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Part time for economic reasons background [ClearOnMoney]
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Part time for economic reasons background

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Reference

Part time for economic reasons background

Summary

9 Dec 2009.

The count of those working “part time for economic reasons” (PTER) is of interest (1) as one measure of unused capacity in the workforce and (2) as a recession indicator. The BLS define PTER as “at work fewer than 35 hours [per week] for … reasons such as slack work, poor business conditions, or only being able to find a part-time job.” The basic idea is part-time but not by personal choice. The survey questions used to classify workers changed in 1994. The intent was to clarify rather than change the concept, but there was a large one-time change in the count. Any study comparing PTER across recessions should use the YOY changes, not the raw levels. Employers often cut back on hours before eliminating jobs altogether; on average the PTER YOY peak occurs a month before the end of the recession, the unemployment rate YOY peak occurs at the end of the recession, and the unemployment rate itself peaks 6 months after the end of the recession. Since the series started in 1956, previous YOY recession highs were in the range 27-64%. Multiple peaks have often been seen in previous recessions.

Highlights

Entries below covered through 17 Apr 2003.

  • Correlation with recession and unemployment (9 Dec 2009) During the history of the series (which started in 1956) there have been 8 completed recessions. Recession-related highs in the YOY change ranged from 27 to 64%; the peak occurs somewhere in the last half, or just beyond the end of, the recession. In 6 of the 8 recessions, the PTER YOY peak preceded the unemployment YOY peak, and in two they coincided. On average the PTER YOY peak occurred a month before the end of the recession, the unemployment rate YOY peak occurred at the end of the recession, and the unemployment rate itself peaked 6 months after the end of the recession.
Date of recession Peak YOY% in PTER Peak YOY% in Unemployment Peak in Unemployment
Aug 1957 - Apr 1958 64 in Apr 1958 90 in Apr 1958 7.5 in Jul 1958
Apr 1960 - Feb 1961 39 in Feb 1961 44 in Feb 1961 7.1 in May 1961
Dec 1969 - Nov 1970 35 in Apr 1970 74 in Dec 1970 6.1 in Aug 1971
Nov 1973 - Mar 1975 59 in Apr 1975 77 in May 1975 9.0 in May 1975
Jan 1980 - Jul 1980 33 in May 1980 37 in Jul 1980 7.8 in Jul 1980
Jul 1981 - Nov 1982 29 in Sep 1982 36 in Jul 1982 10.8 in Dec 1982
Jul 1990 - Mar 1991 27 in Apr 1991 33 in Jun 1991 7.8 in Jun 1992
Mar 2001 - Nov 2001 40 in Oct 2001 46 in Dec 2001 6.3 in Jun 2003
  • Definitions (8 May 2009) The basic idea is part-time but not by personal choice. The survey questions changed in 1994. The intent was to clarify rather than change the concept, the YOY changes (but not the raw values) are at least roughly comparable pre- and post-change.
    • Change in survey in 1994: Before 1994 people were given a multiple choice on their reason for working fewer than 35 hours per week, and the BLS decided from the answer whether the main impulse came from the employer (in which case 'involuntary' or 'part-time for economic reasons') or from the employee. Starting in 1994 the BLS asked in addition whether the person wanted and was available for full-time work, and an affirmative answer was required in addition to the previous criterion. This had the effect of removing from the PTER group those who could honestly give an employer reason for the condition but, also, were content with the result.
    • Current BLS summary definition: Part-time for economic reasons is defined as “at work fewer than 35 hours for … reasons such as slack work, poor business conditions, or only being able to find a part-time job.”
    • Effect of 1994 change: Starting Nov 1993 the MTM changes were -2.0%, +0.7%, -21.4%, -5.5%, +4.6%. It would appear the big drop was surrounding by fairly neutral changes, so the -21% change was almost entirely due to the change in definition.

See also

Effect of the 1994 survey question change

4 Feb 1994. Report to Congress.

http://www.bls.gov/news.release/history/jec_020494.txt

“Statement of Katharine G. Abraham Commissioner Bureau of Labor Statistics before the Joint Economic Committee, UNITED STATES CONGRESS”

“the number of persons employed part time for economic reasons was about a million lower in January than in December, because respondents so classified now must explicitly indicate that they both wanted and were available to take a full-time job.”

