More Americans are working part-time – a possible harbinger of future labor market instability

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Commuters and tourists exit a New York City subway on May 26, 2022.

Robert Nickelsberg | Getty Images

More Americans were working part-time and temporary jobs last month, which could usher in future shifts in the form of what appears to be a robust job market today.

July hirings easily exceeded expectations, signaling a strong labor market despite other signs of economic weakness. But a jump in the number of employees in part-time jobs for economic reasons — usually because of reduced hours, poor business conditions, or because they can’t find full-time work — points to potential instability in the future.

The Bureau of Labor Statistics reported Friday that the number of such workers, called “involuntary part-time workers,” rose by 303,000 seasonally in July to 3.9 million. This follows a sharp drop of 707,000 in June.

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The stat, which is volatile, is still below the 4.4 million involuntary part-time workers registered in February 2020, before the Covid-19 pandemic rocked the job market.

The number of full-time workers decreased by 71,000 during the month, while the number of part-time workers, both voluntary and involuntary, increased by 384,000.

The July increase was not due to a lack of full-time jobs. Compared to the June report, there were fewer workers in July who could only work part-time. Instead, the report said, workers were forced into part-time jobs because of reduced working hours and unfavorable business conditions.

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The report points to a move in the “wrong direction,” according to Julia Pollak, ZipRecruiter’s chief economist, and could point to a future recession.

At the same time, jobs in temporary emergency services showed signs of expansion, with 9,800 in July, more than doubling from 4,300 in June.

These are workers hired on a temporary basis to bring in extra work, and according to Pollak, they are often the first to be laid off as employers brace for tougher economic times. Growth in that statistic, she said, could be a comforting sign for the economy.

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According to Erica Groshen, former commissioner for the Bureau of Labor Statistics and current senior economic adviser at Cornell University, the conflicting indicators may reflect a diverging economy in which some industries are struggling more than others.

Another possibility, she said, is that the strong hiring earlier in the month led companies to pull back to correct.

“By the end of the month, we had people who had to reduce their hours,” she said.

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