Order Code 98-695 E
CRS Report for Congress
Received through the CRS Web
Part-Time Job Growth and the
Labor Effects of Policy Responses
Updated October 28, 2003
Linda Levine
Specialist in Labor Economics
Domestic Social Policy Division
Congressional Research Service ˜
The Library of Congress
Part-Time Job Growth and the
Labor Effects of Policy Responses
Summary
The doubling of persons who usually work part-time (i.e., 1-34 hours per week)
accounted for about one-fifth of employment growth since 1969. The more rapid
increase in part-time versus full-time employment means that today 1 in 6 workers
has a part-time schedule, up quite modestly from 1 in 7 in 1969.
Thus, the
predominant work schedule remains a full-time one.
The part-time labor force is comprised of those who want short schedules and
those who want full-time hours. Most part-timers still work few hours by choice,
despite the long-term increase in persons involuntarily employed part-time. Within
the group of persons involuntary employed part-time, there are those who usually
work full-time and those who usually work part-time. The increase in involuntary
part-time work has occurred among those who usually have short workweeks, which
suggests that their prospect of obtaining full-time jobs has diminished over time.
One explanation for the greater use of alternative work arrangements (e.g., part-
time and temporary employment) is that they enable firms to more efficiently
accommodate heightened competitiveness and variability in the marketplace than if
they relied on traditional (i.e., full-time, long-term) jobs. Another is that flexible
work arrangements enable firms to save on labor costs, thereby making them more
competitive at what some believe is the expense of workers, their families, and
society. A less widely discussed explanation is the possibility of a mismatch between
the fairly low skill qualifications of involuntary part-timers (e.g., welfare mothers
seeking work and men displaced from high-wage factory jobs) and the heightened
skill requirements of a growing share of jobs. Disagreement over the causes and
consequences of nonstandard jobs is likely to continue as long as employers treat
them differently from traditional jobs in terms of job security as well as
compensation levels and practices.
Some advocate that policies, including the public-private safety net (e.g.,
unemployment insurance, social security, pension and health benefits), should be
reshaped so that they no longer are tailored for traditional jobs. Among other
changes, they have recommended amending the Equal Pay Act to require employers
to provide equal
hourly pay for equal work regardless of full-time/part-time status.
The hourly pay disparity between part-time and full-time workers is unlikely to be
much affected by such a change, however, because most of the gap is due to
differences in the two group’s personal and job characteristics. In addition, advocates
have proposed that employers be required to provide benefits (e.g., health and
retirement plans) to part-time employees. Employer mandates could produce winners
and losers, however. The winners would include involuntary part-timers who obtain
full-time jobs and some part-timers who gain new benefits. The losers would include
part-timers who already are covered through other sources (e.g., a spouse’s health
plan) or who prefer higher wages over the new benefits, as well as voluntary part-
timers who accept full-time jobs or drop out of the labor market due to a reduction
in part-time job opportunities.
Contents
Who are Part-Time Workers? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Defining Terms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Their Demographic Breakdown . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
The Trend in Part-Time Employment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Voluntary Part-Time Employment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Involuntary Part-Time Employment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Reasons for the Growth in Involuntary Part-Time Employment . . . . . . . . . . . . . . 7
Job Growth by Industry . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
The Part-Time/Full-Time Wage Gap . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Employment-Based Benefits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Differences in Receipt and Cost of Benefits . . . . . . . . . . . . . . . . . . . . 11
The Labor Market Effect of Mandating Workplace Benefit
Coverage . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Underemployment and a Skill Mismatch . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
List of Tables
Table 1. Percent Distribution of All Employed Persons and of Persons
Employed Part-Time, by Demographic Characteristic, 2002 . . . . . . . . . . . . 4
Table 2. Employed Persons by Full-Time and Part-Time Status During Peak
Years of the Business Cycle . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Table 3. Employed Persons by Reason for Working Part-Time during Peak
Years of the Business Cycle . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Table 4. Percent Distribution of 25-64 Year Olds Employed Full-Time
and Part-Time by Educational Attainment, 2002 . . . . . . . . . . . . . . . . . . . . . 17
Part-Time Job Growth and the
Labor Effects of Policy Responses
Part-time employment is one form of nontraditional work arrangements,1 which
have generated interest during the last few decades.2
The traditional work
arrangement typically is characterized as a full-time, long-term job with fringe
benefits. The expansion of alternatives to the standard arrangement has prompted
concern about job security as well as the adequacy of earnings levels and benefit
coverage during individuals’ work lives and extending into their retirement years.
Some believe that the public-private social welfare system, which includes
unemployment insurance (UI) and social security as well as health and pension
benefits, has not changed sufficiently to satisfactorily address the needs of the
increased share of all workers with more tenuous connections to their employers and
with more varied employee-employer relationships.3 Initially, legislation was offered
that would have narrowed the hourly wage gap between part-time and full-time
workers and would have promoted benefit coverage of part-timers (e.g., H.R. 3657
and H.R. 3682 in the 104th Congress). Proposals subsequently were introduced in the
105th Congress to create a commission to study the impact of part-time employment
(S. 1453) and another to study a range of labor force issues including part-time work
(H.R. 2997). In the 107th Congress, interest continued in extending employer-
provided health care coverage to part-time workers (S. 2639) and in enabling jobless
persons seeking part-time employment to receive UI benefits (H.R. 773). Legislation
concerning part-time work and UI benefit eligibility has been proposed in the 108th
Congress (H.R. 1652) as well.
This report provides an overview of part-time employment, examining who and
how many part-time workers there are as well as why their share of total employment
has increased over time. The report analyzes the potential effect on workers were
Congress to prohibit wage discrimination based on hours worked and to require
1 The terms nontraditional, alternative, nonstandard, or flexible work arrangements are used
interchangeably in this report.