[Numbers in thousands:

1993	6196	6627	6318	6586	6543	6635	6700	6681	6575	6376	6250	6291	 
1994	4947	4677	4890	4752	4836	4816	4505	4359	4332	4472	4468	4440	

Starting Nov 1993 the MTM changes were -2.0%, +0.7%, -21.4%, -5.5%, +4.6%. It would appear the big drop was surrounding by fairly neutral changes, so the -21% change was almost entirely due to the change in definition.]

Short third party account of the 1994 change in the survey

1996. Temple University Press.

“Half a Job: Bad and Good Part-time Jobs in a Changing Labor Market. By Chris Tilly”

“Until 1994, the BLS classified part-timers as voluntary or involuntary according to how they answer the question, 'Why are you working less than 35 hours a week?'. Persons reporting the reason as slack work, material shortages or repairs, a job that started or ended during the survey week, or inability to find full time work were considered involuntary, or 'part-time for economic reasons'; all others were considered voluntary. In 1994 the BLS also began to count as voluntary anyone who said he or she did not want, or was not available for, full time work (these questions were not asked in earlier years).”

Longer third-party account of the 1994 change in the survey

1998. Book from McGraw-Hill.

“Handbook of Key Economic Indicators. By R. Mark Rogers”

“The household data for employment are also broken down into full-time and part-time status. Those indicating they work a schedule of 35 hours or more per week are full-time, and those working 1 to 34 hours per week are considered part-time. Part-time workers are generally divided into those working part-time for economic reasons and those working part-time for noneconomic reasons. The question in the survey determining economic and noneconomic reasons changed significantly with the 1994 redesigned survey.

Prior to 1994, part-time workers were asked why they usually worked part-time. These reasons were classifed as either economic or noneconomic. Economic reasons include slack work, material shortage, plant or machine repair, new job started during week, job terminated during week, and could find only part-time work. Noneconimc reasons were legal or religious holiday, labor dispute, bad weather, own illness, on vacation, too busy with housework or other personal business, and did not want full-time work. Respondents were merely told possible answers and economic or noneconmic status was deduced from the answer given.

Beginning in 1994, the requirements for being classified as working part-time for economic reasons became more stringent. Individuals who usually work part-time are explicitly asked if they want to work full-time and whether they are available to work full-time if offered the hours. In the earlier survey, this information was inferred from the answers provided for not working full-time. With the redesigned survey, the reasons differ from the earlier survey. Economic reasons for working part-time are limited to two categories: “slack work/business conditions” and “could only find part-time work.” Categories for noneconomic reasons are: “seasonal work,” “child-care problems,” “other family/personal obligations,” “health/medical limitations,” “school/training,” “retired/Social Security limit on earnings,” and “full-time workweek is less than 35 hours.””

BLS definition

29 Jan 2003. Article in Monthly Labor Review on BLS website.

http://www.bls.gov/opub/ted/2003/jan/wk4/art03.htm

“Part-time for economic reasons … persons at work fewer than 35 hours for … reasons such as slack work, poor business conditions, or only being able to find a part-time job.”

BLS account of the 1994 change in the survey

17 Apr 2003. BLS Handbook of Methods.

http://www.bls.gov/opub/hom/homch1_d.htm

“BLS Handbook of Methods: Chapter 1: Labor Force Data Derived from the Current Population Survey”

“A major redesign of the CPS was implemented in January 1994. … The redesign of the questionnaire had four main objectives: 1) To adopt a computer-assisted interviewing environment, 2) to measure the official labor force concepts more precisely, 3) to expand the amount of data available, and 4) to implement several definitional changes. …

Major questionnaire changes. While the labor force status of most people is straightforward, some persons are more difficult to classify correctly, especially if they are engaged in activities that are relatively informal or intermittent. Many of the changes to the questionnaire were made to deal with such cases. This was accomplished by rewording and adding questions to conform more precisely to the official definitions, making the questions easier to understand and answer, minimizing reliance on volunteered responses, revising response categories, and taking advantage of the benefits of an automated interview. Areas affected by these improvements include: …

Reasons for working part time. Persons who work part time do so either for noneconomic reasons (that is, because of personal constraints or preferences) or for economic reasons (that is, because of business-related constraints such as slack work or the lack of full-time opportunities). Because respondents typically are not familiar with this distinction, the question was reworded to provide examples of the two types of reasons. More importantly, the measurement of working part time involuntarily (or for economic reasons) was modified to better reflect the concept. Starting in 1994, workers who usually work part time and are working part time involuntarily must want and be available for full-time work.'”