Half A Job: Bad and Good Part-Time Jobs in a Changing Labor Market

6. How Businesses Set the Level of Part-Time Employment

How Businesses Set the Level ofPart-Time Employment 6 • PART-TIME EMPLOYMENT SPREADS QUITE UNEVENLY across industries and occupations. By major industry, the rate of parttime employment ranged from a negligible 4 percent in mining and durable manufacturing to a hefty 30 percent in trade in 1993 (Table 6.1). Major occupational groups vary even more dramatically-from 7 percent of managers to an overwhelming 61 percent of private household employees (Table 6.2). Surveys of firms indicate that the variance within industries is also large (Nollen and Martin 1978). Clearly, this variation reflects differences in how managers perceive the advantages and disadvantages of part-time employment across industries , occupations, and companies, as discussed in Chapter 5. Other researchers have conducted statistical searches for the factors that explain the highs and lows of part-time employment. The retail and insurance case studies done for this book shed additional light on the subject. In particular, they illuminate how different actors within (and outside) the firm interact to set the level of part-time employment. Previous Studies on the Amount ofPart-Time Employment Statistical studies have identified two determinants of employer demand for part-time workers: compensation differentials and quasi-fixed costs of labor. Quasi-fixed costs are those that are incurred per worker rather than per hour worked, hiring and training costs being chief examples. Quasi-fixed costs are higher per hour of part-time labor than per hour of full-time labor. Copyrighted Material 91 TABLE 6.1 Percent ofPart-Time Employment by Major Industry, 1993* Part-Time Part-time Total Industry Involuntary Voluntary Part-Time Construction 7.6 4.4 11.9 Durable manufacturing 1.8 2.2 4.1 Nondurable manufacturing 3.9 4.2 8.1 Transport, communications, 3.2 5.4 8.6 utilities Wholesale and retail trade 8.4 21.9 30.3 Finance, insurance, real estate 2.3 8.7 11.0 Service 5.9 17.6 23.6 Public administration 1.3 4.6 5.9 Mining 1.5 2.0 3.5 All industries 5.2 12.9 18.1 ' Wage and salary workers in nonagricultural industries only. Source: Data from U.S. Bureau of Labor Statistics, Employment and Earnings, January 1994. TABLE 6.2 Percent ofPart-Time Employment by Major Occupation, 1993* Part-Time Part-time Total Occupation Involuntary Voluntary Part-Time Managers 1.7 5.3 6.9 Professional 3.1 13.0 16.1 Technical 2.5 11.3 13.8 Sales 6.3 19.5 25.8 Clerical/administrative support 3.8 15.9 19.7 Private household service 19.7 41.7 61.4 Service, except private household 11.0 25.3 36.4 Craft, precision production, repair 6.0 3.2 19.2 Machine operators 5.4 3.9 9.3 Transport, materials moving 5.7 7.7 13.5 Laborers 10.9 16.7 27.7 All occupations 5.5 13.3 18.8 *Nonagricultural occupations only. Source: Data from U.S. Bureau of Labor Statistics, Employment and Earnings, January 1994. Copyrighted Material How Businesses Set the Level of Part-Time Employment 93 John Owen (1979) and Ronald Ehrenberg and his co-researchers (1988) found that employers hire more part-timers in settings where wage and fringe benefit differentials are greater. Owen also observed that the demand for part-timers goes down as the absolute wage level in a sector (after controlling for worker characteristics) increases. He speculates that high pay is linked to training, promotion, and complex organizational structures-many of the traits of primary labor markets. These features could be antithetical to the use of part-timers, since part-timers offer less payoff to training (because they both tend to stay at jobs for shorter periods and use their training for fewer hours per week) and are seen by managers as less promotable. However, James Rebitzer (1987) suggests a contrary interpretation: higher levels of part-time employment may undermine the wages of full-timers. Economist Mark Montgomery (1988), using a unique survey of over five thousand private employers, reported that lower quasi-fixed costs of employment (based on reported time spent recruiting and training employees ), smaller firm size, and a larger wage gap between part-time and full-time workers tend to lead to a higher use of part-time workers. Montgomery hypothesized that because per-worker supervision costs rise with firm size, size is a stand-in for this quasi...