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Nine Million Part-Timers Mean Slow Job Growth in Recovery

During this recession we've come to learn that the headline rate of unemployment doesn't tell us the whole truth about the job market. The official rate for July was down a bit, to 9.4 percent, but the government's alternative measure (called U-6), which includes people who are forced to work part-time, was 16.3 percent. Nearly nine million people are currently "underemployed." How might this enormous part-time pool affect the job market and unemployment rate as the economy regains strength?

The Bureau of Labor Statistics publishes six different measures of unemployment each month, named U-1 through U-6. The familiar headline unemployment statistic is U-3; rates U-4 and U-5 add in, respectively, "discouraged" and "marginally attached" workers who want to work but have given up looking. (The alternative measures are on page 19 of the monthly release.)

U-6 adds in people who are working only part-time, although not by choice. The BLS describes them as "Persons employed part time for economic reasons are those who want and are available for full-time work but have had to settle for a part-time schedule." In recent months, the part-timers have made up between almost six percent of the 155 million-strong U.S. labor force.

That's about nine million people. As a proportion of the labor force, forced part-time work is 50 percent more prevalent than in past recessions, as illustrated by this graph from the Atlanta Fed:

Marisa DiNatale, an economist specializing in labor issues at, believes that employers' decisions to move so many people to part-time is not simply about costs, and that they will have a big influence on the path of job growth:

It's about expectations for the recovery, too. This recession is already longer than any since the Great Depression, and there are so many things going on - the aggressive fiscal and monetary policies that could shape the recovery. It could be the uncertainty that is leading employers to hold on to as many people as they can, rather than let them go.

Another thing is that job growth after the 2001 recession was much slower than in past expansions, so businesses were lean coming in to the recession and there were not as many people to cut. Businesses have laid off everyone they can, and they have to hold to some people part-time just to keep operating.

It's very different from the 2001 recession, where there had been a lot of almost speculative hiring in the dot-com boom, and businesses where hiring anyone that was available. This time there was a lot less room to cut people.

We think GDP will turn positive this quarter, but don't expect to see any positive job growth until this time next year. That's a year of declining employment, even after the economy is out of the recession. We expect slow job growth in the second half of next year, and even for most of 2011. We don't see unemployment getting back down to five percent until 2014.