Wall Street Journal
For Richard Crane, the "new normal" in the labor market began when he was laid off from a New Jersey battery plant in the summer of 2006.
Mr. Crane had been earning more than $100,000 a year operating heavy machinery at Delco, a former unit of General Motors. He worked there for 23 years, since graduating from high school. But when he lost his job he was thrust into a netherworld of part-time gigs: working the registers at Taco Bell, organizing orders at McDonald's, whatever he could find.
"I thought it would be temporary," says Mr. Crane, 49 years old. Three years later, he is selling outdoor furniture by day and pumping gas by night, while worrying about his skills atrophying and spending scant time with his teenage son. He makes about a third of his former pay.
Mr. Crane is part of a growing group of underemployed -- people in part-time jobs who want full-time work or people in jobs that don't employ their skills. Since the recession began two years ago, the number of people involuntarily working part-time jobs has more than doubled to 9.3 million, according to the federal Bureau of Labor Statistics, the highest number on record.
The proliferation of underemployed could represent a profound reordering of the employment structure. Many people who had comfortable full-time jobs with benefits and advancement opportunities now are cobbling together smaller jobs often at lower pay, in a shift that economists say could become permanent for many individuals stuck in the cycle. Underemployment, along with unemployment, is widely seen as a force slowing the economic recovery.
The trend has been building for years, says Robert Reich, who served as labor secretary under President Bill Clinton and now is a professor of public policy at the University of California, Berkeley. "For decades, workers have been watching their salaries and benefits erode," says Mr. Reich, who took an 8% pay cut last week, along with the rest of the Berkeley faculty.
"We are subjecting millions of people to a standard of living below that which they could achieve if the economy were at full capacity," he says. "Underemployment means that many more people who can't spend as much as they otherwise would."
Federal Reserve Chairman Ben Bernanke last week lamented in a speech to the Economic Club of New York that the number of underemployed is rising much faster than during previous recessions. And the average workweek has fallen to 33 hours, the lowest level in the post-World War II period.
"These data suggest that the excess supply of labor is even greater than indicated by the unemployment rate alone," Mr. Bernanke said. The unemployment rate is now 10.2%.
Among the underemployed is Marty Rasmussen of Walnut Creek, Calif., who was a banking executive for more than 15 years. He and his wife earned a combined income of more than $250,000 a year. As a hobby, he built cabinets and furniture.
Two years ago, he was laid off by a big bank in San Francisco. While job-hunting, he volunteered to build cabinets for a local Lutheran church, and some fellow parishioners hired him to do work. His onetime hobby became his sole source of income. In the last year, he earned more than $10,000 replacing windows and installing crown molding. He just finished a pair of nightstands commissioned by a friend paying $700. His wife also lost her job this year and is collecting unemployment benefits. "It is hard transitioning from hobbyist, because I'm used to giving my work as gifts," he says.
State labor officials and economists generally label the underemployed as those who are working part-time when they would prefer full-time work, as well as people who are working beneath their skill level.
Federal figures on the underemployed, however, don't count that second group -- those who are overqualified for their jobs. Still, the government's broadest measure of labor underutilization -- known as the U6 -- has more than doubled in the two years since the recession began to 17.5%, and it is up from 12% just a year ago, according to the Bureau of Labor Statistics. This means that nearly one in five people are either unemployed, involuntarily working part-time or "marginally attached" -- they want jobs but haven't searched in at least a month. It also counts "discouraged workers" who have stopped searching.
"The number would be much higher if we included the mechanical engineers working at 7-Eleven," says Heidi Shierholz, who studies underemployment at the Economic Policy Institute, a left-leaning Washington think tank.
Melanie Donahoe might be one of them. The 56-year-old mother of three who lives in Stuyvesant, N.Y, has watched her gross income as a self-employed jeweler shrink from a peak of $55,000 to $40,000 when the recession set in, to perhaps $25,000 this year. "Between the recession and the high price of gold, it just keeps slipping and slipping," she says. This summer, she signed on for work as a government census taker, which paid $15 an hour and tided her over for a few months. Then, she joined a local Lowe's as a part-time cashier, earning $9 an hour. She hopes it leads to full-time work.
After being laid off by the New Jersey battery plant in 2006, Mr. Crane took a job stocking shelves at Costco in the fall of 2006. His pay was $10.76 an hour -- the same money he earned when he was hired by Delco in 1983, just out of high school. "It's sad," says Mr. Crane, who had been earning about $28 per hour at Delco, before overtime.
