**MNI INTERVIEW: Part-Time Job Levels Reflects Tight US Market

--Involuntary Part-Time Employment Still Elevated, SF Fed Economist Tells MNI

--Employers Face Shortage of Part-Time Workers, Draw from Full-Time Pool

--Rise of Service Industries Driving Long-Term Trend

By Jean Yung

     WASHINGTON (MNI) - Some 5 million Americans wanted full-time work but were

forced to work part-time jobs in May despite a national unemployment rate that

fell to a fresh 18-year low, but Federal Reserve Bank of San Francisco Vice

President Rob Valletta told MNI in an exclusive interview that he believes that

elevated levels of involuntary part-time workers signal labor-market tightness,

not slack as some would suggest. 

     Since the Great Recession, the rise of certain service industries with

uneven work schedules have underpinned an uptick in involuntary part-time

workers relative to where the economy is in the business cycle, and does not

appear to be a trend that will reverse itself anytime soon, Valletta said. 

     Whereas some Fed policymakers have flagged elevated levels of involuntary

part-time work as representing labor market slack, Valletta interprets the

persistence of the trend as reflecting a structural shift that can be

interpreted as employers facing a shortage of workers willing to work part time

-- a group increasingly in demand.

     That's a key insight that will help illuminate the debate within the

Federal Reserve over precisely how much more progress the labor market can make

before tightness feeds through to wage gains and broader price inflation. 

     --FORCED INTO PART-TIME

     The number of individuals working 35 hours or less per week fluctuates with

the overall state of the U.S. job market. But since 2016, that group has counted

some 1.5 million more people than one would expect based on how tight the

overall labor market has gotten, Valletta said. 

     "That's up by about 40% relative to its base level before the Great

Recession," he said. "One-and-a-half million may not sound like a lot in a labor

market of 140 million to 150 million, but for people in these kinds of low-wage

labor markets where there's a lot of part-time work, that's actually a lot of

people who feel stuck in these low-hours jobs." 

     Many of these jobs are in restaurants, hotels, tourism outfits and home

health care services, Valletta found after analyzing state-level employment

data. These two sectors -- leisure and hospitality, and education and health

services -- have historically relied on part-time employees and have now grown

in importance in the U.S. economy. 

     "If employers have more jobs they want to fill with part-time workers than

there are part-time workers who want to be in those jobs, then those employers

end up forcing people into part-time work and that's how you get involuntary

part-time employment," Valletta said. 

     "Generally I interpret the trend as reflecting a tight labor market and a

shift in the way employers approach the balance of supply and demand between

full-time and part-time jobs."

     --LOW-PAID WORK

     Sectors in which there's a lot of involuntary part-time employment tend to

hire low-skill low-paid workers. But it's not clear that minimizing labor costs

is the primary reason behind why these employers prefer part-time workers,

Valletta said. 

     Uneven work schedules are a fundamental element of those industries, he

said. For example, it is cost-effective to hire for a 4 to 5-hour shift to meet

the demand in peak periods such as the lunch rush, and such patterns are

widespread in the hospitality sector.

     Technology has also enabled employers to schedule hours as needed and in

real time, allowing companies to more efficiently respond to their labor needs,

Valletta said. 

     The increase in involuntary part-time work contributes to the steady

hollowing-out of the workforce as more job are created at the top and bottom

than those requiring middle-level skills and pay middle-level wages. But there

is no direct linkage between the trend and the modest wage growth that has

characterized the recovery, Valletta said. 

     But, much like the disappearance of manufacturing jobs since the 1970s,

"it's a sign of structural change," Valletta said, "not a sign of weakness in

the labor market." 

--MNI Washington Bureau; +1 202-371-2121; email: jean.yung@marketnews.com

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