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When part-timers seek full-time work

The government is expected to report Friday that the economy added jobs for a second straight month. But in addition to the nation’s 9 million unemployed, there are millions of “underemployed.”
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When Joanne Puckett finally found a job in public relations — after eight months of searching — she had high hopes that her career at last was taking off. But only six months after being hired by a large Chicago agency, Puckett, 29, was told there no longer was enough business to justify her working full-time. Now she works 24 hours a week and wonders if she chose the right profession.

Puckett is one of millions of “underemployed” Americans working part-time either because they are unable to find full-time work or because of slack business conditions. Add these to the uncounted millions more who have had to take huge pay cuts in new or existing jobs, and you begin to get a picture of a labor market that might be quite a bit worse than suggested by the 6.1 percent jobless rate.

The Labor Department is expected to report Friday that the economy added jobs in October for a second straight month, making up for some of the 2.6 million jobs lost since employment peaked in January 2001. On average forecasters estimate employers added a net 50,000 jobs last month, not enough to move the needle on the unemployment rate, which hit a nine-year high of 6.4 percent in June.

The latest evidence that the job market finally is recovering came Thursday, when the Labor Department reported that 348,000 people filed for initial jobless benefits, the lowest level since January 2001. The four-week moving average, which smoothes out weekly volatility, also hit the lowest level in more than two years. “It seems that the labor market is firming a bit,” said David Rosenberg, chief North American economist for Merrill Lynch.

Analysts estimate the economy needs to add nearly 150,000 jobs a month just to absorb new workers joining the labor force, which is growing at an annual rate of about 1.1 percent, according to government figures. In addition to the 9 million Americans listed as unemployed, another 1.5 million are considered “marginally attached” to the work force, including discouraged workers who have given up looking for a job.

Then there are people like Joanne Puckett, who would prefer to be working full-time after incurring $46,000 in graduate school debt. She and her husband, Ryan, whom she met in graduate school, applied to enter the marketing communications program at Northwestern University at a time when recent graduates routinely were getting job offers in the $60,000 range.

By the time they arrived at the campus in Evanston, Ill., they quickly realized that kind of money would be only a distant hope. In the 15 months they were in school, the economy went into recession, stock values fell by 25 percent, Enron imploded and terrorists carried out the deadliest attack ever seen on the U.S. mainland.

“Everything was falling apart,” said Ryan, 31, who manages media relations for a trade association. “The class before us was having trouble finding jobs. We saw it all happen right in front of us while we were in school.”

For Joanne, the reduction in hours has had some benefits. She has been able to volunteer for the first time, working once a week in an animal shelter. And she is able to spend more time considering her career options, including the possibility of returning to the non-profit sector, where intangible rewards might help make up for the lower pay she is earning anyway.

But she and her husband say they have had to cut expenses — driving on vacation instead of flying, eating at “nice fast food” restaurants instead of fine dining, brown-bagging lunch instead of going out, looking for bargains at the supermarket and movie theater. “I wouldn’t say we are living uncomfortably, but we are struggling somewhat,” Joanne said.

All told nearly 5 million people were working part-time for economic reasons in September, up sharply from 4.4 million in August, according to government data. Such underemployment is a contributing factor behind sluggish growth in total wage and salary income.

Even though the gross domestic product grew at a stunning 7.2 percent rate in the third quarter, wage and salary income rose just 0.6 percent. Most of the gains fueling rising consumer spending came from other sources, including tax cuts and cash generated by mortgage refinancing activity, said Jared Bernstein, senior economist with the liberal Economic Policy Institute.

“Tax cuts and refis were the steroids pumping that up,” he said. “Unless we get the labor market back in a pretty big way, you can’t expect a very robust recovery.”

Bernstein said he was optimistic that the economy finally has turned the corner and begun adding jobs but noted that most analysts expect the unemployment rate to remain near 6 percent for most of next year. Some analysts even expect the jobless rate to rise as marginally attached workers, encouraged by reports of economic growth, begin looking for employment again.

John Challenger, a longtime observer of the labor market as head of a firm that counsels laid-off workers, was somewhat less optimistic. He noted that U.S. companies announced plans to lay off nearly 172,000 jobs in October, the highest total in a year.

“We have had a very difficult year for the job market,” Challenger said. “There was a small uptick in job creation last month that fueled a lot of optimism, especially given the growth of GDP, but the forces that are leading to the downsizing we have seen throughout the last several years haven’t abated.”