Half a Job Is Better Than None at All

August 7, 2011

For release Aug. 10 and thereafter (682 words)

Low wages, earned part-time, are often ridiculed by those who do not have to justify their employment week by week. Most part-timers, though, maintain their skills, work legitimately, report taxable income and contribute payroll taxes. Their meager earnings buy groceries and pay for utilities. For many, part-time work is an entry or bridge to full employment. For others, it is a choice or the next best option.

Over eight percent of Indiana’s labor force needs jobs. Writing resumes, getting “dressed for success,” beating the sidewalks and going to interviews seem like a black hole. Many believe that their talents meet or exceed those with jobs and benefits, but there is no way to signal their willingness and availability to potential employers. Wage rigidities preclude competing with the presently employed.

It also is the case that about another 10 percent of Indiana’s labor force consists of those who hold part-time positions. These individuals are not included in unemployment statistics. Some work multiple jobs. They earn, for example, less than $20,000 a year in stores and restaurants, on farms, care-giving, consulting and substitute teaching.

Those unemployed and partially employed from good union-member households are conflicted. They were raised in homes where paychecks were steady, health benefits generous and pensions accumulated. But now they are on the outside looking in. Sure, they seek a well-paid position with benefits; they hope and pray that someone in their household lands such a job. They never give up hope of one day being on track for a job with full benefits. If successful, some would be willing to pay dues for collective bargaining to personally benefit themselves and their families. Meanwhile, they must explore other options such as part -time employment.

Well-meaning Americans are concerned about the marginally employed. They worry about exploitation for those they consider to be tied into “dead-end” jobs. Such concerns are legitimate, but potential  exploitation exists in any job, with or without benefits. The best employee protection against exploitation is the possibility of walking out and finding another job.

How can any individual earning part-time wages and frequently changing jobs possibly have sufficient savings to maintain his or her standard of living on retiring? The challenge, according to economist Martin Feldstein, is to assure all employees, not merely those with employer-matched contributions, that they are able to accumulate investment accounts to supplement Social Security and Medicare.

Suppose that once a year full- or part-time workers could designate on his or her federal income tax return one private broad-based mutual fund from a list approved by government. In addition to current payroll taxes, an employer would additionally remit anywhere from five percent to fifteen percent of that individual’s salary. This amount would be forwarded to the designated fund where it would grow untaxed until retirement or remitted the following year at the worker’s request. This is similar to plans presently in place in Chile, the United Kingdom and Australia. Presently, each of these countries is experiencing a lower unemployment rate than the U.S.

There is indeed the belief that the availability of part-time positions drives wage compensation and work conditions down. It is more likely the case that employers just don’t care whether their employees work either full or part time, with or without benefits. What they do care about is revenue earned from the sale of their products and their total labor costs.

With respect to jobs, one size does not fit all. Employees, employers and their associations need to hammer out mutually beneficial agreements differentiated by the needs of particular industries and those willing to work in them. Laws micro-managing employment conditions are inimical to job creation. Indiana legislators, however, can work to maintain an environment where jobs have a chance of flourishing.  

What is the solution to less than full employment? It is to maintain the historic flexibility of U.S. labor markets. There always will be “bumps in the road,” but we do not want a rigid two-tiered system of those who never have to think about the next paycheck and those who never have the chance to earn one.

Maryann O. Keating, Ph.D., an adjunct scholar of the Indiana Policy Review Foundation, is co-author of Microeconomics for Public Managers, Wiley/Blackwell, 2009.


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