Multiple Jobholders: Another Sign of a Job Market in Crisis?
How many times since the start of the Great Recession have you heard a story like this one, from USA Today?
Heather Rolley’s primary occupation is motherhood, but it doesn’t pay the bills. So most days, after she takes her daughter and two sons to school, the 36-year-old divorcee heads to work. Some days it’s at the Polo Ralph Lauren store at an outlet mall, where she makes $8.50 an hour as a part-time sales associate. Other days, she focuses on her home-based Mary Kay beauty products business, making telephone calls, checking orders and meeting clients.
Many days, she does both. “It helps me make ends meet, but it’s barely enough,” Rolley said of her dual income, which is supplemented by child support. “It is very difficult. Holding two part-time jobs, plus being a mom, is a juggling act. It’s tough, it really is.”
Anecdotes like this grab our attention, but just how common are they?After taking a look at the data on part time workers earlier this year, I thought it would be worth digging into the story of multiple jobholders.
How many people hold multiple jobs?
The first thing we learn is that although multiple jobholders are not rare, they are not as common as the impression you might get from accounts in the media. The following chart shows the basic data. Multiple jobholders account for about 4.5 percent of the labor force. These include 2.4 percent who hold a part time job in addition to a full time job—a pattern we can call FT/PT. Those who piece together two or more part time jobs—Heather Rolley’s category, or PT/PT—make up about 1.2 percent of the labor force. (People like Rolley, whose primary or secondary job is self-employment, count as multiple jobholders, but people whose only work consists of two or more forms of self-employment do not.) Smaller numbers of workers, not shown in the chart, hold two full time jobs or hold multiple jobs that are unclassified because they vary in hours from week to week.
The chart shows that multiple jobholding has decreased a bit since the start of the recession, but seasonal variation and the format of the chart make it hard to track recent trends in detail. The next chart does two things to bring those trends out more sharply. First, it removes the seasonal variation by plotting 12-month moving averages. Second, it changes the vertical scale to an index with each indicator’s average value for 2007 equal to 100.
This version of the chart highlights the divergent trends in different categories of multiple jobholding. Early in the recession, the FT/PT pattern became less frequent, while PT/PT became more common. At that time, it would be easy to imagine that people were losing their full-time jobs and, in desperation, piecing together two that were part-time. Interestingly, though, that pattern has not reversed as the economy has recovered. The FT/PT category bottomed out in May 2011, and since then has risen a bit, but the PT/PT pattern has continued to grow also. That is not what we would expect if the PT/PT workers were shifting back to FT/PT as the job market grew stronger. We need to think more about just what motivates multiple jobholders.
Why people hold multiple jobs
The next thing we learn when dig into the data is that not every multiple jobholder is a hardship case. The BLS does not report people’s reasons for holding multiple jobs on a monthly basis, but an occasional survey, taken in 2004, sheds some light on the question. At that time, 25.6 percent of those surveyed said they needed the job to meet regular expenses or pay off debt—the answer we would expect Heather Rolley to give. Another 21.3 percent appeared motivated mainly by the value of the second job itself rather than the money it brought in. These included people who took a second job to gain experience, to build a business, or because they enjoyed the work. A third group, 38.1 percent of the total, simply said they wanted the extra income without saying why. Maybe they, too, needed the money desperately, or maybe they wanted to take a cruise or buy a fancier car. We don’t really know. The remaining 15 percent gave other unspecified reasons or no reason.
We can get further, indirect insight into the motivations of multiple jobholders by looking at data on part time workers. Multiple jobholders and part time workers are overlapping categories. Very few multiple jobholders have two full time jobs; on average they work about 13 hours per week at their secondary jobs, so they are active in the part time segment of the market. The degree of overlap is ambiguous, however. The BLS data do not tell us how many people with two part time jobs work more than a total of 34 or more hours per week, which would classify them as full time workers even though they do not have full time jobs. Similarly, data on part time workers do not tell us how many have just one part time job, and how many more than one.
