The enforced leisure society

The rate of job losses might be slowing, but the rate at which workers are forced to work fewer hours is not.

By Andrew Leonard

Published June 9, 2009 3:04PM (EDT)

Jeff Frankel, a Harvard economist who is a member of NBER's business-cycle dating committee -- the group that more or less officially decides when U.S. recessions start and end -- has a pretty compelling argument as to why the economy has not yet hit bottom: The numbers of hours worked in May fell at about the same rate as it has since last September. (Found via Mark Thoma.)

Total hours worked is equal to the total number of workers employed multiplied by the average length of the workweek for the average worker. The length of the workweek tends to respond at turning points faster than does the number of jobs. When demand is slowing, firms tend to cut back on overtime, and then switch to part-time workers or in some cases cut workers back to partial workweeks, before they lay them off. Conversely, when demand is rising, firms tend to end furloughs, and if necessary ask workers to work overtime, before they hire new workers.

Unfortunately, as reported by Forbes, pursuing this logic leads to second thoughts about whether the most recent BLS announcement was really good news after all. The length of the average workweek fell to its lowest since 1964! The graph below shows that, not only did total hours worked decline in May, but the rate of decline (0.7 percent) was very much in line with the rate of contraction that workers have experienced since September. Hours worked suggests that the hope-inspiring May moderation in the job loss series may have been a monthly aberration. If firms were really gearing up to start hiring workers once again, why would they now be cutting back as strongly as ever on the hours that they ask their existing employees to work? My bottom line: the labor market does not quite yet suggest that the economy has hit bottom.

A research letter from the San Francisco Federal Reserve Bank piles on the gloom, warning that a recovery, if one does eventually emerge, is likely to be the mother of all jobless recoveries. The authors also offer some support for Frankel's analysis.

Even more dramatic, however, has been the break from past patterns in the number of workers who are involuntarily employed part-time. Numerous reports tell of workers being furloughed for a set number of days in a month or asked to work fewer hours each day. These anecdotes are supported by the monthly data. Indeed, the number of workers employed part-time against their wishes is at historical highs. The fraction of the labor force that reports working part-time for economic reasons has increased from 3.0 percent in December 2007 to 5.8 percent in April 2009. This increase has been broad-based, occurring in a wide range of occupations. Moreover, the reduction in hours has not been trivial, with more than half of such workers experiencing reductions of five hours per week or more.

Back in the 1960s, people used to wonder what Americans would do with all the leisure time that they would enjoy in the over-abundant economy of the future. Now we know: They'll spend it unsuccessfully looking for work.

Andrew Leonard

Andrew Leonard is a staff writer at Salon. On Twitter, @koxinga21.

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