September 16, 2019

Part-Time Work Becomes Full-Time Wait for Better Job

In March, 7.6 million Americans who want more hours were stuck in part-time jobs, about the same as a year earlier and three million more than there were when the recession began at the end of 2007.

These almost invisible underemployed workers do not count toward the standard jobless rate of 7.6 percent. A broader measure, which includes the involuntary part-timers as well as people who want to work but have stopped looking, stands at 13.8 percent.

“There’s nothing inherently wrong with people taking part-time jobs if they want them,” said Diane Swonk, chief economist at Mesirow Financial in Chicago. “The problem is that people are accepting part-time pay because they have no other choice.”

Even for those who have been able to take advantage of the better job market, the opportunities have not been good. Since the economy began to recover almost four years ago, hiring has been concentrated in relatively low-wage service sectors, like retailing, home health care, and food preparation, and in contingent jobs at temporary-hiring companies. For example, nearly one out of every 13 jobs is at a restaurant, bar or other food-service establishment, a record high.

Household incomes have been stagnant throughout the recovery, and actually fell in the latest report, according to Sentier Research. As a result, economists and policy makers have been expressing concerns about not only the pace of hiring but the quality of new jobs as well.

“It’s important to look at the types of jobs that are being created,” Sarah Bloom Raskin, a member of the Federal Reserve Board, said in a recent speech. “Those jobs will directly affect the fortunes and challenges of households and neighborhoods as well as the course of the recovery.”

While increases in part-time and temporary work can sometimes be an early sign that employers will soon take on more permanent hiring, many workers have been trapped in such jobs far longer than they had anticipated.

Part-time work rose rapidly in the recession and early parts of the recovery, and it has not let up much. Today, 19.1 percent of workers say they usually work part time, defined as fewer than 35 hours a week, versus 16.9 percent when the recession started.

Essentially all of the gains in part-time employment have been among people who are reluctantly working fewer hours because of slack business conditions for their employer or an inability to find a full-time job.

“It was a relief just to find something,” said Amie Crawford, 56, of Chicago. After four months looking for a new job as an interior designer, which she had been for 30 years before the recession, she accepted a position as a part-time cashier at a quick-service health-food cafe called Protein Bar.

She keeps asking for more hours, but her manager’s response is always the same.

“He tells me, ‘I try to give you as many hours as I can, but everybody wants as many hours as they can,’ ” Ms. Crawford said.

The owner of the company, Matt Matros, said that it was working on giving her more hours, but that each location had a limited need for cashiers. He added that Ms. Crawford had the opportunity to get trained in other skills if she wanted to advance or take on other positions.

Holding a part-time job when a full-time one is desired is frustrating for workers, and not only because fewer hours means less income. Like temp workers, part-timers are also less likely to get benefits and are more likely to be stuck with unpredictable schedules that make it hard to plan for child care, transportation or even a second part-time job.

“I’ll be on the schedule from this time to this time, so I expect to work from this time to this time,” Ms. Crawford said. “But because on a particular day, who knows, it’s snowing, raining, or people just didn’t come in today for whatever reason, they start cutting people. So I get sent home in the middle of my shift.”

Part-timers also generally earn less per hour than their full-time counterparts.

“The only remaining legal form of discrimination in the labor market is against part-time workers,” said John Schmitt, senior economist at the Center for Economic and Policy Research, a liberal research organization. “You can hire part-time workers and full-time workers doing the same job, and you’re allowed to pay them different money and different benefits.”

There are multiple reasons for an increased reliance on part-timers, primarily continuing low demand and uncertainty about the economy.

Article source: http://www.nytimes.com/2013/04/20/business/part-time-work-becomes-full-time-wait-for-better-job.html?partner=rss&emc=rss

Today’s Economist: Bruce Bartlett: Wealth, Spending and the Economy

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Bruce Bartlett held senior policy roles in the Reagan and George H.W. Bush administrations and served on the staffs of Representatives Jack Kemp and Ron Paul. He is the author of “The Benefit and the Burden: Tax Reform – Why We Need It and What It Will Take.”

