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Is Your Economy Improving Only Part-Time?

“The economy is improving… the recession is finally over… more jobs are being created.” While all these statements are correct, the one labor/employment number that hasn’t gotten more headlines (but should have) is this: the number of workers who are employed in part-time jobs because they can’t find full-time work is actually larger today than it was before the recession.

While the level of involuntary part-timers has declined in construction and manufacturing (many of these workers have found full-time jobs within a year), the retail and hospitality sectors stubbornly remain as bastions of part-time workers.

About 3.3 million full-time jobs were created in the last year, but even with this improvement, the full-time employment level is still about 2 million jobs short of pre-recession 2007 levels, according to figures from the Federal Reserve of Atlanta.

Many are quick to blame the Affordable Care Act (ACA) or “Obamacare” if you prefer that terminology; it mandates employers with more than 50 full-time employees provide workers with health insurance. Workers hours are being cut in an effort to dodge the requirement. However, reports from the Robert Wood Johnson Foundation and the Urban Institute suggest that while part-time work has increased this year above what could be expected, the increase doesn’t apply to part-time jobs below the ACA 30-hour threshold. If businesses were chopping workers hours for expressly this reason , we would see a lessening of average work week hours – but just the opposite has occurred in the travel/hospitality sector.

Wage data should also point to businesses favoring p/t over f/t, but full-time employee wage growth, while still anemic, has outperformed part-time wages, according to the Atlanta Fed.

What we are seeing is the growth of the so-called involuntary part-time worker, millions of people in the U.S. who would like to work a full-time position, but can’t find one and have to settle for a part-time position… or even two or three of these p/t jobs. That is exactly my situation.

The big unanswered question: is this a temporary cyclical problem, one that will minimize over time as the economy improves, or is it more structural and permanent, the result of a decades long shift away from a manufacturing economy and toward one centered around the service sector?

Most analysis I’ve seen on this say the problem isn’t exclusively cyclical or structural, but instead a mix of both. Stubbornly persistent economic uncertainty coupled with rising labor costs, including higher minimum wages in many states, ACA mandates and overall business regulation contribute to the growth of part-time work. But businesses aren’t paying higher wages to part-time workers as compared to their full-time counterparts; this would be a clear indicator of changes in hiring preferences.

Janet Yellen, chairwoman of the Federal Reserve, has highlighted the problem that there are still too many people who are working part-time but would instead like to be working full-time. As one of the millions, I applaud her efforts to bring attention to this problem.

This has important implications for the Fed. If the shift is truly structural, we should see wages rise. This indicates the Fed would move to raise interest rates. However, if cyclical, the Fed has a little more wiggle room on rates. Only time (and more data) will tell.

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Unemployed? It’s All In The Way You Count It

Who’s looking for work these days?  It all depends on how you define the terms, who you ask, who’s measuring the statistic and where they are checking. unemployment A couple of articles caught my eye recently and help clarify the complex unemployment picture.

If it were up to him, Zachary Karabell would scrap the closely watched U.S. unemployment number all together.  Karabell, head of global strategy at the financial services firm Envestnet, argues in his new book, “The Leading Indicators: A Short History of the Numbers That Rule Our World,” (Simon & Schuster), that the U.S. unemployment rate number, announced at the beginning of each month, has outlived its usefulness.

I’ve learned that the unemployment number is a child of the Great Depression, created after the market crash of 1929 and subsequent economic tremors threw millions out of their jobs.  President Herbert Hoover had no way of measuring U.S. unemployment, and the subsequent accounting by Bureau of Labor Statistics revealed the truly horrific scope of the economic crisis.  Ironically, the measurement, initiated by Hoover, helped ensure his loss to Franklin D. Roosevelt in the 1932 Presidential election.

The definition of unemployed — those looking for work who can’t find it – is somewhat misleading.  How do we count, not only the unemployed, but also the underemployed (people with higher education and significant job experience who are working at lesser positions because that’s all they can find)?  And what about those workers who have dropped out of the job market, stopped looking for work because they are frustrated at repeatedly finding no available opportunities? 