Still, whether we look at full time workers with a secondary part time job or at part time workers, the data suggest that most people who hold part time jobs do so voluntarily, rather than out of economic necessity. Our earlier pie chart showed that was true for multiple jobholders and the next chart shows the same to be true for part time workers. Hardship cases like Heather Rolley’s are real enough, but they certainly don’t dominate either among multiple jobholders or part time workers.
What lies ahead?
As we look forward, both multiple jobholding and part time work are likely to become more common and increasingly voluntary, for two reasons.
The first reason is an aging population. Workers older than 55 are less likely to have multiple jobs than people of prime working age, but of those who do, fewer report that they need the extra job to meet expenses or pay debt. Instead, they are more likely to have a second job because they enjoy the work. At the same time, older people are more likely to work part-time. In the 55 and older age group, 22 percent work part time, compared with just 13 percent of those aged 25 to 54. What is more, part time work is voluntary for 84 percent of older workers, compared with 70 percent for prime-age workers.
The Affordable Care Act is another reason to expect changes. As has been widely noted, the ACA is likely to create an increase both in the demand for part-time jobs and in the supply of such jobs. The increased demand for part time jobs will come from people who no longer have to hold an unwanted full time job in order to get healthcare coverage. Able to purchase insurance on exchanges, sometimes at subsidized rates, some former full time workers may cut back to a single part time job or to a more flexible pattern of multiple part time jobs.
At the same time, once employer mandates come into full force, it is possible that some employers will choose to offer more part time and fewer full time positions. If that happens, some people might shift involuntarily from a single full time job to multiple part time jobs, but also, more part time positions would open up for those who prefer that kind of work. We will know more about the effect of employer mandates by next year.
The bottom line: Each of these in-depth indicators—part time work, multiple jobholders, or whatever—provides another perspective on a labor market that is often drawn in terms of just a few big numbers, like new jobs or the unemployment rate. Sometimes the details make the labor market crisis look worse than we thought. The data on multiple jobholders, though, look less alarming as we examine them more closely.
11 Responses to “Multiple Jobholders: Another Sign of a Job Market in Crisis?”
Exceptionally timely and interesting post. Before I read it and looked at the charts my impression would have been much different.
Hiring has certainly improved but couldn't be characterized as robust. Some unemployed have run out of benefits. You have argued before that low workforce participation rate is an arithmetic artifact and that it overstates working age people who are involuntarily separated from the workforce (though I remain decidedly unconvinced).
This leaves me wondering just what is going on? Everybody has to be somewhere. People are working full time, they are working part time, they are unemployed, they have given up, or they have retired/died/ or joined an Ashram to worship Krishna. I haven't noticed an influx of can-shakers at the airport so I'm discounting the Krishna theory.
U6 seems to be slouching downward but if Williams' Shadow Stats are to be believed the true unemployment rate is rising. Clearly, the recovery continues but at a tepid pace. GINI climbs. Threats of deflation lurk and inflation lays in a heap on the ground. And global sovereign debt is breathtaking.
What the heck is actually going on?
"just what is going on?" is a great question.
Here's another one – suppose Ms. Rolley could work as many hours as she wanted at her single main job, including overtime at 1.5x rate. Would she feel less economically pressed? How much of the the issue has to do with the administrative hassle of working multiple jobs to get enough billable hours, versus just having a very very hard time making enough money? 2000 hours a year at 8.50 is a whopping $17,000. That would be tough, whether one earned it working one job or seven.
Will raising the minimum wage help her, or cause her to lose hours or be fired, and thus have to rely entirely on her commission/self-employed income? This is double edged for non-food retail such as where this person works – not only can higher costs drive automation, hour cutting, and so on. Any price increases may well drive customers to web vendors as well. (Less of an issue for dining establishments.)
One hopes she successfully applies for the EITC. Does the EITC apply to comission and self employment income? I think it ought to, but congress has a remarkable ability to ignore my views.
