WASHINGTON — There may be a dark lining to the sunny June employment report, which recorded an increase of 288,000 payroll jobs for the month. Most or all of the increase may have been part-time jobs. If that's a trend, it could signal a weaker economy. It could also vindicate critics of the Affordable Care Act (the ACA or Obamacare). They have argued that the added costs of providing health insurance for full-time workers would cause many firms to emphasize part-time employment.
Is it a trend? Writing in The Wall Street Journal, Mortimer Zuckerman, real estate developer and editor-in-chief of U.S. News & World Report, says "yes." Some data seem convincing. In June, part-time jobs (defined as less than 35 hours a week) increased by 1,115,000, reports the Bureau of Labor Statistics (BLS); full-time jobs fell 708,000.
"Just think of all those Americans working part time, no doubt glad to have the work but also contending with lower pay, diminished benefits and little job security," wrote Zuckerman.
The administration differs. After the release of the June jobs report on July 3, the White House Council of Economic Advisers noted that "the 1.4 million jobs added in the first half of this year are the most in any first half since 1999." The strong increase in payroll jobs suggested that the weakness in the first quarter's gross domestic product was a fluke, reflecting bad weather or statistical gaps.
Differing job surveys
Who's right? Unfortunately, we don't know. The official job statistics aren't conclusive. The BLS does two job surveys. They don't always agree. That's the case here.
The payroll job figures came from a monthly survey of 554,000 business locations ("establishments"). Hence, this survey is called the "payroll" or "establishment" survey. Firms are asked the number of people on their payrolls, their pay and occupations. With this data, the BLS makes estimates for the entire economy. The payroll survey produced June's 288,000 job gain.
But the payroll survey can't estimate unemployment, because it doesn't know how many people want a job and can't find one. For that, the BLS turns to its "household" survey: monthly interviews with 60,000 Americans. Do they have a job? If so, is it part-time or full-time? If not, are they looking for one? If jobless, for how long? By the household survey, June's job increase was 407,000 (about 40 percent higher than the payroll estimate), consisting of that whopping — 1,115,000 — increase in part-time jobs offset by the 708,000 loss in full-time jobs.
So two surveys produce two estimates of June's job change and one survey (the household) attributes all the gain to part-time work. Note that critics like Zuckerman are engaging in a bit of statistical razzle-dazzle by describing the entire 288,000 payroll gain as part-time jobs. They've imposed the household survey's result on the payroll survey. That's an assumption, not a fact.
Between the two surveys, many economists trust the payroll figures more. The reason: its sample size is larger, reflecting a third of all non-farm employment; by contrast, the personal interviews involve less than 1 percent of U.S. households. "There's a lot of volatility in the household survey," says economist Chris Christopher of Global Insight. Seasonal adjustments are especially tricky.
The next few employment reports ought to tell us whether June's figures were a statistical blip or the start of a part-timers' boom.