Christopher Thornberg

Viewpoints; Part-time jobs the product of health law? Actually, no

Published: Sunday, Aug. 18, 2013 - 12:00 am | Page 5E

When Mark Twain famously wrote over a century ago that there are "lies, damn lies, and statistics" he couldn't have imagined how perfectly his words characterize the economic policy battles occurring in Washington today. Ideology is trumping analysis with both sides of the aisle relying on economic myths – "truths" about our economy that are anything but – to drive political priorities.

These myths, such as the negative impact of higher marginal tax rates on long-term growth (the impact is actually very small) or that policy interventions to reduce the number of foreclosures will help the broader housing market (they don't), have been created over time by biased analysis, trivial anecdotes and a seemingly willful ignorance of basic facts. Once they take hold, they become stubborn and almost incontrovertible parts of the public and political consciousness, inevitably leading to bad policy and economic outcomes. They also divert attention from very real problems that do matter for the short and long-term health of the nation's economy.

The current debate over part-time employment is a fascinating illustration of a brand new economic myth being created right before our eyes. Major news organizations, bloggers and pundits have recently been opining about the so-called surge in part-time employment. Many pin the blame for this perceived increase in labor force stress on the Affordable Care Act, a.k.a. Obamacare. Commentators have included The Wall Street Journal, USA Today and Fox News.

The argument is deceptively neat: Obama-care is so detrimental and costly to businesses that managers are forcing their workers into part-time status in order to avoid financial charges associated with the new health care law – the rules for employers apply only to full-time employees, defined as 32 hours or more per week. Ergo the surge in part-time employment is the president's fault. Nice and neat, but also completely wrong.

There has indeed been an increase in part-time employment in the United States. According to the latest data from the U.S. Bureau of Labor Statistics, today there are 257,000 more part-time employees in the non-agricultural workforce than there were one year ago, in July 2012.

And here is myth-building at its best: While the increase in part-time employees has been loudly proclaimed from online and broadcast hillsides everywhere, the "analysts" fail to mention that these new jobs accounted for only 12 percent of all job gains during the past 12 months. And the growth rate among part-time employment was substantially smaller (1 percent) than the growth rate among full-time workers (1.7 percent). This means the share of part-time employees in the labor force has actually fallen over the past year.

The myth becomes even sillier when we segment the part-time labor force into workers who are part time for economic versus non-economic reasons. The former group is defined as workers who would like to be full-time but are unable to find full-time work, while the latter are those who are part time voluntarily because they are in school, have family obligations or for a myriad of other reasons.

Currently, the voluntary category makes up 70 percent of all part-time U.S. workers, and the increase in part-time employment since July 2012 has been completely within this voluntary (non-economic) category. The number of people who are involuntarily part time is the same today as it was one year ago, and falling as a share of the total labor force. This wholly undermines the argument that the rise in part-time workers is being forced upon the labor force by worried employers. The increase can be interpreted not as a sign of labor market stress, but of labor market recovery: More people who want/choose to work part time are able to find jobs.

Those determined to blame Obamacare for something will alter the time period under examination and argue that the number of involuntary part-time employees today is much higher today than it was in 2007. But the number of unemployed workers is also much higher. And the number of payroll employees remains lower than the pre-recession peak. This corresponds with a generally weak recovery rather than something specific to the health care legislation.

An examination of the long-term relationship between the share of involuntary part-time employment and the overall unemployment rate shows no recent material break in the correlation between these two metrics and shows nothing unusual about what is happening today. The pattern mimics past cycles perfectly from a share perspective, and the only thing to glean from the data is that this has been a pretty lousy recovery, something everyone has known for a long time.

Why has it been so lousy? There are many reasons, but one of the most pernicious is that our elected leaders pursue legislative agendas based on economic myths that satisfy their core voting bases rather than dealing in economic realities.

Christopher Thornberg is an economist and founding partner of Beacon Economics LLC (www.BeaconEcon.com).

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