Part-Time Work Helps Hold Down Unemployment

(MoneyWatch)  The March report on US employment was grim, and is certain to become worse. The unemployment insurance report on April 9 showed another 600,000 new claims, and U.S. corporations already have announced something like 150,000 future job cuts, according to outplacement consultants Challenger, Gray & Christmas.

But if you look behind the headline unemployment number of 8.5 percent -- the highest since 1982 -- the situation is actually better than you might expect. That's because a surprisingly large number of people have had their hours cut back instead of losing their jobs altogether.

In one sense, the unemployment picture is already much worse than the 8.5 percent official rate. That's because the Bureau of Labor Statistics chooses to leave out of its calculation people who are unemployed but, in the BLS's words, "discouraged" or "marginally attached to the labor force" -- those who have stopped looking for work. Add in today's three million or so disillusioned workers, and unemployment pops to 9.8 percent of the 154 million-strong U.S. work force.

The good news -- or perhaps I should say the glass-half-full perspective -- has to do with the underemployed. The BLS calls describes them as "employed part-time for economic reasons," meaning these are folks who want to work full-time, but have to settle for less. In March this contingent numbered about nine million, or 5.9 percent of the work force. That's well up from its usual level of three percent or so, and roughly as large as the peak official unemployment rate of the 2001 recession.
Scott Hoyt, senior director of consumer economics for Moody's Economy.com, believes the large increase in part-timers may reflect efforts by employers and workers to share the pain, or wealth, by voluntarily cutting back hours. These people are still connected to their jobs, and can quickly move back to full-time schedules when their employers need them.

Consider this: if half the part-timers were out of work altogether, today's official jobless rate would be on the order of 11.5 percent -- well above the high-water mark set in 1982. "You'd rather that the people work full time if that's what they want, but it's better than not working at all," Hoyt told me.