Top Ex-White House Economist
Admits 94% of All New Jobs Under Obama Were Part-Time, by Tyler Durden,
12/23/16
Just
over six years ago, in December of 2010, we wrote "Charting
America's Transformation To A Part-Time Worker Society", in which we predicted - and showed - that in light
of the underlying changes resulting from the second great depression, whose
full impacts remain masked by trillions in monetary stimulus and soon, perhaps
fiscal, America is shifting from a traditional work force, one where the
majority of new employment is retained on a full-time basis, to a
"gig" economy, where workers are severely disenfranchised, and enjoy
far less employment leverage, job stability and perks than their pre-crash
peers. It also explains why despite the 4.5% unemployment rate, which the Fed
has erroneously assumed is indicative of job market at "capacity",
wage growth not only refuses to materialize, but as we showed yesterday, the
growth in real disposable personal income was the
lowest since 2014.
When
we first penned our article, it was dubbed "fringe" tinfoil hattery,
or in the latest vernacular, "fake news."
Fast
forward 6 years, when a report
by Harvard and Princeton economists Lawrence Katz and Alan Krueger, confirms exactly what we warned. In their study, the duo
show that from 2005 to 2015, the proportion of Americans workers engaged in
what they refer to as “alternative work” soared during the Obama era, from
10.7% in 2005 to 15.8% in 2015. Alternative, or "gig" work is defined
as "temporary help agency workers, on-call workers, contract company
workers, independent contractors or freelancers", and is generally
unsteady, without a fixed paycheck and with virtually no benefits.
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The
two economists also found that each of the common types of alternative work
increased from 2005 to 2015—with the largest changes in the number of
independent contractors and workers provided by contract firms, such as
janitors that work full-time at a particular office, but are paid by a
janitorial services firm.
Krueger,
who until 2013 was also the top White House economist serving as chairman of
the Council of Economic Advisers under Obama, was "surprised" by the
finding. Quoted
by quartz, he said “We find that 94% of net job
growth in the past decade was in the alternative work category,”
said Krueger. “And over 60% was due to the [the rise] of independent
contractors, freelancers and contract company workers.” In other words, nearly all of the 10 million jobs created between 2005 and 2015
were not traditional nine-to-five employment.
While
the finding is good news for some, such as graphic designers and lawyers who
hate going to an office, for whom new technology and Obamacare has made it more
appealing to become an independent contractor. But for those seeking a steady
administrative assistant office job, the market is grim. It also explains why
despite an apparent recovery in the labor market, wage growth has been non-existant,
due to the lack of career advancement and salary increase options for this vast
cohort which was hired over the past decade.
The
decline of conventional full-time work has impacted every demographic. Whether
this change is good or bad depends on what kinds of jobs people want. “Workers seeking full-time, steady work have lost,” said
Krueger. He then added, perhaps sarcastically, that “while many of those who
value flexibility and have a spouse with a steady job have probably gained.”
Yes,
well, spousal support aside, it also confirms another troubling finding this
website reported first earlier this month, namely that the number
of multiple jobholders has
recently hit the highest number this century.
Not
surprisingly, the study found that young workers represented the largest growth
of contractors who frequently do not receive any kind of benefits, even when
they are working full-time. The issue is particularly frustrating to employees
in the entertainment industry where media conglomerates rely on freelancers for
long periods of time without offering benefits, an arrangement frequently
referred to as “permalance.” None of these "qualitative" aspects,
however, matter to the outgoing president, who believes his administration was
a net positive for workers.
"Since
I signed Obamacare into law (in 2010), our businesses have added more than 15
million new jobs," said Obama, during his farewell press conference last
Friday.
He
did not delve into the details of just what those 15 million new jobs were. Now
we know; and we also know why the Fed is making a huge mistake in thinking it
can hike rates and tighten financial conditions, to reverse engineer wage
growth, when corporations are guaranteed to not increase wages even in response
to higher rates, as the data above confirms that the amount of slack in the
economy is vastly greater than virtually all economists are willing to admit.
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