by Paul Davidson
For years, the nation’s solid job growth and tumbling unemployment have been tainted by the shadow of millions of underemployed Americans not counted in the official jobless rate.
Now, even that shadow is receding.
The number of part-time workers who would prefer full-time jobs fell by 281,000 last month to 5.3 million, down from a peak of 9.2 million in 2010 and the lowest number in nine years, according to the Labor Department.
Altogether, the broadest measure of U.S. joblessness that includes part-timers, discouraged workers who have stopped looking as well as unemployed people is now at 8.6%, compared with 9.7% a year ago and a high of 16.9% in 2010. It’s slightly above the pre-recession mark of 8.4%.
Why are things improving for people who are working part time but want full-time roles? It's because of a shrinking pool of unemployed workers who are making it tougher for businesses to find job candidates, economists and staffing officials say.
Many firms instead are upgrading their part-time workers to full-time, or turning part-time jobs into full-time positions to attract more applicants. Full-time positions typically include benefits such as paid time off and 401(k) retirement plans.
“There simply aren’t enough” available workers, says Joe Brusuelas, chief economist for consulting firm RSM U.S. As a result, he says, “The dynamic has shifted. Labor is going to have power for the first time in years.”
The shift to fewer part-time and more full-time jobs means workers are seeing bigger paychecks while many businesses are deciding to avoid the logistical headache of stringing together part-timers to cover shifts.
The trend “is putting more money into (workers') pockets," Brusuelas says. That leads to more household spending, which bolsters economic growth. Part-time employees who prefer full-time hours and discouraged job-seekers also represent a surplus of potential workers. That surplus has allowed employers to lift wages only gradually in recent years. Since that shadow supply has dwindled, businesses will have to step up raises, Brusuelas says.
Skyview Advisors, a Tampa-based commercial real estate brokerage that handles self-storage units, traditionally hired salespeople as independent contractors who could work part-time and become full-time staffers after a year. But the company's president, Jay Crotty, last year decided to bring on entry-level salespeople full-time, making them eligible for benefits like paid vacations. He made the move because the 15-employee firm was struggling to find job candidates.
“College grads obviously have other choices,” he says. “They can go work for a lot of other companies.”
Crotty says the number of resumes he receives for open sales positions has roughly doubled and more of the applicants are college grads. Although the additional labor costs initially cut into the money his firm made, he says worker productivity and profits were higher in the first quarter than a year earlier and revenue rose 25%.
Employers are also hiring more workers in full-time roles to improve retention in the more competitive market.
“They don’t want to lose them,” says Kelly Marinelli, principal consultant for Solve HR in Denver.
She adds that many firms in manufacturing, warehousing and call centers are switching part-time workers to full-time. While the trend largely stems from the struggle to find outside job candidates, it also alleviates having to piece together an ever-changing schedule of part-time workers, Marinelli says.
Manufacturers are also increasing hours because of the improving global economy and rebounding energy sector, says Chad Moutray, chief economist of the National Association of Manufacturers.
After the Great Recession ended in 2009, risk-averse firms brought on part-time workers to hold down costs and give them tryouts, says Jeanne Branthover, managing partner of DHR International, an executive search firm that also provides consulting services on staffing.
Now, she says, employers have more confidence that healthy customer demand will hold up, an outlook that has been bolstered by President Trump’s promises of cuts in taxes and regulations. And so many firms scrambling to add labor are converting part-timers to full-time because they already know the workers, and can save on the costs of recruiting and training new hires, Branthover says.
Companies are effectively telling the workers, “We want you to become part of the family,” which increases employee loyalty, she says.
The recent trend toward hiring full-time workers has partly offset a post-recession inclination by employers to bring on more part-timers for specific projects to reduce costs and avoid paying for health coverage under the Affordable Care Act. Economist Michael Feroli of JPMorgan Chase believes that longer-term shift will continue, pending in part on the proposed rollback of the health care law.
For now, full-time is in. The year-old Les Lunes, an upscale clothing chain with five outlets in California and Chicago, at first hired some salespeople in part-time roles but found it was “more difficult to find time to train them,” says CEO Anna Lecat.
That, along with the tighter labor market and a desire to ensure staffers are committed to the chain’s high-level customer service, has prompted Lecat to try to hire full-time workers exclusively and switch part-timers to full-time.
Monesha Berry, who started at Les Lunes in San Francisco in February, worked 24 hours a week the first month until she was converted to full-time. The extra income, she says, allowed her to buy a car.
“It’s actually helped a lot,” she says. And now, she adds, her co-workers “make it feel like a second home.”