Part of the previous comment did not appear. It should say: Could multiple job holding be
affected by the higher minimum wage? Firms could substitute one higher-skilled higher wage worker for two or more lower skilled minimum wage workers.
The minimum wage issue is terribly complex. I live near Seattle where a minimum wage of $15 is seriously debated. As your and Mr. Willman suggest, there will be many unanticipated consequences.
For the owner of a convenience store the minimum wage doesn't much matter. If I pay my workers $12 per hour and you pay yours $12 the playing field remains flat (this presumes a national increase – local and regional increases are more fraught still). But I manufacture medical disposables and much of my competition is in China and Mexico. I pay a minimum of $10 per hour now after probationary period (WA minimum wage is $9.32). My competitors in China pay roughly 3000RMB PER MONTH (roughly $450) – a quarter of what I pay. Raising the minimum wage here puts me at further disadvantage. And I operate my factory in a rural county with few job opportunities. Workers here who lose their jobs go on the dole.
I raise this not as a sob story – I have a facility in China as well. There are some products that I simply cannot make in this country and survive. But to draw the larger lesson – not everyone lives in Chicago or New York and not everyone is cut out for high tech or high finance. We, as a nation, can either provide job opportunities for these people or we can provide public assistance. 'Cause they ain't going away.
It is important that people who work are able to earn enough to live a decent life. But this needs to be viewed from the perspective of ever increasing world labor competition.
Perhaps part of the the answer is not to raise the minimum wage but to raise the EITC.
"Does the EITC apply to comission and self employment income? "
Yes. My CPA tells me that EITC is available to all low income earners regardless of (legal) income source.
Maybe it is time to reconsider the low friction border and bring back tariffs to guard domestic industries against race to the bottom wage competition. I fear that instead of undermining the Chinese Communist Party we have merely created a new brand of oligarch not too unlike our own, and instead of capitalism spreading democracy we have simply reintroduced capitalism to its authoritarian roots.
Maybe it is past time to return to pre-Reagan tax structures to make investment in production more attractive than financial swindles that produce negative growth.
Maybe it is time to put Volckerism to bed and allow labor to unionize and participate in the national policy discussion rather than act as a commodity to stripmine then abandon.
It is far past time to bring back the Fairness Doctrine simply to counter-act the propaganda that dominates public policy discussions.
"Maybe it is time to reconsider the low friction border and bring back tariffs to guard domestic industries against race to the bottom wage competition."
Now how the heck is that supposed to work? We should go back to a pre-Rooseveltian (Theodore) time of protectionist tariffs that coddle politically preferred industries?
"Maybe it is past time to return to pre-Reagan tax structures to make investment in production"
I don't think investment incentives are a particular problem and I'm not clear how pre-Reagan tax structures would help. I would be all for removing preferential capital gains policies from secondary stock transactions as they do nothing to benefit companies (first sale would qualify, subsequent would not).
"Maybe it is time to put Volckerism to bed and allow labor to unionize"
Volkerism? Control of inflation?
Labor is free to unionize. It might find more success if it brought more to the table than the old class warfare bullcrow.
"It is far past time to bring back the Fairness Doctrine"
I see. Liberal talk can't draw a crowd so let's penalize conservatives who can. What about NPR? MSNBC?
The fault, dear Brutus, is not in our stars but in ourselves. If you want to stop the flow of jobs offshore, beef up the EITC so that semi-skilled American workers can compete with semi-skilled Chinese, Indian or Vietnamese workers. If you want US companies to take a longer view, eliminate the facets of capital gains taxation that encourages short term churning. If you want to stimulate innovation and growth of small businesses, take away the political clout that allows big businesses to shape the regulatory landscape to their benefit.
Anyone who has ever run anything knows that people will tend to do what they are incentivized to do and avoid the things they are disincentivized to do. It ain't rocket science. But it demands careful thought.
Here's the on-topic question related to mulitple jobs, part time for economic reasons, and minimum wages.
To what extent do minimum wage and like policies (healthcare mandate, etc.) force people into part time jobs, and/or, force people into self-employed/independent-contractor etc jobs.?