2 In addition to part-timers, persons engaged in alternative work arrangements include
employees of contract services firms, independent contractors or consultants, on-call
workers, leased employees, and temporary workers. For information on temporary workers
specifically see CRS Report RL30072,
Temporary Workers as Members of the Contingent
Labor Force, by Linda Levine.
3 Richard S. Belous, “The Rise of the Contingent Workforce: Growth of Temporary, Part-
Time, and Subcontracted Employment,”
Looking Ahead, vol. XIX, no. 1 (June 1997); and
Virginia L. duRivage, ed.,
New Policies for the Part-Time and Contingent Workforce
(Armonk, NY: M.E. Sharpe, 1992). (Hereafter cited as duRivage,
New Policies for the Part-
Time and Contingent Workforce.)
CRS-2
benefit eligibility of part-time workers. It closes by considering whether a mismatch
between the qualifications of involuntary part-time workers and the heightened skill
requirements of jobs might explain some of the long-term rise in part-time
employment.
Who are Part-Time Workers?
Defining Terms
The U.S. Bureau of Labor Statistics (BLS) derives data on part- and full-time
employment from the Current Population Survey (CPS). The count of part-time
employment is the number of individuals working 1-34 hours a week. The count of
full-time employment is the number of individuals working 35 or more hours a week.
In order to reflect a worker’s normal schedule rather than any aberration during the
survey week, respondents are asked whether they
usually work 1-34 hours (in which
case they are classified as part-time workers) or
usually work at least 35 hours (in
which case they are classified as full-time workers).
Because the statistics are obtained from a survey of households rather than of
firms, the figures relate to part-time and full-time
workers not jobs. It is thus
possible for individuals who hold multiple jobs, one of which is part-time, to be
classified as full-time workers if their hours total at least 35. As a result of the major
revision to the CPS implemented in January 1994, information has become available
on the prevalence of people holding multiple jobs and their usual hours in those
jobs.4 According to BLS, the trend in part-time employment (which is examined
shortly) would be little changed based on a count of jobs rather than of workers.
Other changes made to the CPS in 1994 affect the consistency over time of the
part-time/full-time data series. The changes’ impact on trends are noted where
appropriate in the following pages.
Some individuals who work on a part-time basis choose to do so while others
would prefer longer hours. The former are often referred to as
voluntary part-time
workers. They elect to work 1-34 hours per week for what BLS considers to be
noneconomic reasons, including problems arranging child care, other family or
personal obligations, health or medical limitations, in school or training, retired or
social security limit on earnings, vacation or personal day, legal or religious holiday,
4 In 2002, 7.3 million workers moonlighted (i.e., held more than one job). The most
common form of multiple jobholding involved full-time workers with a second part-time job
(3.9 million). Almost 1.6 million workers held primary and secondary jobs with each being
part-time, and 856,00 of these workers were employed at least 35 hours on their part-time
jobs combined. Another 1.2 million individuals who worked a full-time week held two jobs,
one of which had variable hours. Thus, 6 million workers who held one or more part-time
jobs were classified as full-time workers because the combined work week from those jobs
totaled at least 35 hours. Part-time jobholders with full-time schedules more often are
prime-age workers (25-54 year olds) and married men compared to either group’s
prevalence among “official” part-time workers.
CRS-3
and weather-related curtailment. The latter are often referred to as
involuntary part-
time workers or as being employed part-time for
economic reasons. They work less
than 35 hours a week due to slack work or business conditions, could only find part-
time work, seasonal work, and job started or ended during survey week.
Their Demographic Breakdown
Women of all ages, younger (16-24) and older (at least 55) men, as well as white
workers make up larger shares of workers voluntarily employed part-time than of all
workers. (See
Table 1.) Voluntary part-timers in 2002 had an average work week
of 21.4 hours. Individuals most often gave “in school or training” and “other family
or personal obligations” as their reason for choosing part-time hours.5 Women
continue to disproportionately opt for part-time schedules, which probably reflects
their efforts to accommodate family responsibilities; however, they have become
increasingly less likely over time to choose part-time employment. In contrast, the
rate of voluntary part-time employment has increased for younger and older male
workers.6
In contrast, young women (16-34 years old) and men (16-24 years old) as well
as black workers are over represented among involuntary part-timers regardless of
whether they are usually employed 1-34 hours or a minimum of 35 hours a week.7
Over time, however, the incidence of involuntary part-time schedules among prime-
age men (25-54) usually employed part-time has risen more so than among women.8
Economic part-timers average a longer work week, at 23.0 hours in 2002, compared
to voluntary part-timers. Among persons employed part-time for economic reasons,
those who usually work full-time report longer hours (24.1) compared to those who
usually work part-time (22.3).
The most frequently offered reason for being
involuntarily employed part-time in 2002 was “slack work or business conditions,”
but in more robust periods of economic growth, it more often is “could only find
part-time work.”9
5 BLS,
Employment and Earnings, June 2003, Table 20.
6 Thomas Nardone, “Part-Time Employment: Reasons, Demographics, and Trends,”
Journal of Labor Research, vol. 16, no. 3 (summer 1995). (Hereafter cited as Nardone,
Part-Time Employment.)
7 An example of someone who usually is employed full-time but works part-time for
economic reasons is a construction worker who had only three 10-hour days of work in a
week because one job ended and another had not yet begun.
8 Nardone,
Part-Time Employment.
9 BLS,
Employment and Earnings, Jan. 2003, Table 20.
