Part-time workers a full-time headache on Yellen radar

Federal Reserve Chair Janet Yellen has a stubborn warning light blinking on her labor market dashboard: A group of Americans larger than Washington state’s population can find only part-time work.

As Yellen heads to this week’s Fed symposium in Jackson Hole, Wyoming, where the focus will be on the labor market, those 7.5 million part-time workers who want full-time jobs are inflating the broad measure of underemployment she watches to gauge job market health. Involuntary part-time workers have gained by 325,000 from February’s five-year low.

With employment and inflation nearing Fed goals, Yellen has consistently cautioned some labor market measures still show enough slack to warrant keeping interest rates low. In the shadow of the Teton Range of the Rocky Mountains, she’ll have a chance to highlight soft spots such as the crowded pool of part-timers as investors try to decipher the timing of the Fed’s first interest-rate increase since 2006.

“We still have quite a long ways to go,” said Aneta Markowska, chief U.S. economist at Societe Generale SA in New York. In the discussion of monetary policy, “I’d be surprised if the message is anything other than dovish.”

Yellen, 68, is delivering a speech titled “Labor Markets” at the Jackson Hole symposium Aug. 22 at 10 a.m. New York time. The three-day meeting of central bankers and economists begins Aug. 21 with a topic of “Reevaluating Labor Market Dynamics.”

Some previous conferences there have foreshadowed some of the Fed’s biggest policy shifts since the financial crisis. In 2010 and 2012, then-Chairman Ben S. Bernanke signaled new bond buying that has pumped up the Fed’s balance sheet to a record $4.43 trillion.

Heading into this year’s Jackson Hole assembly, the labor market is giving off mixed signals even as unemployment falls. About 28 percent of all part-time workers in July reported that slack business conditions or a dearth of full-time jobs kept them from finding full-time work. That’s up from a 19 percent share at the start of the downturn.

The high share of workers who are part time for economic reasons is one reason that the Labor Department’s broadest measure of unemployment remains far above its 8.8 percent pre-recession level. U6 unemployment, which includes involuntarily part time and discouraged job seekers in addition to the jobless, is 12.2 percent, or almost double the 6.2 percent level of the main unemployment rate. Both increased by 0.1 percentage point in July from five-year lows in June.

About 4.62 million Americans worked part time for economic reasons in December 2007, the start of the 18-month recession. The level peaked at a record 9.22 million in March 2010, five months after unemployment reached a 26-year high of 10 percent. (Bloomberg)