By the numbers: Part-time work casts shadow over low unemployment rating

Vermont’s official unemployment rate may be approaching pre-recessionary lows, but when part-time and other marginally attached workers are factored in, the rate has been slower to budge.

At 3.3 percent, the state’s official jobless rate remained second lowest in the nation in May, the most recent month for which estimates are available. The official rates from the Vermont Department of Labor only include jobseekers who have been looking for work for a four-week period. Averaged annually, the official rate in Vermont was 4.3 percent in 2013.

But discouraged and underemployed workers don’t show up in official rates. A more inclusive measure of “labor underutilization” averaged 9.3 percent last year.

Tom Kavet, economist for the Vermont Legislature, speaks at an Emergency Board meeting on July 20, 2012. Photo by Taylor Dobbs

Tom Kavet, economist for the Vermont Legislature. Photo by Taylor Dobbs/VTDigger

Economist Tom Kavet of Kavet, Rockler & Associates, who consults for the Vermont Legislature, said in a normal economic recovery, he would expect the number to have come down more by now.

“Things are getting better, but we’re not back to anything near full employment,” Kavet said. “A lot of people would like to work more but are not able to.”

6 WAYS TO SLICE UNEMPLOYMENT

The federal government estimates unemployment six different ways to account for different segments of the workforce. Here’s a rundown, with more detail at the U.S. Bureau of Labor Statistics.

U-1: unemployed 15 weeks or longer

U-2: job losers + temporary workers

U-3: official rate — jobless available to work who have looked in most recent four weeks

U-4: unemployed + discouraged (potential workers who have dropped out of the labor force but looked for jobs in the last year)

U-5: unemployed + discouraged + other marginally attached (available for work, but hadn’t looked in last four weeks)

U-6: unemployed + discouraged + marginally attached + part-time workers who’d prefer full-time work

The reasons are hard to pin down, but Kavet said employers appear to be holding back because they’re not confident consumer demand will grow enough to justify more hiring.

Another possible reason for the disproportionately high percentage of part-timers? Businesses are avoiding the cost of benefits by keeping workers just shy of full-time employment, Kavet said.

“It’s likely that’s happening,” he said. “Avoiding the costs associated with full-time employment is one of the reasons there’s been more part-time and temporary employment in this (recovery).”

Patricia Moulton is secretary of the Agency of Commerce and Community Development. Photo by Hilary Niles/VTDigger

Patricia Moulton, secretary of the Agency of Commerce and Community Development. Photo by Hilary Niles/VTDigger

Pat Moulton, secretary of the Agency of Commerce and Community Development, said she thinks the dichotomy is more a matter of mismatched skills.

“I rather think the issue is that the underemployed, those working below their skill level, are having a hard time finding the right full time job at their skill level,” Moulton said by email. “Further, I believe there are a percentage of the discouraged workers that are running in to job openings beyond their skill levels.”

The state is working to provide greater job opportunities for both the unemployed and underemployed, Moulton said. “But this takes time.”

Whatever the reason for stubbornly high rates of “labor underutilization,” Vermont is not alone in the trend. Data from the Bureau of Labor Statistics show that around the country, the most inclusive measurement has been slow to budge. Nationally, it averaged 13.8 percent in 2013.

Known as U-6, this figure is always higher than official unemployment rates because it’s more inclusive. It accounts for those who have all but dropped out of the workforce, and even people who are working part-time but would rather have full-time jobs.

But it’s not always this much higher than the official unemployment rate, known as U-3, which essentially just counts jobless people who have looked for work in the last four weeks.

And the difference between the two figures is bigger in Vermont than most of the rest of the country.

Vermont’s annual average U-6 rate has been more than twice the state’s official unemployment rate since 2010. Nationally, the U-6 rate in 2013 was 86 percent higher than official figures — the biggest the gap has been in at least a decade.

Comparatively, Vermont rates well either way, according to Mat Barewicz, Vermont’s economic and labor market information chief. The official unemployment rate remained second-lowest in the nation in May; the alternative rate accounting for discouraged and underemployed workers was sixth-lowest — even if the difference between the two rates was higher in Vermont than the rest of the country.

Barewicz said a significant portion of the state’s employment profile is seasonal. Close to 10 percent of the state’s labor force is employed by the leisure and hospitality sector, in which part-time work is common.

He also noted that a study by the state’s Department of Tourism found a high degree of job satisfaction among leisure and hospitality workers.

But the number of part-time workers captured in the U-6 unemployment rate reflects people working part-time because they can’t find full-time jobs — not because they choose partial employment.

“You have this work ethic that is so ingrained,” said Gerry Ghazi, president, CEO and co-founder of the workforce development organization Vermont HITEC. Adult students often come to HITEC holding down multiple jobs to make ends meet, Ghazi said.

“But then their family life suffers because they’re … trying to balance three different employers,” he said. That’s why HITEC’s focus is on full-time, livable wage jobs that offer benefits.

“I agree that working part-time is not the highest economic outcome,” Barewicz said.