CRS-4
Table 1. Percent Distribution of All Employed Persons
and of Persons Employed Part-Time,
by Demographic Characteristic, 2002
Involuntary part-time
Usually
Usually
Total
Voluntary
work
work
Characteristic
employed
part-time
Total
full-time
part-time
Total
100.0%
100.0%
100.0%
100.0%
100.0%
16-19
4.6
19.7
11.1
8.3
11.3
20-24
9.8
15.3
19.2
18.3
19.2
25-34
22.2
14.1
23.2
23.7
23.2
35-44
25.8
16.6
20.9
20.1
21.0
45-54
22.9
13.8
16.3
18.3
16.2
55+
14.6
20.6
9.1
11.2
8.9
Men
53.4
30.9
45.2
47.3
45.1
16-19
2.3
8.9
5.5
4.7
5.6
20-24
5.1
6.2
9.4
8.3
9.4
25-34
12.1
3.0
10.5
11.2
10.4
35-44
13.9
2.2
8.9
9.5
8.9
45-54
12.0
2.3
6.3
8.3
6.2
55+
7.6
8.3
4.5
5.3
4.5
Women
46.7
69.0
54.8
52.1
54.9
16-19
2.3
10.7
5.6
3.6
5.7
20-24
4.7
9.1
9.8
9.5
9.8
25-34
10.1
11.1
12.7
12.4
12.8
35-44
11.9
14.4
12.0
11.2
12.1
45-54
10.9
11.5
9.9
10.1
9.9
55+
6.7
12.3
4.6
5.3
4.5
White
83.5
87.2
77.4
82.8
77.1
Black
10.9
7.9
16.2
11.2
16.5
Source: Table created by CRS from BLS data.
CRS-5
The Trend in Part-Time Employment
The doubling of persons who usually work part-time — from 11.3 million in
1969 to 23.0 million in 2000 — accounted for one-fifth of employment growth
during the 30-year period. (See
Table 2.) The more rapid increase in part-time
(104%) than in full-time (71%) employment means that 1 in 6 workers had a part-
time schedule in 2000, up quite modestly over the past few decades from 1 in 7 in
1969. The predominant work schedule thus remains a full-time one.
Table 2. Employed Persons by Full-Time and Part-Time Status
During Peak Years of the Business Cycle
Part-time
Part-time
for eco-
for eco-
Full-
Part-
nomic
Full-
Part-
nomic
Total
timea
time
reasonsb
Total
timea
time
reasonsb
Year
(Numbers in thousands)
(Percent distribution)
1969
77,902
66,596
11,306
2,056
100%
85.5% 14.5%
2.6%
1979
98,824
82,654
16,171
3,577
100%
83.6% 16.4%
3.6%
1989
117,342
97,369
19,973
4,894
100%
83.0% 17.0%
4.2%
2000
136,891
113,846
23,044
3,227
100%
83.2% 16.8%
2.4%
Source: Table created by CRS from BLS data.
Note: Data for 1994 and subsequent years are not directly comparable with data for 1993 and earlier
years due to a major redesign of the CPS.
a Before 1994, the full-time total includes persons usually employed 1-34 hours but who worked 35
or more hours during the reference week. From 1994 forward, such persons are included in the
part-time total.
b Includes individuals employed 1-34 hours for economic reasons, who usually work part-time and
who usually work full-time schedules. Thus, persons employed part-time for economic reasons
are
not a subset of all part-time workers (i.e., persons who usually work 1-34 hours regardless
of reason).
The pace of part-time employment growth appears to have slowed during the
period under observation. This trend might be related to the heightened commitment
of women to the labor force, as reflected in their decreased propensity to leave full-
time jobs and their increased propensity to move from part-time jobs or
nonparticipation to full-time jobs.10
Voluntary Part-Time Employment
Most part-timers — about 4 in every 5 — choose short workweeks. In 2002, for
example, BLS data show that18.9 million out of 23.8 million part-time workers opted
for less than 35 hours of work per week on average.
10 Donald R. Williams, “Women’s Part-Time Employment: A Gross Flow Analysis,”
Monthly Labor Review, Apr. 1995.
CRS-6
Although the share of voluntary part-time workers decreased in the 1970s (from
85.4% in 1969 to 79.7% in 1979) and then edged further downward in the 1980s (to
77.1% in 1989), the trend may have reversed more recently (rising to 81.6% in 2000).
Some portion of the turnaround in the 1990s reflects changes in the CPS
questionnaire which, among other things, was reworded to make it easier to
determine whether noneconomic/voluntary or economic/involuntary factors affected
the length of respondents’ workweeks.11 Voluntary part-timers as a share of all part-
timers jumped from 72.1% in 1993, based on the old questionnaire, to 75.7% in 1994
when the revised questionnaire was introduced. Since this large 1-year jump, the
incidence of voluntary part-time employment has continued to rise but at a more
modest pace.
Involuntary Part-Time Employment
The major story behind the increase over time in part-time employment
concerns those who work part-time but would prefer full-time hours. Once the
business-cycle effect12 is eliminated by focusing on peak years of economic activity,
it becomes clear that involuntary part-time work has grown over the long run. As
shown in
Table 2, all persons employed part-time for economic reasons numbered
more than 3.2 million in 2000, which is about 1½ times the 1969 level. Involuntary
part-time employment accounted for 2.6% of total employment in 1969.
The
proportion subsequently rose, with a larger increase occurring in the 1970s than
1980s. The involuntary part-time employment rate subsequently fell to 2.4% in
2000, with the seemingly reduced incidence partly due to the aforementioned CPS
revision.13
The long-term increase in involuntary part-time employment has occurred
among those who usually have short workweeks. As presented in
Table 3, less than
one-half of persons employed part-time for economic reasons in 1969 usually worked
part-time. The share grew substantially during the 1970s and continued to expand,
11 Nardone,
Part-Time Employment.
