Hidden Unemployment Increasing
There's more than one way to push people out of the workforce and out of the mainstream. One of the most cost-effective ways is to move people from full-time to part-time work. These people don't inflate and enlarge the unemployment figures because they are at least marginally employed, and they tend not to cost employers too much money, because in many companies, part-time employees are ineligible for health insurance.
But as reported in the New York Times today, part-time employees aren't reliable consumers, and part-time work is often the first step down the slide into poverty:
The number of Americans who have seen their full-time jobs chopped to part time because of weak business has swelled to more than 3.7 million -- the largest figure since the government began tracking such data more than half a century ago.
The loss of pay has become a primary source of pain for millions of American families, reinforcing the downturn gripping the economy. Paychecks are shrinking just as home prices plunge and gas prices soar, furthering the austerity across the nation.
"I either stop eating, or stop using anything I can," said Marvin L. Zinn, a clerk at a Walgreens drugstore in St. Joseph, Mich., who has seen his take-home pay drop to about $550 every two weeks from about $650, as his weekly hours have dropped to 37.5 from 44 in recent months.
Mr. Zinn has run up nearly $2,000 in credit card debt to buy food. He has put off dental work. He no longer attends church, he said, "because I can't afford to drive."
On the surface, the job market is weak but hardly desperate. Layoffs remain less frequent than in many economic downturns, and the unemployment rate is a relatively modest 5.5 percent. But that figure masks the strains of those who are losing hours or working part time because they cannot find full-time work -- a stealth force that is eroding American spending power.
All told, people the government classifies as working part time involuntarily -- predominantly those who have lost hours or cannot find full-time work -- swelled to 5.3 million last month, a jump of greater than 1 million over the last year.Workers who see their pay cut in half and their benefits terminated are more likely to accumulate debt just to make ends meet. They're more likely to put off medical and dental checkups and procedures. They're more likely to enter foreclosure. And this benefits overall American society -- how? Yes, reduced payroll costs can help companies get through the quarter without causing Jim Cramer to jump up and down and screech about them on his television show. But is this the best solution for reduced profits? Or are companies just killing the goose that laid the golden egg.