of Loser Liberalism: Making Markets Progressive
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Progressives need a fundamentally new approach to politics. They have been losing not just because conservatives have so much more money and power, but also because they have accepted the conservatives' framing of political debates. They have accepted a framing where conservatives want market outcomes whereas liberals want the government to intervene to bring about outcomes that they consider fair. This puts liberals in the position of seeming to want to tax the winners to help the losers. This "loser liberalism" is bad policy and horrible politics. Progressives would be better off fighting battles over the structure of markets so that they don't redistribute income upward. This book describes some of the key areas where progressives can focus their efforts in restructuring the market so that more income flows to the bulk of the working population rather than just a small elite.

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*These books are also available in digital format for "free" on Dean Baker's website, Beat the Press. Yea!