12 In 1979, at the peak of a business cycle, persons involuntarily employed less than 35 hours
per week totaled almost 3.6 million. A few years later, around the time of the 1981-1982
recession, their number climbed to 6.3 million. After tapering off during the 1980s
recovery, the level turned up again — reaching 6.5 million — following the 1990-1991
recession. The influence of cyclical fluctuations in aggregate demand on those unable to
get as many hours of work per week as they would like is evident from this pattern and
demonstrated empirically in Ronald A. Ratti, “Involuntary Part-Time Employment: Cyclical
Behavior and Trend Over 1968-1987,”
Economic Letters, 1991.
13 Between 1993 and 1994, when the revised questionnaire was implemented, the number
of part-timers who preferred longer hours dropped from 6,481,000 to 4,625,000, which
could result in at least a 1 percentage point decrease in the involuntary employment rate.
Note: Before the 1994 CPS revision, interviewers inferred whether persons employed part-
time for economic reasons wanted and were available for full-time jobs. From 1994 onward,
respondents have been asked explicitly about their desire and availability for full-time work.
“[T]he reduced number of involuntary part-time employees results almost entirely from the
direct question about desire for full-time work; the question on availability has little affect.”
Nardone,
Part-Time Employment, p. 289.
CRS-7
but at a considerably diminished pace, during the 1980s. While the share declined
during the 1990s, it remains well above its 1969 level. The data suggest that the
prospect of moving from part-time to full-time employment has diminished over the
years, thereby making part-time work a more permanent status for those who would
prefer full-time work.
Table 3. Employed Persons by Reason for Working Part-Time
during Peak Years of the Business Cycle
(numbers in thousands)
Persons at
work <35
1969
1979
1989
2000
hours per
week
Number Percent Number Percent Number Percent Number Percent
Part-time
for
2,056
100.0
3,577
100.0
4,894
100.0
3,227
100.0
economic
reasons
Usually
work part
963
46.8
2,102
58.8
3,164
64.7
1,894
58.7
time
Source: Table created by CRS from BLS data.
Note: Data for 1994 and subsequent years are not directly comparable with data for 1993 and earlier
years due to a major redesign of the CPS.
a Total who usually work part time includes those usually employed 1-34 hours per week but (1) who
were absent from work for the entire reference week or (2) for 1994 and after, who worked 35
or more hours during the reference week. As these groups are not shown separately, the sum
of the parts is less than the total.
Reasons for the Growth in
Involuntary Part-Time Employment
The long-run increase in part-time employment has occurred among those who
want to work full-time hours, which likely means that demand has outpaced the
supply of voluntary part-time workers. Therefore, explanations of the trend typically
have focused on the demand side, that is, on employers’ motivation for favoring part-
time over full-time job creation.
The changing economy is one explanation commonly offered for business’
greater use of nontraditional work arrangements, including part-time and temporary
workers, leased employees, and employees of contract services firms. Such factors
as deregulation and internationalization of product markets, it is asserted, have made
the marketplace increasingly competitive and variable. Some contend that combining
different work arrangements allows firms to more efficiently accommodate changing
or fluctuating patterns of demand for goods and services than if they relied solely on
traditional (full-time, long-term) jobs.
Greater flexibility in staffing has been
achieved through such strategies as maintaining a core workforce augmented by (1)
CRS-8
calling on workers directly or through temporary agencies when production must be
increased to fill the more sporadic orders of customers who no longer want to
maintain sizeable inventories, and by (2) scheduling part-time workers to ensure
coverage during store hours which have been extended to meet the needs of today’s
dual-earner families.
Another leading explanation for the increase in alternative work arrangements
is labor cost minimization. The source of lower costs is twofold: from reduction in
paid non-productive time (i.e., having “just-in-time employment” rather than a
constant staff level over the course of a day, week, or year) and from the relatively
low wages and limited benefits of nonstandard jobs. Some oppose the creation of a
workforce variously described as two-tiered, disposable, or marginal which they
believe depresses morale due to unequal treatment of employees and dampens
productivity growth due to reduced employer-provided training as well as diminished
reasons to innovate. In their view, the increased competitiveness of U.S. firms
achieved through the proliferation of flexible work arrangements has come —
literally — at the expense of workers and, ultimately, of society to the extent that
more individuals rely on public assistance (e.g., welfare and medicaid) because of the
“low quality” of nontraditional jobs.
A less widely discussed explanation concerns the skill composition of
involuntary part-time workers and the nature of job growth. With many more jobs
today than in the recent past requiring fairly high educational attainment (i.e., at least
some postsecondary schooling), employers may have found that a growing share of
workers do not possess the skill levels they are seeking to fill full-time long-term
positions. In other words, persons involuntarily employed part-time might have been
on the rise over the long run because of a mismatch between their qualifications and
the requirements of many “high quality” job opportunities. For the same reason,
firms may not have converted as many part-time to full-time jobs as might have been
expected during the tight labor markets that prevailed in the late 1990s.
Job Growth by Industry
The greater incidence of part-time work might be related to above-average job
growth in industries that have historically relied on part-time workers or to an
increased rate of part-time scheduling within industries. The former explanation
reflects shifts in customer demand for goods and services among industries, and
hence, in the industrial distribution of employment. The latter (within-industry)
explanation reflects a change in the staffing strategy of firms, which might be
motivated by either labor flexibility or labor cost considerations.
Rapid employment gains in industries that are historically heavy users of part-
time workers were estimated to account for the entire increase in the ratio of part-
time to full-time employment during the 1980s and into the early 1990s.14 Part-time
intensive industries include services (e.g., business and repair, personal, medical
14 Chris Tilly,
Half a Job: Bad and Good Part-Time Jobs in a Changing Labor Market,
(Philadelphia, PA: Temple University Press, 1996). (Hereafter cited as Tilly,
Half a Job.);
and Nardone,
Part-Time Employment.
CRS-9
excluding hospitals, and professional); retail trade; and finance, insurance, and real
estate. Thus, it appears that the differential rate of job growth across industries —
which reflects nothing more invidious than changing consumer demand for goods
and services — has fueled the growth of part-time employment since 1980.
