Tuesday, August 26, 2014

More Non-Evidence of Part-Time Work Shift

I was thinking about labor supply and demand, and the anecdotal evidence from employers that they are shifting work to part time because of the ACA.  I haven't seen definitive evidence of a significant shift to part time work in the data for number of employees.  Here is the chart of part time employment from yesterday's post.

After an initial shock and a shift from "non-economic" to "economic" reasons, the total number of part time workers has been moving down to about 1% above the pre-recession level.  This is typical for a recession.  The size of the shift up in "economic" part time workers, and the slow subsequent decline are unusual, but these trends pre-date the ACA, so it seems inaccurate to pin much if any of the trend on the ACA.

I have posited that one underappreciated factor here is that the binding constraint here may be the supply of willing part time workers.  But, if that is the case, if employers are experiencing higher costs for full time workers, then we should see an increase in pay for part time workers, as labor supply and demand settle at a new equilibrium that accounts for the new cost structure.  If the quantity of available part time workers is relatively inelastic, maybe this adjustment would mainly play out in wages.  Employers would need to increase the wages on part time jobs to entice workers who preferred full time work to move to a suboptimal work scenario.

But, there doesn't appear to be anything here, either.  Relative weekly wages for full and part time workers have moved in lock step over the past 14 years.

So, it still seems like there is a disconnect between the survey data, anecdotal evidence, and labor data.


  1. Or part-time prices stay the same and you substitute more expensive full-time workers for a mix of less expensive part-time and capital. Some more anecdotes are the touchscreen order stations that replace servers at restaurants. What's a good measure of labor saving capital expenditures for the subset of firms where the ACA is binding?


    (Your graph does not show full-time workers becoming more expensive, but I assume that is because earnings does not include all the fringe benefits for total compensation.)

    1. Your scenario is plausible. But, I think it is dangerous to think in terms of narratives. On the margin, if an added variable has made full time workers relatively more expensive, we should expect to see an increase in quantity of part time workers and an increase in wages for part time workers, as - at the margin - employers and workers would converge on a new work balance with neutral costs.

      I'm with you, that I would expect it to happen, and maybe some of the increased quantity of part time work is related to it. But, I'm surprised at how sparse the confirmation in the data is, given the large amount of survey and anecdotal evidence.

    2. That's fair. My point was more about multiple margins and other confirmatory evidence, rather than a smoking gun. Lots of weak signals in a portfolio (e.g. that capital expenditure measure) may be combined whereas a single measure is swamped by the noise. How big a signal are we expecting in a perfect experiment?

      There's also a few caveats (which you may have discussed, new to your blog via Scott Sumner). The discrepancy between the "large amount of survey and anecdotal evidence" (comment) and whether "employers are experiencing higher costs for full time workers" (post) may be that the surveys are forward looking and there are reasons firms are not adjusting now (maybe they expect the costs to be postponed indefinitely a la the medicare "doc fix"). The employer mandate is postponed until 2016-2017...so how much of the forecasted costs are actually in play right now? ACA has fallen off the blogosphere so I don't recall any recent estimates (in fact, didn't the CBO say they refuse to analyze the impact anymore because of all the ad hoc changes?).

    3. Excellent points. Thanks for your input. Lots to think about.

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