More Americans Forced to Settle for Part-Time Work as Labor Market Shows Strain

Labor market strains deepen as part-time work for economic reasons surges to multi-year high

A hiring sign at a restaurant in Columbia, Md., on June 15, 2024. Madalina Vasiliu/The Epoch Times

The number of Americans preferring full-time jobs but instead having to settle for part-time work surged to a multi-year high in July, underscoring growing signs of strain in the U.S. labor market as economic uncertainty mounts.

Data released by the Bureau of Labor Statistics on Aug. 2 shows that the number of people employed part-time for economic reasons jumped by 346,000 last month, bringing the total to 4.6 million. That’s the highest number of Americans working part-time for economic reasons since October 2021 and above pre-pandemic levels.

These individuals, who would have preferred full-time employment, found themselves working fewer hours due to reduced business activity or an inability to secure full-time jobs.

“Another sign of ongoing cooling,” Guy Berger, director of economic research at the Burning Glass Institute, a Philadelphia-based think tank, wrote in a social media post commenting on the this particular labor market data point.

Breaking down the increase in part-time employment for economic reasons, 153,000 of such workers cited “slack work or business conditions” as the reason for their reduced hours, while 305,000 reported that they “could only find part-time work.”

The surge in part-time employment for economic reasons is a worrying sign for the U.S. economy. It indicates that employers may be responding to economic uncertainty by scaling back hours rather than committing to new full-time hires. It could also signal a possible broader weakening trend in the labor market, especially if economic conditions continue to deteriorate.

One immediate concern of the rise in the number of workers forced into part-time roles due to slack business conditions or inability to find full-time jobs is its potential impact on consumer spending. Workers who are involuntarily part-time typically earn less than their full-time counterparts and so have less disposable income. This could weigh on consumer spending, which is a key driver of the U.S. economy, accounting for over two-thirds of economic output.

In July, the U.S. economy added 114,000 new jobs, a marked slowdown from June’s 179,000 and well below economists’ expectations of 175,000. The headline unemployment rate rose to 4.3 percent, the highest since October 2021, further signaling deceleration in the job market.

Some economists have noted that rise in the unemployment rate to 4.3 percent in July has triggered the so-called Sahm Rule, which indicates that the U.S. economy could be in the early stages of recession, according to analysts at ING Think.

“Moreover, the year-on-year declines in full-time employment are always a warning sign of impending recession threat, especially when part-time is spiking higher, suggesting firms are reluctant to replace retiring or quitting workers with like for like replacements—the first stage of cost cutting,” they wrote.

Starting March 2024, each month has seen a year-over-year decline in the number of U.S. workers employed full-time, according to Federal Reserve data. By contrast, every month since July 2022 has recorded year-over-year increases in the number of part-time workers.

The ability of the economy to transition part-time workers into full-time roles is often seen as a barometer of economic strength, encompassing factors like business confidence and consumer spending capacity.

“The dramatic shift from full-time to part-time jobs has noticeably dragged down the average workweek,” E.J. Antoni, an economist at The Heritage Foundation, said in a social media post.

Friday’s jobs report noted that the average workweek edged down in July by 0.1 hour to 34.2 hours. In manufacturing, this decline was deeper, with the average workweek falling by 0.2 hours to 39.9 hours.

In another possible sign that households may be feeling increased economic strain and needing to bolster their financial situation, the number of people not in the labor force who said in July that they want a job rose by 366,000 to 5.6 million, per the Bureau of Labor Statistics report.

“Job growth is decidedly throttling back, unemployment is rising quickly, hours worked per week are low and falling, and temporary help jobs continue to evaporate,” Mark Zandi, chief economist at Moody’s Analytics, wrote in a post on X, arguing that Friday’s disappointing jobs report makes a strong case for the Federal Reserve to cut interest rates to give the apparently faltering economy a boost.