During the 1970s, however, the increased rate of part-time employment within
industries did account for a substantial share of the heightened incidence of part-time
employment.15 The retail trade and services industry groups in particular stepped up
their hiring of part-time as compared to full-time workers in this decade.
Taken together, these findings suggest firms had changed their internal staffing
strategies and achieved what they consider to be a more efficient mix of part-time
and full-time jobs by 1980. But, debate about whether labor flexibility or labor costs
motivated the higher ratio of part-time to full-time jobs, and about the consequences
of alternative work arrangements, is likely to continue as long as “standard and
nonstandard jobs [do not pay] similar wages to people with similar characteristics,
[do not] provide ... equal fringe benefits, [do not] allow ... equal opportunity for
career advancement ladders, and [do not] provide ... an equivalent level of job
security.”16
The Part-Time/Full-Time Wage Gap
The wages of part-timers are lower than those of full-timers, but the size of the
gap has been fairly stable for decades. While the growth in the part-time/full-time
wage gap thus cannot explain the upward trend in involuntary part-time employment,
the gap’s very existence might have induced firms to increase their relative use of
part-time workers.17
In 2003, private sector firms paid part-time employees 45% less than full-time
employees. The former earned $9.96, and the latter $18.02, per hour worked.18
However, the hourly wage gap neither accurately reflects the cost savings employers
might gain by using part-time rather than full-time workers, nor the pay disadvantage
part-timers might suffer solely from working short hours.
“Much of the pay
discrepancy between full-time and part-time workers can be attributed to who they
are and what jobs they hold,”19 that is, to variations in the distribution of part-time
and full-time workers across demographic, occupational, and industrial groups.
15 See Tilly
Half a Job, and Nardone,
Part-Time Employment.
16 Economic Policy Institute (EPI) and Women’s Research & Education Institute (WREI),
Nonstandard Work, Substandard Jobs, (Washington, D.C.: EPI, 1997), p. 5. (Hereafter
cited as EPI and WREI,
Nonstandard Work.)
17 Tilly,
Half a Job.
18 BLS, “Employer Costs for Employee Compensation — March 2003,” news release, June
11, 2003. (Hereafter cited as BLS,
Employer Costs for Employee Compensation.)
19 Sar A. Levitan and Elizabeth A. Conway, “Part-Timers: Living on Half-Rations,”
Challenge, May-June 1988, p. 13. See also Marvin Kosters and Deirdre McCullough, “Does
Part-Time Work Pay?,”
The American Enterprise, Nov.-Dec. 1994.
CRS-10
The results of empirical studies confirm that differences other than hours
worked account for the great majority of part-time workers’ relatively low hourly
pay. Once they are taken into account, the wage gap between the two groups narrows
substantially. After adjusting for compositional differences in sex, race, education,
and experience between part-timers and full-timers, one analysis estimated that the
former earned 29% less than the latter. When the concentration of part-time workers
in low-paid industries and occupations was taken into account as well, the gap
narrowed further to perhaps 10%.20 A negative relationship also was discerned
between part-time status and earnings in 40 out of the 46 industries analyzed
individually in another study. After controlling for human capital and several other
factors known to influence wages, the adjusted wage gap averaged about 13%.21 A
third study found that “regular” part-time status depressed the hourly wage of women
by 5%, and men by 10%, compared to full-time workers with similar personal and
job characteristics.22
The unexplained portion of the pay differential between part-time and full-time
workers reflects some combination of unmeasured, unmeasurable or imprecisely
specified variables and wage discrimination based on hours worked. Because
selection bias23 could affect estimation of the adjusted hourly wage gap, one analysis
developed a model to correct for it. After making this correction, the study found
that part-time status did not depress the wages of women generally, but women
involuntarily employed part-time and all male part-timers did incur an hourly wage
penalty.24
The small adjusted wage gap indicates that differences in hourly rates of pay for
part-time and full-time workers are responsible for little of the earnings disparity
between the two. Expansion of the current federal requirement under the Equal Pay
Act of 1963, that firms provide equal pay for equal work, to equal
hourly pay for
equal work might thus have less impact on part-timers’ wage and retirement income
levels than anticipated by those who have supported such a proposal.
20 John D. Owen,
Working Hours: An Economic Analysis, (Lexington, MA: D.C. Heath and
Company, 1979). (Hereafter cited as Owen,
Working Hours.)
21 Ronald G. Ehrenberg, Pamela Rosenberg and Jeanne Li, “Part-Time Employment in the
United States” in Robert A. Hart, ed.,
Employment, Unemployment and Labor Utilization,
(Boston, MA: Unwin Hyman, Inc., 1988). (Hereafter cited as Ehrenberg, et al.,
Part-Time
Employment.)
22 EPI and WREI,
Nonstandard Work. Note: “Regular” part-time employment in this
analysis means employees who worked less than 35 hours
and who were not in any other
nonstandard work arrangement.
23 In the instant case, selection bias would occur if individuals choose to enter the labor force
or choose part-time over full-time jobs due to factors that are not explicitly accounted for
in the estimation procedure and that affect wages independently of part-time status.
24 Rebecca M. Blank, “Are Part-Time Jobs Bad Jobs?” in Gary Burtless, ed.,
A Future of
Lousy Jobs? (Washington, D.C.: The Brookings Institution, 1990). (Hereafter cited as
Blank,
Are Part-Time Jobs Bad Jobs?) Note: The EPI and WREI analysis in
Nonstandard
Work takes a different approach to adjust for potential systematic differences between part-
time and full-time workers not explicitly included in the estimation procedure. It found that
selection bias accounts for only a small portion of the part-time/full-time wage gap.
