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The Atlanta Fed's macroblog provides commentary and analysis on economic topics including monetary policy, macroeconomic developments, inflation, labor economics, and financial issues.

Authors for macroblog are Dave Altig, John Robertson, and other Atlanta Fed economists and researchers.


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September 30, 2016


A Quick Pay Check: Wage Growth of Full-Time and Part-Time Workers

In the last macroblog post we introduced the new version of the nominal Wage Growth Tracker, which allows a look back as far as 1983. We have also produced various cuts of these data comparable to the ones on the Wage Growth Tracker web page to look at the wage dynamics of various types of workers. One of the data cuts compares the median wage growth of people working full-time and part-time jobs. As we have highlighted previously, the median wage growth of part-time workers slowed by significantly more than full-time workers in the wake of the Great Recession. The extended time series allows us to look back farther to see if this phenomenon was truly unique.

The following chart shows the extended full-time/part-time median wage growth time series at an annual frequency.

Median-nominal-hourly-wage-growth-01

The chart shows that the median wage increase for part-time workers is generally lower than for full-time workers, with the average gap about 1 percentage point. The reason for the presence of a gap is a bit puzzling. Could it be that part-time workers have lower average productivity growth than full-time workers? It is true that a part-time worker in our data set is more likely to lack a college degree than a full-time worker, and the median wage level for part-time workers is lower than for full-time workers. But interestingly, a reasonably systematic wage growth gap still exists after controlling for differences in the education and age of workers. So even highly educated prime-age, part-time workers tend to have lower median wage growth than their full-time counterparts. If it's a productivity story, its subtext is not easily captured by observed differences in education and experience.

Changes in economic conditions might also be playing a role. The wage growth gap exceeded 2 percentage points in the early 1980s and again between 2011 and 2013, both periods of considerable excess slack in the labor market, as we recently discussed here. In fact, in each of 2011, 2012, and 2013, half of the part-time workers in our dataset experienced no increase in their rate of pay at all.

To explore this possibility further, it's useful to separate part-time workers into those who work part-time because of economic conditions (for example, because of slack work conditions at their employer or their inability to find full-time work) from those who work part-time for noneconomic reasons (for example, because they have family responsibilities or because they are also in school). The following chart shows the median wage growth for full-time, voluntary part-time, and involuntary part-time workers.

Median-nominal-hourly-wage-growth-02

Admittedly, there are not that many observations on involuntary part-time workers in our data set. But it does appear that their median wage growth has tended to slow by more after economic downturns than those working part-time for a noneconomic reason—at least prior to the Great Recession. After the last recession, however, the wage growth gap was just about as large for both types of part-time workers. In that sense, the impact of the last recession on the median wage growth of regular part-time workers was quite unusual.

Since 2013, median wage growth for part-time workers has been rising, which is good news for those workers and consistent with the labor market becoming tighter. With the unemployment rate reasonably low, employers might have to worry a bit more about retaining and attracting part-time staff than they did a few years ago.

September 30, 2016 in Employment , Labor Markets , Wage Growth | Permalink

Comments

I'm less interested in why a wage increase gap exists between pt and ft workers. The common sense answer would seem to be that pt workers are simply worth less and therefore would get smaller increases in addition to overall lower pay.

The more interesting item to me from the graph are the spikes in the pt wage increases. Particularly the spike that continued into the early 90s recession. Is spiking pt wage growth a sign of full employment?

Posted by: Rob | October 01, 2016 at 07:37 AM

Could you display real wage growth, instead of nominal ? The downward slope of the graph is probably caused by falling inflation, and removing it would make it clear to see recession patterns.

Posted by: Felipe | October 04, 2016 at 05:39 PM

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