(Bloomberg View) – The unemployment rate is down to 4.6%, which sounds pretty good. But the unemployment rate doesn't count people who've given up looking for jobs, which is why the employment-to-population ratio, especially the "prime-age" ratio for those 25 through 54, may be a better measure of the health of the labor market.
After I wrote about this metric on Monday, several readers wrote in to wonder if even it might be overstating the health of the labor market because more people are working part time, or working multiple jobs, or scrounging a living from freelance assignments.
On part-time work, we have pretty good numbers:
So yes, the percentage of people who are working part time (fewer than 35 hours a week) but say they'd work full time if they could is higher than it was at any point from 1995 until 2008. At this point in a now seven-year-old economic expansion it's not much higher, though, while the percentage of voluntary part-time workers is lower than it was in the late 1990s. So factoring in part-timers makes the employment situation look a little bleaker, but not a lot.
What about people working three jobs to make ends meet, or getting by on "gig" work such as driving an Uber or running errands for TaskRabbit? This is a big puzzle that I've been struggling to answer for several years now. According to the monthly Current Population Survey data used in calculating the unemployment rate and the employment-to-population ratio, there's been no increase in multiple jobholding or self-employment as a share of overall employment.
This may have more to do with the limitations of the questions in the survey than the reality of the labor market, though. A different survey conducted for economists Lawrence F. Katz and Alan B. Krueger last year found that:
The percentage of workers engaged in alternative work arrangements -- defined as temporary help agency workers, on-call workers, contract workers, and independent contractors or freelancers – rose from 10.1% in February 2005 to 15.8% in late 2015.
That's a big leap, and indicates a shift away from more secure jobs to more contingent ones -- another sign that the labor market might not be as robust as the unemployment rate or even the employment-to-population ratio would indicate. There seem to be two separate, if not entirely unrelated, phenomena at work here:
Dropping out of the labor force. The percentage of prime-age men who have a job or are actively looking for one has been declining for decades, from more than 97% in the mid-1950s to a record low of 88% in 2014. Women's prime-age labor-force participation rose for most of that period, but has fallen since 2000. Participation is actually up over the past year, especially for women, but it's way too early to say whether that marks a reversal in the trend. Scrambling to get by. As noted above, the evidence is mixed on this, but more people appear to be doing work that doesn't fit the definition of a conventional full-time job. They're often doing it as a supplement to a conventional job, not a replacement. That could be because their conventional job doesn't pay enough, or doesn't seem secure enough, to fully rely on. For some people it's also surely because the labor market is now offering more opportunities for rewarding, remunerative unconventional work. But I'm guessing they're in the minority.
This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.
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