CRS-11
Because of the number of women in the part-time labor force as well as the
number of part-time employees in relatively low-paid female-dominated occupations,
adoption of comparable worth as national policy has sometimes been advocated in
connection with the part-time worker issue.25 (Comparable worth would extend the
current equal pay mandate to equal pay for
equivalent jobs within a firm.) Similarly,
the considerable representation of women and youth among both part-time and
relatively low-paid workers has made raising the federal minimum wage another
policy option sometimes mentioned in connection with the part-time worker issue.26
Employment-Based Benefits
Over the years, employer costs for employee benefits have grown substantially.
Employer contributions for legally required social insurance27 rose from $100 million
in 1929, into billions of dollars following enactment of social security and other
Depression-era programs. Employer payments for mandated benefits have continued
to increase over the years, according to U.S. Department of Commerce data, as both
the labor force grew and Congress expanded coverage, raised wage ceilings, and
increased tax rates. With employer expenditures on discretionary benefits (e.g.,
vacation, holiday, and sick leave; rest periods; pension and profit-sharing plans; and
health, disability, and life insurance) also increasing, total employee benefit costs
topped $1 trillion by 1990.28
With the rate of benefit increases often exceeding that of wage increases over
time, non-wage compensation today consumes a greater share of employers’ total
labor costs. Most recently, the employer portion of benefit expenses comprised
27.8% of total compensation for employees in the private sector: discretionary
benefits accounted for 19.4% and mandated benefits, 8.4%, of total compensation
costs at private sector firms in 2003.29
Differences in Receipt and Cost of Benefits. Higher quasi-fixed labor
costs are expected to lead firms to
reduce their demand for part-time compared to
25 For information on the potential labor market impact of this policy see CRS Report 98-
278,
The Gender Wage Gap and Pay Equity: Is Comparable Worth the Next Step?, by
Linda Levine.
26 For information on the labor market effect of the federal minimum wage see Susan N.
Houseman, “The Effects of Employer Mandates” in Richard B. Freeman and Peter
Gottschalk, eds.,
Generating Jobs: How to Increase Demand for Less-Skilled Workers,
(N.Y.: Russell Sage Foundation, 1998). (Hereafter cited as Houseman,
The Effects of
Employer Mandates.)
27 These payments represent employer contributions to federal funds (i.e., old-age, survivors,
disability, and hospital insurance; unemployment insurance; federal employee and railroad
retirement; veterans’ life insurance; military medial insurance; and workers’ compensation)
and to state/local funds (i.e., state/local employee retirement, temporary disability insurance,
and workers’ compensation).
28 U.S. Chamber of Commerce,
Employee Benefits, (Washington, D.C.:U.S. Chamber
Research, 1991).
29 BLS,
Employer Costs for Employee Compensation.
CRS-12
full-time workers. Employers incur certain costs for each employee regardless of the
number of hours the employee works (e.g., for health and other insurance; mandated
benefits with low wage ceilings; and recruitment, supervision, and training); they are
per-employee (fixed) rather than per-hour (variable) costs. All else being equal,
higher fixed labor costs make it relatively less expensive for firms to employ full-
time workers because per-employee expenditures are spread over more hours or
recouped more quickly in the case of training for example.30 More specifically,
unless benefits can be prorated based on hours worked or earnings, part-timers
who
receive benefits will cost firms
more per hour to employ than full-timers.
However, part-time employees less often have access to or are eligible for
participation in employer benefit plans than are full-time employees. Many fewer
part-timers than full-timers in the private sector have access to paid leave (e.g., for
holidays, jury duty, military service, and vacations).31 If firms offer health or pension
benefits to their employees, employees who work fairly few hours may find it
difficult to meet length of service requirements or may be legally excluded from
coverage.32 When part-timers are eligible, the amount of the firm’s contribution may
be based on hours worked or earnings which might make the employee’s contribution
sufficiently expensive to cause them to forgo coverage. Other eligible part-timers
might opt not to participate because they already are covered through other sources.
For these various reasons, only 18% of part-time employees compared to 58% of full-
time employees in the private sector participated in their employers’ retirement plans
in 2003; for participation in medical care benefits, the proportions were 9% and 56%,
respectively.33
Factors other than part-time status cannot fully explain the difference in
discretionary benefit receipt between part-time and full-time workers. After taking
into account such variables as age, education, firm size, occupation, and union status,
part-timers remain significantly less likely than full-timers to receive employer-
30 Owen,
Working Hours. Note: One analysis challenges the long-held conception that
many voluntary benefits (e.g., paid leave and pensions) represent quasi-fixed costs. It
concludes that only health insurance is, at least in part, a fixed cost of employment. See
Michael K. Lettau, “Comparing Benefit Costs for Full- and Part-Time Workers,”
Monthly
Labor Review, Mar. 1999.
31 BLS, “Employee Benefits in Private Industry, 2003,” new release, Sept. 2003. (Hereafter
cited as BLS,
Employee Benefits in Private Industry.)
32 Federal law requires that only part-time employees who work more than 1,000 hours per
year (i.e., about 20 hours per week) must be covered under a firm’s pension plan. See
earlier pages of this report for the
average weekly hours of part-time workers.
33 BLS,
Employee Benefits in Private Industry.
CRS-13
sponsored health or pension benefits and leave.34 Involuntary part-timers are even
less likely to receive health or pension benefits from their employers.35
The lower incidence of benefit receipt by part-time workers generally has made
them less expensive to employ than full-time workers. In 2003, for example, part-
timers cost private sector employers an average of only $2.45 in benefits per hour
worked, while full-timers cost an average of $7.36.36 Benefits added 25% to the
average hourly wage costs of part-time workers at private firms. They added a
considerably higher 41% to the average hourly wage of full-time employees. By
increasing the ratio of part-time to full-time workers on their payrolls, firms have
been able to minimize the increase over time in benefit expenditures and likely
contributes to employers’ decision to use part-time and other flexible staffing
arrangements.37
The Labor Market Effect of Mandating Workplace Benefit Coverage.
