Emerging Trend in the Labor Force?

February 25, 2015

As of January 2015, the headline unemployment rate (U-3) stood at 5.7%. Since hitting a recession high of 10% in October 2009, this headline rate has steadily fallen to pre-financial crisis levels. However, headline unemployment is but one of many measures used by the Bureau of Labor Statistics to gauge the health of the labor market since one single measure can’t possibly tell the whole story.

While the percentage of those officially counted as unemployed has fallen, that decrease also accounts for changes in the amount of those classified as marginally attached to the labor force (those who have stopped looking for work but still want a job) as well as workers employed part-time for economic reasons (those working part-time and unable to find full-time employment). The broadest measure of unemployment (U-6), which includes these two categories, was 11.3% in January.

Part-time workers as a percentage of the labor force have improved slightly over this time period, but not nearly as much as the headline rate has. There is a multitude of possible reasons for the increase and slower decline in part-time workers for economic reasons. Possible reasons include job-seekers lacking the skill sets that employers require, employers being more selective and/or hesitant to add new staff following the Financial Crisis, and the effect of the Affordable Care Act’s 30-hour threshold rule to be considered a full-time employee and receive health coverage. The trend of higher part-time workers as a percentage of the labor force bears watching as this may be part of a secular trend in the labor market.