One week, you’re working 40 hours. The next, your boss has cut you to 36. And maybe the week after that, it’s dropped to a measly 27 hours per week.
The nation’s recession is leaving millions of Americans working fewer hours than they would like — and taking home less money than they need — as their employers try desperately to trim costs. That, in turn, is hurting everything from consumer spending to tax revenues, adding to the woes already created by the millions of Americans who are entirely without work, or facing other economic hardship.
“It’s obviously better to be working at all than to be laid off completely, (but) it’s certainly going to have a huge impact, particularly on spending,” said Marisa Di Natale, senior economist with Moody’s Economy.com.
There were about 7.8 million part-time workers who would rather be working full-time as of January, according to the Bureau of Labor Statistics, a whopping 65 percent increase over a year earlier and about the same as the previous month.
The sharpest increase in the number of so-called “involuntary” part-time workers has come since the financial crisis hit full force in September, leaving many scared corporate executives anxious to save money wherever possible — including on payroll.
“Companies were very quick to pull the trigger on cutting everything,” said Ken Mayland, an economist with ClearView Economics.
A steep rise in the number of involuntary part-time workers is typical in any recession, because companies tend to cut workers’ hours before laying them off completely. This time around, economists say that, so far at least, the grim numbers aren’t really surprising given the state of the economy.
In fact, Di Natale said, the percentage of part-time workers who would like to be working full-time, currently at about 29 percent, is actually lower than during the height of the recession in the early 1980s.
Still, she expects that percentage to rise as time goes on and more companies cut back. A steep rise in the number of people who are working less than they would like also can be a harbinger of more job cuts to come, as companies further trim costs by laying those workers off completely.
“It says that we can expect more job losses,” she said.
Underemployed Americans also may be especially hard-hit this time because they didn’t have anything to fall back on. Americans have become notoriously bad at saving money in recent years, and many also are strapped with credit card debt, high mortgage payments and other debts that have left them living paycheck to paycheck.
“Maybe the problem is that, in terms of people’s finances, they’re playing it too close to the wire so they lose that hour and that’s just on the margin,” Mayland said. “There’s not savings to absorb that kind of loss.”
Even those who do have the savings to withstand a drop in hours are likely tightening their belts because they fear what could come. In general, Americans are saving more these days than in the recent past, which is good on a personal level but also is helping to further erode economic conditions.
“That’s the sort of downward spiral that we’re worried about,” said Dean Baker, co-director of the Center for Economic and Policy Research in Washington, D.C. “That’s what we have to stop, to try to turn things around.”
Workers who see their hours cut also face other fallout, including potentially losing their healthcare or retirement benefits. That, too, could have a further impact on broader economic conditions.
Still, there is a silver lining for the millions of Americans who have found themselves living with less work. Economists expect that employers will ramp back up to full-time positions when the economy improves.
That’s both because it makes financial sense and because they want to stay competitive with other employers who will start offering more hours and better benefits.
“I don’t think it’s sort of like a seismic shift in the way hours of working are arranged,” Di Natale said. “I think that this really is a cyclical pattern that we’re seeing.”
The bad news? Many expect that it could take years before the economy recovers enough for employers to feel comfortable bringing back as many full-time workers as before this recession began.
“When the economy does rebound, it’s going to take several years to come to its full potential,” Di Natale said.