In late 2007, he took a job at Lowe's while working at a series of fast-food jobs on the side, as well as a stint at Pathmark supermarket. He still works at Lowe's, earning $15.96 an hour selling lawnmowers, outdoor furniture and Christmas ornaments. At night, he pumps gas at a Quick Check for $13.70 an hour.
Typically, he works between 61 and 63 hours per week. It wouldn't be so bad, he says, if the hours were consecutive. But with the gap between jobs, he can only sleep a few hours a night now -- sometimes just an hour. Last week, he managed to clock 87 hours and barely saw his son.
"That's all I do -- every day -- I just keep working," he says. "I've got to. I'm not going to lose everything I have."
His wife, who had been a stay-at-home-mother, also took a job. She earns about $20,000 working at a nursing home.
Last year, they collectively earned of about $42,000. This year, they expect between $48,000 and $50,000.
Mr. Crane has applied for hundreds of jobs, among them sanitation worker, bridge painter, tree cutter and transit worker. There were some factory openings, he says, but they pay less than Lowe's.
Over the summer, Mr. Crane's electricity was shut off, he says. He paid the bill and had it restored. But he didn't pay the gas, which is about $175 per month. Instead, all summer, they cooked on the grill outside. Mr. Crane bought an electric hot water heater for baths and laundry. They lived that way for three months before finally turning the gas back on.
Ultimately, many economists expect the underemployment situation to improve, but not for a few years. Companies are cutting back hours, so as they pick up, they are likely to return hours to current staff before hiring new people. "This whole pool of people with reduced hours means recovery of employment is that much farther off," says Ms. Shierholz of the Economic Policy Institute.
Eventually, employment will pick up. But for people like Mr. Crane, the current situation could become permanent.
As they work part-time, they have less time to look for work. Their résumés, meanwhile, become spotty. "If you have a string of jobs beneath your skills, it erodes your resume and marketability," says Ms. Shierholz.
Mr. Crane no longer sees his new life as temporary. He no longer dreams of going and fixing equipment at the factory and operating big machines.
"My new goal is to become a manager at Lowe's," he says. "That will pay $17 an hour. I'm hoping this happens in the next couple of years, by the time my son is in high school."
Mr. Crane had been earning more than $100,000 a year operating heavy machinery at Delco, a former unit of General Motors. He worked there for 23 years, since graduating from high school. But when he lost his job he was thrust into a netherworld of part-time gigs: working the registers at Taco Bell, organizing orders at McDonald's, whatever he could find.
"I thought it would be temporary," says Mr. Crane, 49 years old. Three years later, he is selling outdoor furniture by day and pumping gas by night, while worrying about his skills atrophying and spending scant time with his teenage son. He makes about a third of his former pay.
Mr. Crane is part of a growing group of underemployed -- people in part-time jobs who want full-time work or people in jobs that don't employ their skills. Since the recession began two years ago, the number of people involuntarily working part-time jobs has more than doubled to 9.3 million, according to the federal Bureau of Labor Statistics, the highest number on record.
The proliferation of underemployed could represent a profound reordering of the employment structure. Many people who had comfortable full-time jobs with benefits and advancement opportunities now are cobbling together smaller jobs often at lower pay, in a shift that economists say could become permanent for many individuals stuck in the cycle. Underemployment, along with unemployment, is widely seen as a force slowing the economic recovery.
The trend has been building for years, says Robert Reich, who served as labor secretary under President Bill Clinton and now is a professor of public policy at the University of California, Berkeley. "For decades, workers have been watching their salaries and benefits erode," says Mr. Reich, who took an 8% pay cut last week, along with the rest of the Berkeley faculty.
"We are subjecting millions of people to a standard of living below that which they could achieve if the economy were at full capacity," he says. "Underemployment means that many more people who can't spend as much as they otherwise would."
Federal Reserve Chairman Ben Bernanke last week lamented in a speech to the Economic Club of New York that the number of underemployed is rising much faster than during previous recessions. And the average workweek has fallen to 33 hours, the lowest level in the post-World War II period.
"These data suggest that the excess supply of labor is even greater than indicated by the unemployment rate alone," Mr. Bernanke said. The unemployment rate is now 10.2%.
Among the underemployed is Marty Rasmussen of Walnut Creek, Calif., who was a banking executive for more than 15 years. He and his wife earned a combined income of more than $250,000 a year. As a hobby, he built cabinets and furniture.