On the other hand, he said, it’s better than no job at all. Roughly 1.7 percent of Vermont’s workforce was considered long-term unemployed in 2013, according to BLS data that estimates the number of people out of work for 15 weeks or more.

“They talk about this new job market where it’s easier to get a job when you have a job,” Barewicz said. “At least they (part-time workers) have got a foothold on the economic ladder such that they’re looking to advance.”

Nonetheless, a disproportionately high level of under-employment is worth noting, Kavet said, not only as a business trend with financial and personal consequences for workers. It also could shed light on a worrisome inconsistency in the state budget.

He pointed to a disconnect in Vermont between employment and income. The issue emerged in April and May of this year, when the state’s collection of personal income taxes fell far below forecast. Kavet said he normally would expect the state to collect more income tax revenue at a time when the official unemployment rate is down to 3.3 percent.

The discouraged and part-time employment situation “has got to tighten up before you can really say the economy has improved,” Kavet said.

Hilary Niles

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25 Comments on "By the numbers: Part-time work casts shadow over low unemployment rating"

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Jamie Carter
2 years 1 month ago
This is a real problem. Whenever there is a good position that comes around there is a flood of applications from well seasoned and educated people. There is a tremendous amount of “under-employed” workers and that is making it extremely difficult for those that are unemployed or part timers to move up. We need to grow jobs but one of the main killers is the unknown… and the big one right now is single payer. Once businesses know what this is going to cost them they’ll figure out if its worth hiring more people or not, but as long as… Read more »
Doug Hoffer
2 years 1 month ago

If the problem is unique to Vermont because of the move toward single payer, how do you explain the vast majority of states that have higher rates of under-employment?

Wendy wilton
2 years 1 month ago

Underemployment nationally has been linked to Obamacare. Therefore the woes of the nation’s unemployment problem have similar causes to Vermont. The law has encouraged employers to utilize more part time workers due to the cost of benefits including healthcare.

Pam Ladds
2 years 1 month ago

If you mean the ACA (Obama merely used a plan devised by Romney!) I agree it has problems. However, the jump to suggest underemployment linkage to “Obamacare” is a little bizarre. “Linkage” like the word “tendencies” implies fact when something barely exists. Underemployment was around way before the ACA, as was unemployment. There is no simple solution to this other than by changing the way businesses are run, national priorities are made and funding redirected from wars, corporate welfare and the prison industry .

Craig Powers
2 years 1 month ago

Pam:

Please provide details on what your suggestions are for “changing the way businesses are run”. It would be wonderful to hear them.

John Fairbanks
2 years 1 month ago

Good Lord, is there any contortion the Right won’t bend itself into to blame America’s problems on Obamacare? You guys are gonna make the chiropractic industry rich.

John Greenberg
2 years 1 month ago

Wendy Wilton:
“Underemployment nationally has been linked to Obamacare. ” By whom? Unemployment and underemployment were both considerably higher BEFORE Obamacare passed than after.

Bob Orleck
2 years 1 month ago
Jamie’s analysis is right Doug. It is the ‘gap” between the low “official rate” and the higher rate reporting unemployed + discouraged + marginally attached + part-time workers who’d prefer full-time work that is the big problem. Comparing both numbers separately it looks like Vermont fares well against the rest of the US but doing so gives a false sense of security. As the article pointed out if we were doing well as seems to be reflected by the low official rate of unemployment the tax collection would not be so far below expectations. The low official rate should translate… Read more »
John Greenberg
2 years 1 month ago

Bob Orleck:
You write: “The gap between those two indicators is much larger in Vermont that in the rest of the nation.” Please cite the actual statistics which justify that statement.

John Greenberg
2 years 1 month ago

I wrote the comment above before reading the article (I thought I had already read it) and I see that they’re included above. Please ignore my comment.

David Dempsey
2 years 1 month ago

Doug,
Uncertainty about future costs for health insurance is a big problem. Businesses can’t make big decisions about expanding in Vermont or leaving the state without knowing the costs of future health care insurance. To suggest otherwise is is politics, not reality.

Steve Baker
2 years 1 month ago

Seems to me that we have one of the lowest rates of underemployed (9.1%) in the nation (well below the national figures), and the second lowest official unemployment rate (3.3%). And we are the only state on track for single payer healthcare (2017). The conclusion I draw from those facts is that moving towards single payer is good for our economy and for our working families (who have a basic human right to healthcare). Good work Vermont! Lets keep it up and get those numbers even lower, while providing healthcare to all.

