The most recent U.S. jobs report was overwhelmingly bullish.
However, one detail that the naysayers pointed to was the uptick in part-time jobs and the downtick in full-time jobs.
“In the aftermath of the June employment data, I have to say that rarely has such a solid report been so maligned,” said Gluskin Sheff’s David Rosenberg. “It got no respect — all because full-time jobs fell while part-time jobs rose.”
Rosenberg argued the report confirmed that the “third act” of the economic recovery was in full swing.
“What doesn’t really add up with this focus on part-time employment is what the payroll data are telling us about labour income, which is now on a discernible uptrend,” said Rosenberg in a note to clients earlier this week. “The aggregate wage bill has accelerated to over a 6% annual rate on both a three- and six-month basis, so it is difficult to square this with a view among some commentators that all the economy is doing is generating low-paying service sector jobs.”
So, despite the part-time shift, people are still getting paid more. Furthermore, the evidence suggests these part-time jobs are pretty good ones.
“At the same time, a diffusion index of close to 60% would other wise suggest that, in fact, the dispersion of job creation is much wider than simply burger flippers and bell captains,” added Rosenberg.
Some suggest that this shift may be due to the Affordable Care Act, a.k.a. Obamacare, which would require more employers to offer health insurance or face penalties.
However, the evidence for this remains unclear.
Furthermore, many question the reliability of the recent part-time jobs stats.
“This information, from the Household survey, which is not only notoriously volatile but also very limited in terms of sample size (60,000 households),” caveated Rosenberg.
Deutsche Bank’s Joe LaVorgna also raised doubts about the noise in the June numbers.
“The ratio [of part-time jobs to all jobs] is currently 19.5% versus 19.6% in June 2012 and 19.8% in June 2011, although the latest reading was up from 19.2% in May,” said LaVorgna in a recent note to clients. “Conceivably, this could have been due to the massive seasonal shift in the labour force that occurs among students and teachers ahead of the summer holiday. Therefore, it is probably prudent to wait another month or two to see if the ratio dips back down. Our guess is that it will since the ratio of part-time to total household employment roughly mirrors that of the unemployment rate. With the latter still high and well above estimates of full employment, an elevated share of part-time employment is not unusual.”
Still, like Rosenberg, LaVorgna notes that the evidence suggests the quality of jobs is improving.
“[E]mployee tax withholding receipts continue to accelerate,” said LaVorgna. “They grew around 6% in June which was their best June showing since 2007. Considering the fact that the level of employment is about 3 million lower today than it was then, the current growth in tax receipts is very impressive because it means that aggregate income growth may be understated. Anecdotally, this would suggest job quality, notwithstanding the very recent increase in part-time employment, is better than some analysts think.”
So, while the sound of a “part-time” job may not be so sexy, everything else that makes up the job description seems to be improving. And this is assuming that part-time jobs really are spiking.
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