Given the growth of part-time and other nonstandard work arrangements, some
advocate that policies need to be reshaped so they no longer are tailored for full-time,
long-term jobs with benefits. The extension of the public-private social safety net to
nontraditional jobholders has been urged by some as a humane means of easing the
adjustment from a more rigid to a more flexible work environment.38 One analyst has
commented that “Although economists tend to focus on efficiency grounds for
employer mandates, achieving equity is arguably the more important political
motivation for legislating employer mandates.”39
Economic theory suggests that requiring work-based benefit provision for part-
time employees could adversely affect their wages or employment. Unless firms
covered by the mandate could trade-off the benefit increase against a wage decrease,
so that their compensation costs do not rise, the aggregate demand for part-time labor
is expected to fall.
34 Bernard E. Ichniowski and Anne E. Preston, “New Trends in Part-Time Employment,”
Proceedings of the Thirty-Eighth Annual Meeting of the Industrial Relations Research
Association, Dec. 28-30, 1985; and Ehrenberg, et al.,
Part-Time Employment in the United
States.
35 Blank,
Are Part-Time Jobs Bad Jobs?.
36 BLS,
Employer Costs for Employee Compensation. Note: Because of the lower
prevalence of benefit coverage among part-time than full-time workers, the series tends to
overstate the benefit cost gap between the two.
37 Susan N. Houseman, “Why Employers Use Flexible Staffing Arrangements: Evidence
from an Establishment Survey,”
Industrial and Labor Relations Review, vol. 55, no. 1 (Oct.
2001).
38 In addition to proposals requiring that firms or the government provide certain benefits
to part-time workers, other suggested changes include lowering the annual hours threshold
for coverage under the Family and Medical Leave Act, pension portability, and changing the
unemployment compensation system so that workers with low earnings or who are seeking
part-time work are more often eligible. See duRivage,
New Policies for the Part-Time and
Contingent Workforce; and EPI and WREI,
Nonstandard Work.
39 Houseman,
The Effects of Employer Mandates.
CRS-14
Whereas it might be supposed that employers will respond to legislated
augmentation of mandatory benefits by reducing the wages of all employees to
compensate for the added burden, our findings suggest that part of their response
might be, instead, to reduce their hiring of part-time workers. If they do, the
labor market for those seeking part-time employment will shrink.40
Wages. Statutorily set minimum wage rates might constrain how much firms
can cut or slow the growth rate of part-time workers’ wages in response to a benefit
mandate. Employers would be able to offset little, if any, of the benefit increase
through a pay cut if part-timers’ wages were close to the minimum wage. The
smaller the gap between minimum and part-time wages, the greater the likelihood
that firms would adjust to a benefit requirement by curbing part-time employment.41
As benefit mandates, both those in effect (e.g., the Family and Medical Leave Act)
and those that have been offered (e.g., health care proposals during the Clinton
Administration), typically exempt some part-timers, it is likely that employers will
“shift low wage workers from work schedules just above the mandated hours
threshold to just below it, in order to avoid the cost of the mandate.”42
If employers were able to lower the wages of part-time workers to compensate
for the increase in benefits, then the economic well-being of some part-timers would
suffer. As previously noted, many workers who do not have health benefits through
their part-time jobs are insured through other sources; if their wages were reduced,
they would not experience any attendant gain from the benefit requirement. Other
part-time workers might not value the additional benefits as much as they value their
forgone wages. In this case, as well, the imposition of a benefit package would
diminish the workers’ economic well-being.43
Employment. A reduction in part-time jobs might have the salutary effect of
bringing demand closer to the supply of voluntary part-time workers. Firms could
maintain their level of output by employing more full-time workers whom the benefit
mandate has made less expensive to use. The opportunity then would increase for
involuntary part-timers to obtain the full-time jobs they prefer. Alternatively, firms
in some instances could substitute capital for the now more costly labor input and
consequently cutback their total employment.
The extent to which imposition of a workplace benefit mandate increases the
relative cost of utilizing part-time workers would depend on whether firms must
make the same payment for each employee regardless of hours worked or earnings
level. If the employer’s contribution is a fixed (per-employee) sum, the mandate
40 Mark Montgomery and James Cosgrove, “The Effect of Employee Benefits on the
Demand for Part-Time Workers,”
Industrial and Labor Relations Review, vol. 47, no. 1
(Oct. 1993), p. 96.
41 Olivia S. Mitchell, “The Effects of Mandating Benefit Packages” in Laurie J. Bassi and
David L. Crawford, eds.,
Research in Labor Economics, vol. 11, (Greenwich, Conn.: JAI
Press Inc., 1990). (Hereafter cited as Mitchell,
The Effects of Mandating Benefit Packages.)
42 Thomas C. Buchmueller, “Fringe Benefits and the Demand for Part-Time Workers,”
Applied Economics, vol. 31 (1999).
43 Mitchell,
The Effects of Mandating Benefit Packages.
CRS-15
would increase the total compensation of part-timers by a larger percentage than if
the contribution varied by total wages or hours worked. While the costlier approach
would be more likely to open up full-time jobs for involuntarily employed part-
timers, it also could so reduce part-time demand that those who want jobs with short
workweeks are unable to get them. As the vast majority of part-timers prefer short
schedules, “many of them would be worse off if forced to transfer into a permanent
full-time job” or to drop out of the labor force.44 Alternatively, the less expensive
approach might result in low levels of retirement income, little accumulated leave to
care for oneself and dependents, or few additional part-time workers with health
insurance because they could not afford their share of the premium.45
Imposition of a work-based benefit requirement also could change labor costs
across groups of workers and affect their job opportunities in unintended ways.46
Women and older workers are two large components of the part-time labor force. If,
for example, firms had to extend health benefits to their part-time employees and
they believe that coverage of women and older part-timers would raise group
premiums, firms might replace them with part-timers thought to be lower risks (e.g.,
16-24 year olds).
