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Chronic Underemployment? Causes and Consequences for Labor Markets and Well Being

Paper Session

Sunday, Jan. 7, 2018 1:00 PM - 3:00 PM

Pennsylvania Convention Center, 202-B
Hosted By: Labor and Employment Relations Association
  • Chair: Lonnie Golden, University of Illinois-Urbana-Champaign

How to Measure Underemployment and Some of Its Consequences?

David G. Blanchflower
,
Dartmouth College

Abstract

One of the factors that may inhibit reductions in unemployment as the economy recovers is the extent to which existing workers would like to work more hours and employers may prefer to let them work longer hours before making new hires. This phenomenon suggests that the unemployment rate does not capture the full extent of excess capacity in the labor market. But how should it be measured? In this paper we argue that the United States does not have the necessary statistical tools to calibrate this form of underemployment. We describe an index that captures the joint effects of unemployment and underemployment and provides a more complete picture of labor market excess capacity. We show how this index can be implemented using British data and describe its evolution over the Great Recession. Comparisons of our index with unemployment rates suggest that unemployment rates understate differences in labor market excess capacity by age group and overstate differences by gender. We also show that being unable to work as many hours that one desires -- i.e., underemployment -- has a negative effect on well-being. It considers several indicators of well being, such as happiness and life satisfaction measures. Finally, we recommend that the Current Population Survey conducted by the US Bureau of Labor Statistics might be extended to enable the construction of an equivalent US index.

Flows Into and Out of Part-time for Economic Reasons

Stuart Glosser
,
University of Wisconsin-Whitewater

Abstract

The number of people classified as working part-time for economic reasons (PTER) is one of the measures considered when assessing labor market slack. Even though the Great Recession ended 7.5 years ago, the number of those classified as PTER remains 24 percent higher than at the recession's start. Disagreement exists as to whether this high level is attributable to the lingering effects of the Great Recession -- a cyclical phenomenon -- or to changes in demographics, shifts from goods production to services, and/or the Affordable Care Act (ACA) -- structural phenomena. Whether PTER's high level is a cyclical or a structural phenomenon is the research question. This paper will investigate the extent to which the still somewhat elevated level in PTER has occurred either because of a rise in the number of workers who have flowed into this situation because of a change in labor force status, or because it now takes longer to transition out of PTER. Four of eight rotation-groups in the CPS form a sample made up of individuals who remained in the same household when interviewed in both the earlier and latter periods. This sample spans from May 2005 through June 2016 and includes information about these individuals from both periods. The goal is to observe whether the inflows into PTER (those who were PTER in the latter period but not in the earlier period) have returned to the level they were at prior to the Great Recession. Likewise, it will be tested whether the outflows from PTER (those who were PTER in the earlier period but are employed full-time 12 months later) is at a lower level than it was prior to the Great Recession.

The Rise of Part-time Employment

Etienne Lale
,
University of Quebec-Montreal

Abstract

We address methodological breaks in data collection on part-time employment to construct new monthly time series of U.S. stocks and flows spanning the period from 1976 onwards. Using these data, we document that part-time employment plays an increasingly important role in shaping the functioning of the U.S. labor market, both in normal times and during recessions. Specifically, we find an upward secular trend in turnover between full-time and part-time employment, and a large cyclical component chiefly explained by fluctuations in involuntary part-time work. We show that these patterns cannot be uncovered without splitting employment into finer categories because both short-run and long-run reallocations along this margin occur mostly without an intervening spell of non-employment. We emphasize the importance of our findings for several active debates, such as the slowdown in U.S. labor-market dynamism, changes in job stability and security, and the assessment of labor-market slack.

Irregular Work Scheduling and Its Consequences

Jaeseung Kim
,
University of Chicago
Lonnie Golden
,
University of Illinois-Urbana-Champaign

Abstract

What are the effects of aspects of workers' well being when an employee is either underemployed or works on an irregular or on-call shift? For many, having shift times that are variable over the course of a week creates periodic underemployment if their income fluctuates, even (or especially) among those with part time hours, and complicates work-life navigation. The incidence and effects of involuntary part time working and underemployment -- those want to work more hours at current wage rates -- is explored using the US General Social Survey (GSS) data and two of its modules, the 2015 ISSP Work Orientations IV and the most recent Quality of Worklfe (QWL) modules. Multinomial regression estimation analysis finds that employees who work irregular shift times, in contrast with those with more standard, regular shift times, experience greater work-family conflict and somewhat greater work stress. The association between work-family conflict and irregular shift work is particularly strong for salaried workers, even when controlling for their relatively longer work hours. There is lower work-family conflict for those with part-time jobs, however, this is entirely attributable to their shorter working hours. The adverse effect of irregular and on-call shifts can be moderated by daily schedule flexibility -- ability to alter their starting and ending times and to take time off during work. An employee having flexibility moderates some of the adverse negative effect of irregular work schedules on work-family balance. Preliminary results also suggest work-family conflict is lower for part time workers, but not if involuntarily working fewer than desired hours. The results regarding both the sources and reduction of such conflict not only reinforce the existing 'business case' -- but that limiting the extent and prevalence of work hours fluctuation and consequent underemployment, underscores the need to adopt both ameliorative and
Discussant(s)
David Howell
,
New School
Ryan Finnigan
,
University of California-Davis
JEL Classifications
  • J2 - Demand and Supply of Labor