The Federal Reserve Board last week released the latest data on national wealth. Economists were gratified to see that the net worth of Americans is very nearly back — less of a tenth of 1 percent — to where it was before the 2007 crash. At the end of that year and at the end of 2012, net national wealth was just over $66.1 trillion. The rising stock and housing markets are the primary reasons, but so is the decline in debt, which is down $822 billion since 2007.

Today’s Economist

Perspectives from expert contributors.

This generally good news, however, masks the fact that the benefits of rising wealth have not been equally shared. As one can see in the table, which is based on gross assets, there has been a significant change in the composition of assets. Much more is now held in the form of such financial assets as stocks and bonds and much less in nonfinancial assets, principally home equity.

Federal Reserve Board

Obviously, this has important distributional implications because the average middle-class family has the bulk of its wealth tied up in its home. According to the Fed, the gross value of household real estate is $5 trillion below its precrash peak: $17.7 trillion in 2012 compared with $22.7 trillion in 2006.

Depressingly, the gross value of household real estate is up only about $1.4 trillion over the last year despite a 7.3 percent increase in home prices, according to the widely followed Case-Shiller Index. The nation will need to do that well annually for another three years before beleaguered homeowners are back to where they were in 2006 in terms of housing wealth.

Obviously, those lucky or smart enough to be in the stock market have reaped the bulk of wealth gains. These have gone overwhelmingly to the wealthy. According to the New York University economist Edward N. Wolff, corporate stock constitutes just 3.1 percent of the net wealth of the middle class (defined as the middle three wealth quintiles), excluding pension accounts, with two-thirds of their wealth in home equity. (Raw data are from the Federal Reserve’s Survey of Consumer Finances.)

But for the ultrawealthy (defined as the top 1 percent), home equity accounts for only 9.4 percent of their wealth, with stocks accounting for 25.4 percent. The not-quite-rich (defined as the next 19 percent of households below the top 1 percent) are also heavily invested in stocks, which constitute 14.9 percent of their wealth, with 30.1 percent in home equity.

These data have important macroeconomic consequences, because household wealth and its composition affect people’s work, saving and consumption.

According to a generally accepted rule of thumb, consumers spend 3 to 5 cents from every $1 increase in wealth. Thus the $10 trillion decline in household net wealth from 2007 to 2009 took $300 billion to $500 billion in annual spending out of the economy, enough to reduce the gross domestic product by 2.1 percent to 3.5 percent in 2008 and 2009 – more than sufficient to account for the length and depth of the recession.

But recent research suggests that the negative impact of declining wealth may even be greater because people react differently to changes in housing wealth than they do to changes in financial wealth. They also react differently to declines in wealth than they do to increases in wealth.

The latest research – by the economists Karl E. Case, John M. Quigley and Robert J. Shiller – shows a $1 decline in housing wealth reduces consumption by 10 cents per year, whereas a $1 increase in housing wealth raises spending just 3.2 cents. This suggests that homeowners will spend $500 billion less this year than they would if home prices were at their 2006 level.

By contrast, changes in stock-market wealth have a much smaller effect on spending. Consumption rises or falls about 2.5 cents for each $1 change in stock market wealth. Therefore, the $4 trillion increase in financial wealth from 2011 to 2012 will add only about $100 billion to spending this year.

The decline in wealth among those nearing retirement has been especially stressful, with many forced to work years longer than they planned. At the same time, there are fewer job opportunities for those in their 50s and early 60s. This has forced many to burn through savings put aside for retirement faster than they planned, while others will need to save more to compensate for declines in asset values, which will reduce their ability spend even if the housing and stock markets continue to rise.

The decline in wealth may have long-lasting consequences as well, by reducing bequests to the next generation. Given that younger workers are already having a harder time saving and investing than their parents’ generation, in part because of crushing student debts, the depletion of their parents’ wealth could leave many with no inheritances that might have helped fill the gap.

