Jul 15, 2009

Involuntary Part-Timers Would Boost the Unemployment Rate

In the past few weeks, we've heard a lot about the unemployment rate. By the end of June, the jobless rate reached 9.5%, the highest it has been in more than 25 years. This data put the kibosh on all the talk from just a month earlier that things were looking up because the economy had lost fewer jobs than expected in May.

The unemployment rate counts only those who are able to work, available to work, looking for work, and not working at all. But what about all of those who are working less than they would like to be, whether because of losing one part-time job, being forced from full time to part time, or taking an hours cut? The New York Times crunched those numbers, and today told us just how high the jobless rate would be if these folks were included: 20% or higher -- that's one in every five workers -- in the states of California, Oregon, Rhode Island, South Carolina, and Michigan. The article said that the rate could reach 25% by the end of the summer in California. Ouch.

The problem of underemployment is highlighted by statistics showing that the aggregate weekly hours worked by private employees in this country has declined to the lowest level since 1964. In fact, most of us are working fewer hours per week now than we were a year ago, according to data from the Bureau of Labor Statistics.

One reason for this decline is that employers are cutting employee hours across the board -- in the form of temporary reductions or unpaid furloughs -- as a way to lower payroll costs and avoid layoffs. Most of the working stiffs I know have faced wage cuts, hour cuts, or both, and have accepted them gracefully, knowing that these measures are helping save jobs.

But employers beware: A recent spate of articles warns that there is currently some legal confusion -- and therefore, a stronger possibility of lawsuits -- over how furloughs can be implemented without running afoul of wage and hour laws. And that's assuming employees really aren't working during the hours for which they aren't being paid. Some experts even advise making sure employees can't work while on furlough by requiring them to leave their company-issued laptops, BlackBerrys, and phones at work. The web is sufficiently tangled that it makes sense for employers considering furloughs to consult first with an experienced employment lawyer.