Two years ago, he was laid off by a big bank in San Francisco. While job-hunting, he volunteered to build cabinets for a local Lutheran church, and some fellow parishioners hired him to do work. His onetime hobby became his sole source of income. In the last year, he earned more than $10,000 replacing windows and installing crown molding. He just finished a pair of nightstands commissioned by a friend paying $700. His wife also lost her job this year and is collecting unemployment benefits. "It is hard transitioning from hobbyist, because I'm used to giving my work as gifts," he says.
State labor officials and economists generally label the underemployed as those who are working part-time when they would prefer full-time work, as well as people who are working beneath their skill level.
Federal figures on the underemployed, however, don't count that second group -- those who are overqualified for their jobs. Still, the government's broadest measure of labor underutilization -- known as the U6 -- has more than doubled in the two years since the recession began to 17.5%, and it is up from 12% just a year ago, according to the Bureau of Labor Statistics. This means that nearly one in five people are either unemployed, involuntarily working part-time or "marginally attached" -- they want jobs but haven't searched in at least a month. It also counts "discouraged workers" who have stopped searching.
"The number would be much higher if we included the mechanical engineers working at 7-Eleven," says Heidi Shierholz, who studies underemployment at the Economic Policy Institute, a left-leaning Washington think tank.
Melanie Donahoe might be one of them. The 56-year-old mother of three who lives in Stuyvesant, N.Y, has watched her gross income as a self-employed jeweler shrink from a peak of $55,000 to $40,000 when the recession set in, to perhaps $25,000 this year. "Between the recession and the high price of gold, it just keeps slipping and slipping," she says. This summer, she signed on for work as a government census taker, which paid $15 an hour and tided her over for a few months. Then, she joined a local Lowe's as a part-time cashier, earning $9 an hour. She hopes it leads to full-time work.
After being laid off by the New Jersey battery plant in 2006, Mr. Crane took a job stocking shelves at Costco in the fall of 2006. His pay was $10.76 an hour -- the same money he earned when he was hired by Delco in 1983, just out of high school. "It's sad," says Mr. Crane, who had been earning about $28 per hour at Delco, before overtime.
In late 2007, he took a job at Lowe's while working at a series of fast-food jobs on the side, as well as a stint at Pathmark supermarket. He still works at Lowe's, earning $15.96 an hour selling lawnmowers, outdoor furniture and Christmas ornaments. At night, he pumps gas at a Quick Check for $13.70 an hour.
Typically, he works between 61 and 63 hours per week. It wouldn't be so bad, he says, if the hours were consecutive. But with the gap between jobs, he can only sleep a few hours a night now -- sometimes just an hour. Last week, he managed to clock 87 hours and barely saw his son.
"That's all I do -- every day -- I just keep working," he says. "I've got to. I'm not going to lose everything I have."
His wife, who had been a stay-at-home-mother, also took a job. She earns about $20,000 working at a nursing home.
Last year, they collectively earned of about $42,000. This year, they expect between $48,000 and $50,000.
Mr. Crane has applied for hundreds of jobs, among them sanitation worker, bridge painter, tree cutter and transit worker. There were some factory openings, he says, but they pay less than Lowe's.
Over the summer, Mr. Crane's electricity was shut off, he says. He paid the bill and had it restored. But he didn't pay the gas, which is about $175 per month. Instead, all summer, they cooked on the grill outside. Mr. Crane bought an electric hot water heater for baths and laundry. They lived that way for three months before finally turning the gas back on.
Ultimately, many economists expect the underemployment situation to improve, but not for a few years. Companies are cutting back hours, so as they pick up, they are likely to return hours to current staff before hiring new people. "This whole pool of people with reduced hours means recovery of employment is that much farther off," says Ms. Shierholz of the Economic Policy Institute.
Eventually, employment will pick up. But for people like Mr. Crane, the current situation could become permanent.
As they work part-time, they have less time to look for work. Their résumés, meanwhile, become spotty. "If you have a string of jobs beneath your skills, it erodes your resume and marketability," says Ms. Shierholz.
Mr. Crane no longer sees his new life as temporary. He no longer dreams of going and fixing equipment at the factory and operating big machines.
"My new goal is to become a manager at Lowe's," he says. "That will pay $17 an hour. I'm hoping this happens in the next couple of years, by the time my son is in high school."