The labor participation rate has also received increased attention lately, in part due to record low percentages of working age people in the U.S. who have jobs. A recent installment of the Politics Counts  blog by Dante Chinni, director of the American Communities Project at American University, details hows this participation rate varies widely across geography, much like the unemployment rate greatly varies not only by location, but also by age, sex, education and race.

Karabell points out that unemployment is a highly geographical problem, there are no national solutions for a dilemma that varies so widely across the country.  Similar observations reported by Chinni show the labor participation rate in urban areas is much higher (and has hardly changed) compared to rural areas.  While there are many contributing factors to both of these intertwined problems, different solutions are needed in different areas, and Karabell thinks dropping the fixation on the national unemployment figure would help open the door to some innovative thinking and create more localized solutions.

Want A Democratic House Majority? Then Spread Out Of The Cities

While it’s easy to blame gerrymandering (partisan state legislatures drawing congressional district borders benefiting the ruling majority party) for  the Republican majority in the U.S. House of Representatives, new research by Jowei Chen, assistant professor of political science at the University of Michigan, and Jonathan Rodden, professor of political science at Stanford University and a senior fellow at the Hoover Institution, shows the real problem may be Democrats are too densely populated for their own good.

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A recent study shows it’s not gerrymandered districts that put the Republicans into the majority in the U.S. House of Representative, but the concentration of Democrats in urban areas.

Republican control of the House of Representatives is only through the folly of gerrymandering, say critics, because the Republicans won a majority of House seats while gaining only a minority of the popular vote in the 2012 presidential election.  The GOP controls the majority of state legislatures and had the keys to the redistricting process after the 2010 Census.

In “Don’t Blame the Maps,” their January 26, 2014 op-ed piece in the New York Times, the professors lay out their case for disproving the GOP redistricting conspiracy.  Using advanced computer algorithms, the duo ran thousands of redistricting scenarios and inserted the voting patterns of the 2008 election.  In such states as Indiana and Missouri, ones with Republican controlled legislatures that were battlegrounds for the Obama-McCain contest, there were 17 House races, only four went Democratic, not surprisingly in the cities of St. Louis, Kansas City, Gary and Indianapolis.  But additional simulated less partisan mapping produced an extra Dem victory only in St. Louis and Indy, and not in all of the scenarios.

In real life, ruling parties, both Democratic and Republican, employ sophisticated computer mapping to create some Swiss cheese-like districts, snaking around to include pockets of strength.  Critics point to North Carolina, Florida, Pennsylvania, Texas and Michigan as states that gained Republican seats through advanced cartography techniques.  But this works both ways, with Maryland, California and my home state of Illinois adding Democratic-held seats by drawing districts with meandering lines.  In Illinois, this was ostensibly done to create a Hispanic seat, but several Republican-held districts from 2008 were sliced and diced for the 2012 contest.  Again, this works both ways – several decades earlier when the Republicans briefly held a majority in the Illinois General Assembly, my hometown of Oak Park, IL, a suburban Chicago liberal Democratic enclave of 50,000 people with perfect rectangular geographic borders, was represented by no less than three different congressmen.

The 2010 Illinois governor’s race showed how population distribution is the real determining factor of elections.  Of the 102 Illinois counties, GOP gubernatorial candidate Bill Brady won 101, yet Democratic Gov. Pat Quinn (an incumbent only because he was lieutenant governor and ascended when former Gov. Rod Blagojevich was impeached and later convicted of attempting to sell Barack Obama’s newly vacated U.S. Senate seat), emerged victorious by winning a super-majority of votes in Cook County, home to the heavily Democratic enclave of Chicago and a host of Dem suburbs, including Oak Park.

While many congressional districts across the country are considered “safe” for the ruling party, there’s always the opportunity for a bright young challenger from the opposition party to push and probe an incumbent’s weak spots and emerge as the underdog surprise victor in November.  It takes the rare perfect convergence of timing, luck and yes, money, to make it happen, but history has shown time and again that upsets are possible on both sides of the fence.

For more information on Chen and Rodden’s work, click here

You Don’t Need Extended Unemployment Benefits… You Need to Find A Job

The weak December jobs report, with only 74,000 new positions created, the lowest number since January 2011, has raised the hue and cry in Washington for extending long-term unemployment benefits.  The so-called long-term unemployed, a number estimated at 1.4 million workers, had their jobless benefits expire in December, 2013.