Underemployment and a Skill Mismatch
Involuntary part-time employment is of concern to some observers not only
because “lost” hours impose a cost on workers and their families in terms of forgone
compensation, but also on the economy in terms of forgone production of goods and
services. Just as unemployment is one measure of the underutilization of human
resources, so too is involuntary part-time employment.
The long-run increase in workers supplying fewer hours of labor per week than
they wish means that the extent of underemployment or partial unemployment has
spread. Even more so than in the past, then, it could be argued that the official
unemployment rate overstates the degree of tightness in the labor market. According
to this perspective, there is more room for output and employment growth without
accelerating inflation than is apparent from the level of the unemployment rate.
In light of the scarcity of labor that existed not too long ago, some have
wondered why firms did not take greater advantage of these underutilized workers
and offer more of them the full-time hours they want. Perhaps there is something on
the supply side, rather than the demand side, that makes workers involuntarily
employed part-time less-than-attractive candidates for full-time jobs.
Indeed,
according to one empirical analysis, the expansion of the 1990s produced an
inconsequential decrease in involuntary part-time employment compared to the
expansion of the 1980s. The researcher suggests that firms might have become more
reluctant to hire from the pool of economic part-timers because of its altered
44 Rebecca M. Blank, “Contingent Work in a Changing Labor Market,” in Freeman and
Gottschalk,
Generating Jobs, p. 285.
45 Mitchell,
The Effects of Mandating Benefit Packages.
46 Ibid.
CRS-16
composition: “state and local welfare reforms in the mid-1990s disproportionately
increased the supply of low-skilled females who desired to work more hours” and the
United States experienced a “relative surge in legal and illegal immigration” during
the decade; that is to say, those who remained involuntarily employed part-time
despite the extremely tight labor market that characterized the late 1990s “may have
been more likely to possess inferior characteristics (or firms had the perception that
these were lower-quality workers).”47
As shown in
Table 4, relatively more workers involuntarily employed part-time
have not completed high school compared to either persons voluntarily working part-
time or persons in full-time jobs. This “suggests that their inability to get as much
work as they desire may be due to a lack of skills rather than simply a lack of full-
time jobs.”48 Given the disparity in skill composition and the greater benefit costs
that firms could incur were they to switch workers from part-time to full-time
schedules, employers might prefer to cope with short-run tightness in the labor
market by lengthening the hours of full-time employees already on their payrolls.49
Over the long run, firms might have partially accommodated any mismatch
between the qualifications of workers and the heightened skill requirements of a
growing share of jobs by favoring the creation of part-time over full-time long-term
jobs. Since 1983, when the occupational classification system was revised, higher
skilled jobs (i.e., those requiring some postsecondary education at a minimum) have
recorded the relatively greatest gains. Higher skilled jobs have increased to the point
where they now account for more than one-half of total employment. As shown in
Table 4, however, just 42% of involuntary part-time workers possessed at least some
postsecondary schooling in contrast with 60% of full-time workers. It is thus
possible that both supply and demand have been factors in the long-run increase in
persons involuntarily employed 1-34 hours a week.
The increased supply of lower skilled workers might extend beyond new groups
entering the labor force as suggested above. It has been hypothesized that lower
skilled men, who in particular faced falling real wage opportunities, added to the
supply of involuntary part-time workers: because men displaced from high-wage
factory jobs, for example, were not readily able to obtain comparably paid full-time
positions, they opted for part-time employment rather than unemployment or
withdrawal from the labor force. The employment constraint thus was on the wage
side rather than the hours side, which implies that these workers may have been
misclassified as involuntary part-timers. Instead of an undersupply of full-time work
47 Mark D. Partridge, “Part-Time Workers and Economic Expansion: Comparing the 1980s
and 1990s with U.S. State Data,”
Papers in Regional Science, vol. 82 (2003), p. 65.
48 Nardone,
Part-Time Employment, p. 283.
49 For more information on the role of benefit costs in firms’ hours-employment decision,
see CRS Report 97-884,
Longer Overtime Hours: The Effect of the Rise in Benefit Costs,
by Linda Levine.
CRS-17
per se, this analysis implies that there may have been an undersupply of “good”
jobs.50
Table 4. Percent Distribution of 25-64 Year Olds Employed
Full-Time and Part-Time by Educational Attainment, 2002
Full-time
Voluntary part-
Involuntary part-
Characteristic
workers
time workers
time workers
Total
100.0
100.0
100.0
8th grade or less
3.2
3.1
8.9
some high school
5.8
5.9
13.6
high school graduate
30.5
30.4
36.2
some college
27.6
30.8
23.9
college graduate or more
32.8
29.7
17.4
Men
100.0
100.0
100.0
8th grade or less
3.8
5.2
9.4
some high school
6.6
8.1
14.3
high school graduate
30.6
27.5
36.4
some college
26.0
27.8
22.7
college graduate or more
33.0
31.3
7.3
Women
100.0
100.0
100.0
8th grade or less
2.3
2.6
8.4
some high school
4.8
5.4
13.0
high school graduate
30.4
31.1
36.0
some college
29.9
31.6
25.1
college graduate or more
32.6
29.3
17.5
Source: Tabulated by CRS from the CPS.
50 Alec Levenson, “Long-Run Trends in Part-Time and Temporary Employment: Toward
an Understanding,” in David Neumark, ed.,
On the Job: Is Long-Term Employment a Thing
of the Past?, (NY: Russell Sage Foundation, 2000).