Jobs

There’s no doubt that the headline unemployment rate (5.8%) does not tell the full picture of the job market. Specifically, there have been three areas of concern not reflected in the (low-ish) unemployment figure: the decline in the overall labor force (the labor participation rate), the elevated duration of unemployment, and the rise in the number of part-time workers. Each of these metrics suggests a weaker employment picture than by glancing at the 5.8% unemployment rate. Let’s tackle the last issue, the large number of part-time workers with the chart below by Julie Hotchkiss of the Atlanta Fed.

I like charts that display multiple data, and this is one. All the data compare to the same month in the previous year: so the June 2014 number is versus the level in June 2013, for example. The black line compares the total change in employment, the green bars show the change in full-time workers and the purple bars show the change in part-time workers. Clearly, through October 2010, when year-over-year employment began turning positive, the gain in part-time workers (the purple bars) far exceeded any gains in full-time employment (green bars). Since then, full-time employment has vastly outstripped part-time employment and, in fact, that’s been true for every single month since August 2011. Since October 2010, 95% of the 8.2 million new jobs have been full-time, not part-time jobs.

The fact that there are still a lot of part-time workers is a residual of the hiring we saw from 2008-2010. Since then, we’ve been adding full-time jobs. All this suggests that the US economy is not as weak as some have asserted, at least in this one particular area. On balance, the data point to continued growth in the US economy. There are risks to the downside, to be sure, but the surprise may be more on the upside. We remain believers in the US economy.