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Can we really afford to extend benefits for the long-term unemployed?

While I do understand first-hand the difficulty of looking for work, these folks have to face the new harsh reality —  you’ve got to take whatever employment available, even if it means a significant cut from your previous salary and transitioning to an hourly wage.  The U.S. budget deficit juggernaut, complicated by fiscal cliffs and sequesters, is in no position to be giving more generous extended benefits than we’ve previously allowed. 

I had the misfortune to lose my job just before the recession really kicked in 2008.   I looked and looked for work,  but when I exhausted my 26-week benefits, I faced up to the reality of taking a part-time job that was considerably less than I was qualified for.  I didn’t like it, but no one was yet aware of the severity of the Great Recession and, unable to find full-time unemployment in my field, I joined the growing army of part-time employees.  I squeaked by with an independent health insurance policy with very high deductibles and minimal benefits that would protect me only in the face of a catastrophic illness or accident.

When the income from my part-time job (commission-only sales of major appliances at a leading retail chain) fluctuated, I bit the bullet again and took another additional part-time position.  Extended unemployment benefits only push off the inevitable need of finding a job, something, anything , to get a paycheck.

This unattractive alternative is why we are seeing historic lows in the labor participation rate, 62.8 percent last month.  The official unemployment rate is 6.7 percent, down from 7.0 percent, but really it’s because fewer people are looking for work.  This doesn’t factor in people like me, not technically unemployed, but making a fraction of my former salary.  The jobs gap, employment at pre-recession levels compared to today (and factoring in the natural population increase), is a whopping -7.9 million positions according to Heidi Shierholz of the Economic Policy Institute ( see her thoughts here).  While progress has been made in creating jobs the last year:

Jan.        148,000 new jobs for the month

Feb.       332,000

March   142,000

April       199,000

May       176,000

June      172,000

July          89,000

Aug.       238,000

Sept.     175,000

Oct.        200,000

Nov.      241,000

Dec.       74,000

… the pace of hiring has not really accelerated since 2011, when it was 175,000. In 2012, it was 183,000, and over most of 2013 it was 191,000. While this is an improvement, it’s not nearly enough to seriously put a dent in the jobs abyss.

So former executives, welcome to the world of part-time labor… and get used to it because I don’t see the economy rapidly improving any time soon.

Important Midterm Elections: Gerrymandering At Root of Legislative Gridlock

Gerrymandering is named after Elbridge Gerry, though ironically he despised the process of stacking districts.

Gerrymandering is named after Elbridge Gerry, though ironically he despised the process of stacking districts.

While many are groaning about the early onset of the 2016 Presidential contest (in the fall of 2013, potential candidates are already jockeying in Iowa to get a leg up on the completion), the real election is a little over a year away.  Often overlooked, the mid-term election has have historically given the opposition party a chance to make huge gains in their plurality.As many voters chose to stay at home in non-Presidential years, turnout is a critical factor in mid-term elections.  Many people are not excited to cast their votes in these lesser elections, but close races become even closer with low percentages of eligible voters trekking to the poles.  While turnout for Presidential elections has historically been 50-60 percent, most mid-term contests barely crack one-third of the constituency exercising their franchise.

Recent mid-term election victories that have posted substantial gains in the House of Representatives (1994 and 2010 for the Republicans; 2006 for the Democrats) had turnout north of 40 percent. It is interesting to note that while the Democrats won 1.7 million more votes for the House than the Republicans in the 2012 election, yet they gained only eight seats, the largest such discrepancy since 1950.

Decisive battles often occur at the state level, where governorships are often on the line (in Illinois where I live, the governor’s race was purpose shifted a couple of decades ago to non-presidential years) and in the statehouse races that determine vital redistricting every ten years.

In 24 states, Republicans maintain complete control — both state houses and the governorship—with nearly 50 percent of these shifting in the last mid-term (2010).  Full Democratic Party rule is currently in 14 states, but the Republicans have many of the most populous states, including Ohio, Florida, Pennsylvania, Texas and Michigan.  Of the largest states, only New York, California and Illinois are completely in the Democratic column.