Put another way, if the "risk free" employment wage is too high, that will put a lot of pressure on businesses to either replace that labor with automation, be wiped out by different forms of delivery (clothings stores wiped out by amazon just as many book sellers have been), OR force employees to be contracts/franchises etc. At which point the work comes with risk and there is NOT assurance of making any particular wage in return for your time and effort.
Let me respond to several ideas that you have packed into your short comment:
(1) I don't exactly see how the minimum wage affects FT vs. PT jobs, since it would apply equally to both job categories. Am I missing something?
(2) I agree that a minimum wage could make some low-return forms of self-employment attractive. I think there are a lot of "make money in your spare time" type jobs–maybe including Mary Kay, as in the example in the post, probably pay less than the minimum if people really added up their time.
(3) I think the literature on the minimum wage upholds most of the effects that you say, but it just says the negative effects are not very large when the minimum is as low is it now is in the US.
With respect to how a too high minimum wage might affect FT vs PT. Speculation on my part.
1. If the minimum wage is "too high" then employers might seek to change tasks from being filled by employees to being filled by contractors of one sort or another. That is, greater pressures to in effect force labor into the "lower than min wage forms of self-employment". As an example, think of hair stylists who in effect rent chairs. One could imagine a model in which clothing sales people "rent the cash register" and are in effect turned into independent contractors. There would be tax law and civil law push back, but one could also expect businesses to get ever more clever. Another structure – you don't get a job an Hokey's Awful Clothes, you buy into the partnership. You are no longer an employee, and like any partner you may make no money at all, or a very low hourly rate.
2. Simply transforming FT to PT would be associated with two things. First, non-proportonal burdens that rise with the minimum wage – healthcare being the current topic. Second, if the issue is that Sarah Hardluck's efforts really only make net revenue of say $20 per hour for about 3 hours per day, and Seattle forces you to pay her $15/hr + LNI+SS etc, then you will very likely cut her hours to 3 hours per day. Dining establishments have done this for decades. The higher the minimum wage the stronger the effect.
All of that of course assumes a minimum wage that is "too high" – and I am skeptical anybody knows what that really is. I imagine we all agree $100 per hour is too high, and $2 per hour has no effect. But "what is the right level?" seems a fraught question.
With respect to how a too high minimum wage might affect FT vs PT:
(First version of this comment got lost, and this one seems too long, I can explain more about my thinking if anybody cares.)
1. If the minimum wage is "too high" there will be greater pressure to change employees into independent contractors. Employment law and tax law resist this, but business can be ever more clever about it. It might not change the hours a person works at one "job", but would change the effective status from full-time payroll to full time self-employed doing some multi-way contract work. And so now Joe Slow is a self-employed shelf stocker who works a couple hours a day at several different places, all of which treat him like a plumber or building contractor. Likewise, the Hokey's Awful Clothing store might be reorged as a partnership – you don't get a job, you buy in as a partner. Work as "FT" as you like, but it's not a steady payroll job any more.
2. Any time the minimum wage + costs are higher than the per-hour profit of employing somebody there will be pressure to not employ them, perhaps on an hour by hour basis. So if Sara Hardluck can only net $20/hr for about 3 hours per day, and Seattle makes me pay her $15+WC+UI+SS, then she'll only be called in for 3 hours per day. Dining establishments have done this for decades. And with the quality of traffic analysis available now, one imagines almost any other retail business could do the same. Obviously, the higher the minimum wage relative to the per-hour revenue the employee makes the greater the pressure. This is a case where a minimum wage rise can at the margin force some people from FT to PT. Obviously, that only applies to a part of the work force.
Any such effect would of course be huge if the 2014 minimum wage were raised to say $100 per hour, and none of it would happen with a minimum wage of $1 per hour. But where the actual switch-over point is seems a topic fraught with politics and the risk of unintended consequences.
I guess if the minimum wage IS raised either nationally or in Seattle, we can look at the FT -> PT changes over the next few years and perhaps see how real these effects might be.