A worrisome job-market trend may last longer than previously thought --  and it spells trouble for millions of vulnerable Americans

Getty / Tim Boyle
  • A new study from the Federal Reserve’s San Francisco branch finds that companies’ increasing reliance on part-time and contract work in the aftermath of the Great Recession may be more permanent than previously thought.
  • A high instance of involuntary part-time work points to a labour market that is less robust than the headlines suggest.
  • A separate study finds more reliable schedules “actually increased both sales and labour productivity, signalling a high return on investment.”

Most Americans are all too familiar with a postrecession shift in the US economy toward more reliance on temporary and contract work.

But new research from the Federal Reserve Bank of San Francisco suggests the temporary-work trend is, well, not so temporary.

“The shift toward service industries with uneven work schedules and the rising importance of the gig economy appear to be long-term trends that are unlikely to reverse in the near future,” Rob Valletta, a vice president in the San Francisco Fed’s research department, wrote in a new blog post.

“We find that the changing structural features of state labour markets have propped up involuntary part-time work in the aftermath of the Great Recession.”

The rising share of US employment occurring in the leisure and hospitality industry, as well as in education and health, “both of which have high rates of part-time employment, made especially large contributions to the overall change,” according to Valletta.

The first chart below shows a narrowing between the jobless rate and the rate of workers employed part time who would like full-time work, while the second illustrates the increasingly structural nature of part-time employment.

Figure 1 involuntary part time rate vs unemploymentSan Francisco Fed
Figure 2 components of involuntary part time employment rateSan Francisco Fed

The San Francisco Fed report argues that the trend is unlikely to change “in the absence of public policies aimed directly at altering work schedules.”

The trend also suggests US employment conditions are less robust than the headline 4.1% unemployment rate would suggest.

Stable work schedules boost productivity, sales

A separate report from the University of California’s Hastings College of the Law echoes that sentiment. It found that more stable scheduling could actually boost sales and productivity.

“Most retailers operate under the assumption that stabilizing employees’ schedules would hurt their financial performance because instability is an inevitable outcome of variable demand patterns in retail stores,” the report found.

Instead, the report said, companies’ reliance on unstable scheduling “reflects not business realities but an organizational failure.”

The authors found that more reliable schedules “actually increased both sales and labour productivity, signalling a high return on investment.”

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