What makes this interesting is the extreme gerrymandering; extensive computer analysis and sophisticated mapping programs draw crazily shaped “safe” legislative districts.  The unintended consequence of this extreme redistricting is that Republican legislators are more vulnerable in primary fights, attacked by members of their own party for not being conservative enough (I suppose it could happen on the Democratic left too).

This extreme gerrymandering gives us legislators who are much more inclined to stick with the party; without a mixed constituency of voters, there is little incentive for compromise.  The resulting U.S. Congressional gridlock is the price we all pay, no matter which state we live in.

To Succeed In School, Students Have To Be In School

September is Attendance Awareness MonthAs we celebrate United Way Education Action Week (August 19-23), everyone agrees on the need to improve the performance of our schools and the students they serve. While it’s easy to get caught up in funding debates, teacher-school board labor disputes and the challenges of maintenance-neglected facilities, there is an education solution that doesn’t really cost anything and has shown measurable results.
One of the easiest ways to improve test scores and increase individual student and overall school performance is to boost attendance. By encouraging, incentivizing and rewarding school attendance, students keep pace with their classmates and consistently learn. That’s why September is being designated as Attendance Awareness Month, drawing national attention to the educational challenge of reducing absenteeism.
Concerted get-to-school campaigns reduce absenteeism and help struggling students, making a pointed effort to get them into the classroom more frequently. Students who attend school regularly are much more likely to complete high school, earn a diploma and become productive, contributing members of society.
It’s impossible to win if you’re not in the game; students simply can’t learn if they are not consistently in the classroom. Schools need to encourage students and demonstrate the importance of steady attendance to academic progression, creating a school culture of class attendance.
While some school districts recognize and reward students for 100 percent perfect attendance, creative educational professionals are taking this further, looking at new ways to boost overall attendance rates, especially for the lower strata of students. Rather than counting days and looking at attendance percentages, some schools are creating award programs recognizing students with the most improved overall attendance rate. By striving for improvement, rather than perfection, this tactic helps students who are in the most need of assistance.
Other attendance progressive schools are having mini-competitions between classrooms to see which group has the best attendance. Interclass competition is a very powerful motivator and there’s a traveling trophy that moves from room to room each week or month, showcasing the school’s attendance leaders. Other low or no-cost attendance awards include recognition certificates presented at an assembly, school supplies, cafeteria food coupons and more.
Other innovative programs create awards for the families of attendance progressive students, offering such prizes as food baskets or coupons, transportation passes or other things than can be appreciated by individuals who are related to the student.
Recognizing that on-time performance is also closely related to learning proficiency, some schools only count attendance when students are not tardy. More ideas for improving student school attendance are at http://www.attendancecounts.org

Rice Still Isn’t Romney’s Vice Presidential Choice

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No matter how many times she emphatically denies that she’s interested in the job, Condoleezza Rice can’t seem to shake being named as Mitt Romney’s vice presidential running mate  http://online.wsj.com/article/SB10001424052702303740704577523631390995126.html?mod=e2tw

This Wall St. Journal article sums it up, having Rice, a Washington experienced black woman with foreign policy experience shakes up the campaign like no other candidate possibly could.

But there’s one little problem.  Rice has been asked the question in virtually every interview she’s given since leaving her post as national security advisor to George Bush.  Just last month during a CBS interview, she said, “I didn’t run for student council president; I don’t see myself in any way in elective office. I love policy, I’m not particularly fond of politics….I’m saying there is no way I will do this, because it’s really not me.” http://firstread.msnbc.msn.com/_news/2012/06/26/12416548-veepstakes-rice-says-no-way-on-vp?lite

Ironically, Sarah Palin said on Fox the other night that she thinks Rice would be a “wonderful” choice http://www.politico.com/news/stories/0712/78470.html, while the Washington Post calls Rice “the anti-Palin.” http://www.washingtonpost.com/blogs/she-the-people/post/condi-rice-as-veep-the-allure-of-the-anti-palin/2012/07/07/gJQAdyqyTW_blog.html

Bottom line, Condi isn’t going to be the veep choice, no matter how many trial balloons are floated or what Matt Drudge reports.  I’m still sticking with my Rob Portman pick.  We’ll all find out soon enough and the real campaign for the White House will kick into high gear.