James Rude
2 years 1 month ago
Hillary, Thank you for listing the six ways to slice unemployment…we typically do not see these distinctions reported or explained in the mainstream press. Even though U3 has been the “official unemployment rate” reported by the Federal Government, it is not the most meaningful data to show the actual number/percent of people out or work or who have had reduced hours. U6 reporting better represents the broad base impact of unemployment on the economy and is less prone to political manipulation than the U3 data…which is like reporting inflation while excluding food and gas prices.
Doug Hoffer
2 years 1 month ago

For the record, I discussed this issue in Phase 2 of the Job Gap Study in May 1997 (see Part 2 of the report).

http://www.vtlivablewage.org/JOBGAP2a.pdf

Paul Cook
2 years 1 month ago
As part of the U6, I have to take exception to commissioner Moulton’s comments about mismatched skills. The problem, commissioner. is that most employers have such a large pool of unemployed and underemployed to choose from that they can wait for the perfect match, a person with the exact experience and education they want. The idea that skills are transferable is a thing of the past. If you in and industry that is declining (higher education in my case), the view that skills are unique to that industry alone has left people like myself in the permanent unemployed/underemployed. “Mismatched” skills… Read more »
2 years 1 month ago
The Commissioner is correct in pointing out the mismatched skills gap. Vermont HITEC has been bridging this gap for the past 15 years, launching Dealer.com from a 50 person business to over 800 employees today. Vermont HITEC educates and trains only when openings are available and guaranteed by the employer for example, we placed 30 unskilled Vermonters in $45,000 per year IT jobs; people are chosen only for aptitude-not experience and are educated and trained them in 8 weeks with a paid apprenticeship that follows. It can and is being done across many industries. Most employers are not lazy or… Read more »
Frank Davis
2 years 1 month ago
Ah yes, the battles over statistics. More than half always wins and more than half always loses. If we compare the current employment statistics gathered to the “old” statistics and they are gathered with the same criteria then they ARE comparable. If we compare Vermont’s employment statistics gathered to all of the other states’ statistics and they are gathered with the same criteria then they ARE comparable. If you create new criteria for Vermont, for now, then it is unreliable and invalid to compare it to anything elsewhere or in the past. BTW, I am usually employed part time but… Read more »
Curtis Sinclair
2 years 1 month ago

If anything I think a move to single payer healthcare would help the VT economy. From an interesting article in Forbes:”it makes nothing but dollars and sense for clever state governments to shift to a single-payer state healthcare system as the key driver for attracting business to their struggling domains.”
http://www.forbes.com/sites/rickungar/2012/04/06/a-dose-of-socialism-could-save-our-states-state-sponsored-single-payer-healthcare-would-bring-in-business-jobs/
VT should be finding money for its roads. A state needs good infrastructure to attract high paying tech jobs.

Jon Piper
1 year 7 months ago

and if your dumping all of your money into the “free health care” money pit where is that money going to come from? Oh, I know, all of those wind turbines producing energy far in excess of market rates that exist only by subsidies from the government that are being jammed down rural Vermonts throats.

2 years 1 month ago
Vermont’s Unemployment Statistics – “The Numbers Game”! by H. Brooke Paige Governor Shumlin boasts that Vermont’s unemployment rate is now merely 3.4 percent – acting as if the he were somehow personally responsible for the improvement. Neither Shumlin, nor the news media that “carry his water”, bother to consider what the figure represents, where it came from or if it is truthful. The truth be told, they probably don’t know nor care! All of us have friends and neighbors who have lost their jobs and have yet to find new employment. Many have been forced to cobble together several part-time… Read more »
Frank Davis
2 years 1 month ago
Thank you Mr. Paige for suggesting that Vermont is failing because we are not trying solutions that less successful states are trying. Now that makes sense. BTW, while it is true that we all ” have friends and neighbors who have lost their jobs and have yet to find new employment. Many have been forced to cobble together several part-time jobs, just to keep their “heads above water” until they are able to find a new full-time engagement. Some will never find another job in the profession in which they have training and experience.” It is also true, that I… Read more »
Doug Hoffer
2 years 1 month ago
Mr. Paige said, “Vermont’s continuing decline in “Goods Producing” jobs does not bode well for our economic future.” Actually, this is a national problem not unique to Vermont. Here is the percentage change in manufacturing jobs for various states from May 2007 to May 2014. -1.9% WA -7.2% SC -8.8% IN -11.6% KY -12.7% VT -13.8% NH -14.5% ME -15.1% TN -15.2% MO -15.4% MA -17.8% NC -19.3% NY All of these states (and most others) show large losses of manufacturing jobs. Therefore, any effort to suggest that specific Vermont policies are the cause of the problem cannot be supported… Read more »
2 years 1 month ago

participate in a facebook online debate for governor, and post your questions and comments for the candidates;
https://www.facebook.com/pages/Debate-for-Governor-of-Vermont-14/1453047298279887

Keith Stern
2 years 1 month ago

Is there any study of discretionary money per capita by state? That would be a very telling piece of data.

Haley Mathis
2 years 1 month ago
Thank you for bringing up discretionary income, since I think something important to consider when viewing local unemployment statistics is the cost of living versus income. Many in Vermont, myself included, may be employed but still unable to make ends meet without some sort of financial assistance. The unemployment statistics don’t even begin to tell the story of folks who are almost better off unemployed than they would be working part-time or even full-time jobs (with or without basic benefits) at minimum wage. Perhaps we would better understand the relatively low unemployment rate versus the low income tax collection if… Read more »
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