The Pandemic Push on Part-time Employment

by Christopher Rich

May 24, 2021

The vast majority of businesses in the United States have felt a negative effect from the Coronavirus pandemic. Roughly 90% of U.S. firms reported either a large negative effect (51.4%) or a moderate negative effect (38.5%) during the week ending May 2, 2020, according to the Census Bureau’s Small Business Pulse Survey (SBPS). The SBPS is a weekly survey developed to measure changing business conditions during the pandemic. The survey asks single location establishments a variety of questions and the results are published weekly for the state and national levels.

Reports of a moderate effect have averaged roughly 45% nationally since the week ending June 13, 2020. Reports of a large negative effect tapered down during the year to reach the most recent level of 27% for the week ending April 18, 2021. Oregon firms made similar reports during the year with 47% reporting a large negative effect during the week ending May 2, 2020 and 41% reporting a moderate negative effect. Reports of a moderate negative effect have remained consistent, bouncing around in the mid to high 40% range since May 16, 2020. Reports of a large negative effect continued over the year, but tapered to 23% by the week ending April 18, 2021.

Varied Negative Effects Call for Varied Responses

Negative effects come in a variety of forms. On average, roughly 40% of Oregon establishments reported domestic or foreign supplier delays, a difficulty finding alternative suppliers, or production delays between August 2020 and April 2021 (the period of time the SBPS asked this question). Operating capacity decreases of less than 50% were reported by 27% to 41% of establishments, while capacity decreases greater than 50% were reported by 11% to 21% of establishments during the same period. Temporary closures were reported by 2% to 10% of establishments between November 16, 2020 and February 28, 2021, with the largest number of closures reported during the week ending November 29. A decrease in revenues was reported by nearly 69% of Oregon establishments during the week ending May 2, 2020. This dropped to 25% during the week ending August 29, rose to roughly 40% between November 9 and February 21, and has been reported by about 20% of establishments since March 1, 2021.

How a firm handles a market disruption is largely dependent on the firm and the nature of the disruption. Supplier delays, operating capacity limitations, mandated closures, demand craters, and establishment level COVID outbreaks have been met with different responses from different establishments during the pandemic. Regardless of the response, however, a negative impact on a business is likely to have a negative impact on employees. The clear result has been the large loss in employment seen across the United States and in Oregon. However, firms are not necessarily relegated to a binary response, because the relationship between employers, employees, demand, and revenue is complex enough that it leaves more choices than to simply employ or layoff a worker. Changes in part-time employment provide another view into these complicated dynamics. 

Firms Don’t Prefer to Let Workers Go

Two questions on the Small Business Pulse Survey suggest that establishments prefer to reduce hours for workers rather than let them go altogether. For the week ending May 2, 2020, 48% of Oregon establishments reported a decrease in the total number of hours worked by paid employees, whereas 29% reported a decrease in the number of paid employees. The share of establishments reporting a decrease in employees bounced between 7% and 19% each week from May 10, 2020 to April 11, 2021 and was mostly on the lower end of the spectrum. The share of establishments reporting a decrease in number of hours worked was between 20% and 30% each week for most of the same period.  
Average weekly hours for private-sector employees in Oregon fell to 33.8 hours in 2020 from 34.0 hours in 2019, as reported by the Bureau of Labor Statistics. This marks the lowest average for weekly hours since 2013 when this measure of employment activity slumped to 33.7 hours. Weekly hours had dropped to a low of 33.2 in 2009 during the Great Recession, but since then had risen to a relative high point and from 2015 through 2019 remained at 34.0 or above.

On a seasonally adjusted monthly basis, average weekly hours has been below 34 during the entirety of the pandemic, except for in August (34.3) and November (34.1). Weekly hours dropped to 32.9 in April 2020 at the onset of the pandemic and sank to 32.6 (the lowest point) in September when outdoor activities began to cool and school closures held off what would typically be a seasonal spike in weekly hours. Weekly hours has remained below 34 through the first three months of 2021. 
Jump in U-6 Shows Part-time Increase

The most widely known measure of labor market impacts, the unemployment rate, reveals one way in which employees were impacted as firms faced market disruptions throughout the year. Oregon’s average annual unemployment rate jumped to 7.8% in 2020; the rate was just 3.8% in 2019 and 4.1% in 2018 and 2017. The national unemployment rate jumped to 8.1% in 2020 from 3.7% in 2019. For Oregon, this means the number of unemployed more than doubled to 165,300 in 2020 from 79,800 in 2019. The unemployment rate, also known as U-3, includes all jobless persons who are available to take a job and have actively sought work in the past four weeks. What U-3 fails to reflect, however, are more nuanced changes in labor underutilization that occur in the labor market. For this we turn to U-6, the broadest measure of labor market underutilization.  

U-6 includes the unemployed (as seen in U-3) as well as workers employed part-time for economic reasons, and those marginally attached to the labor force. Workers employed part-time for economic reasons are those who would prefer to work full-time (35 or more hours a week) yet are working one to 34 hours a week because of slack work, business conditions, or because they are unable to find a full-time job. People marginally attached to the labor force are not working, but indicate that they would like to work, are available to work, and have looked for work at some time during the past 12 months, even though they have not sought work in the past four weeks. Oregon’s U-6 jumped to 13.9% in 2020 from 8.0% in 2019. The rate was 8.3% in 2018 and 2017. The national U-6 rate jumped to 13.6% in 2020 from 7.2% in 2019.
Separating the three categories of U-6 allows us to peek at how workers have been affected by market disruptions, other than unemployment. The number of part-time workers in Oregon jumped by 30,000 during the pandemic, moving to 104,700 in 2020 from 74,600 the year prior. The number of people marginally attached to the labor force nearly doubled, moving to 28,400 in 2020 from 15,800 the year prior. On a not seasonally adjusted quarterly basis, Oregon saw its lowest number of workers involuntarily employed part-time during fourth quarter 2018. This was at the bottom of a long downward trend that began in fourth quarter 2009 when the number of involuntarily employed part-time workers was at its highest point, 160,800. The number of workers employed part-time for economic reasons had already been rising since 2018, averaging 74,900 during the three months just prior to the pandemic (first quarter 2020), but the pandemic quickened the pace dramatically and pushed the number of part-time workers to the last recorded level of 107,000 in first quarter 2021. 

Until We’re Fully Open for Business

Employment has regained some footing and the unemployment rate has receded as establishments find a way to say yes to operations in the face of the coronavirus. Employers and employees continue their complex relationships. Firms continue to fight varied market disruptions, eager to add back employment, doing what they can to retain workers they’d rather not let go. As a result, part-time employment remains elevated and weekly hours remain subdued.

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