While a rising stock market is good news, its impact is limited because few Americans own much stock. Those who have been lucky enough to benefit are increasing their spending and thus raising economic growth, but there aren’t enough of them. Most Americans need the housing market to rise considerably more before their finances are restored. That will be several more years, even if current positive trends continue.

Article source: http://economix.blogs.nytimes.com/2013/03/12/wealth-spending-and-the-economy/?partner=rss&emc=rss

Bucks: Stay-at-Home Moms and the Need for Credit

Paul Sakuma/Associated Press

If you are a stay-at-home mom (or dad) and want a credit card, you should consider applying for one, pronto. A pending change in the way card companies must evaluate applications will probably make it much harder for people who don’t have their own, independent income to get one.

As part of a clarification of the Credit Card Act of 2009, the Federal Reserve board has made it tougher for stay-at-home spouses to get their own credit cards. (Discussions of the Fed’s rule can be found in U.S. News World Report’s Alpha Consumer blog, and on creditcards.com.)

The Card Act has many provisions that help protect consumers, like requiring credit card companies to give you advance notice before slapping you with a double-digit penalty interest rate. But in its final comments on the law, published earlier this year, the Fed told credit card companies that they must consider “individual” income, not “household” income, on credit applications. That means that in most situations, a nonworking spouse won’t be able to obtain credit based on their husband’s or wife’s income, as they can now.

In explaining why this is O.K., the Fed said it believed “married women who do not work outside the home” will still have access to credit because they can apply for joint accounts with their husbands, or become authorized users on their husband’s accounts. The board did concede that applying jointly might be “inconvenient or impracticable” in some situations, like applying for on-the-spot credit at a retail store. But the move is necessary, the Fed said, to make sure the person holding the card can actually pay the bill.

The problem is that nonworking parents do have the ability to pay, through their spouse’s income. (And anyone who has children knows full well that he or she is working — they’re just not getting a paycheck.)

All this struck a nerve with me recently, because of a problem that arose with an account I hold with my husband. A few years back, he got a new credit card so he could rack up frequent-flier miles. Even though I was working full time and had my own set of plastic, he got a “companion” card for me, so we could pool our spending and earn miles faster. I’ve used it often, without thinking much about it.

Until last week, that is. I had a question about a statement fee and called the card company — only to be told that the assistant couldn’t discuss it with me without first obtaining my husband’s permission.

I was speechless. I began supporting myself financially in my early 20s. I have my own credit history and credit score. Yet, I was being told that I couldn’t be taken seriously without a say so from a man (albeit, one of whom I’m exceedingly fond). It felt like a scene from the “Mad Men” era.

When I insisted, the representative partly addressed my question, but said a full review would require spousal approval. For me, the incident provided a good laugh and an anecdote for a blog post. But for an at-home mom in, say, a deteriorating or possibly even abusive relationship, it could be devastating. Forcing such women to piggyback on a husband’s account means that she is still subject, to an uncomfortable degree, to his oversight — which strikes me as an unhealthy step backwards on the long, hard-fought road to gender equality.

Card companies must comply with the law on Oct. 1, but they can begin enforcing it before then if they choose.

Representative Carolyn B. Maloney, a New York Democrat and an author of the Card Act, has said the Fed’s rule exceeds the law’s intent. Originally, strict “ability to pay” restrictions were meant only for applicants under 21, to help prevent college students and other young people from getting into debt. She and three other members of Congress have asked the Fed, along with the new Consumer Financial Protection Bureau,  to study the new standard for six months after it is adopted, and to make changes if it turns up any negative effects on stay-at-home spouses.

“We are sure the board understands that it was never the intention of Congress that there would be any impact on stay-at-home spouses, ” the letter says, “and that we should make sure that that is in fact the case.”

A lawyer from the Fed’s Division of Consumer Community Affairs wasn’t immediately available to comment.

What do you think about the  rule? Should nonworking spouses be able to obtain credit in their name alone?

Article source: http://feeds.nytimes.com/click.phdo?i=f806a65b8fb160b1da40153390bc5232