Morici to Moneynews: 'Permanently Depressed' Jobs Market Thrives on Part-Timers

Friday, 06 Sep 2013 08:56 PM

By Dan Weil and David Nelson

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Peter Morici, a Moneynews insider and professor of international business at the University of Maryland, is none too impressed with the August employment data.

Looking at the 169,000 gain in non-farm payrolls, "it's about half of what we would need under normal circumstances, and we're not even normal in circumstances," he told Newsmax TV in an exclusive interview.

"A good deal of those jobs, about three-fourths, were part-time positions. Essentially employers are dividing up full-time jobs and creating multiple part-time jobs. The Labor Department counts anybody who goes to work the same."

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It's not just the Affordable Care Act, or Obamacare, pushing employers to seek part-time rather than full-time workers, Morici says.

Editor’s Note: New Video: Obama Plans to Redistribute Seniors’ Wealth

"Something else is going on here, and that is with this permanently depressed labor market, employers, if they can get along with part-time people, it's very advantageous because there's all kinds of costs associated with full-time people in addition to healthcare benefits."

The drop in the unemployment rate to 7.3 percent from 7.4 percent in July also isn't good news. "We had more than 500,000 people decide not to look for work," Morici said. "The adult participation rate went down again."

Indeed, the labor-force participation rate, dropped to 63.2 percent in August, a 35-year low, from 63.4 percent.

"The only reason unemployment is going down is because more and more adults are either borrowing money to go back to school to get diplomas that don't do them much good, or they're middle-aged people that for one reason or another can quit looking altogether," Morici said.

So will the Federal Reserve still taper its quantitative easing soon?

"I thought it would until the events in Syria the last couple of weeks. That may color their decision," Morici said. "The Fed wants out because [Fed Chairman Ben] Bernanke wants to begin this process before he leaves in January. That's the big date."

As for who will replace Bernanke, it remains unclear, Morici says. The Wall Street Journal reported Friday that at least three Democrats on the Senate Banking Committee would oppose former White House adviser Larry Summers.

"Summers is such an irascible individual and he has teed off so many women, it's very hard to get him ratified," Morici said.

"In addition, he's teed off a lot of liberals who don't like the big banks in New York, because when he's not making sound economics, he is stuffing his pockets with their money."

Summers and Fed Vice Chairwoman Janet Yellen are seen as the favorites for the job. When it comes to Yellen, she "a frightening individual because of her inclination to put her pedal to the medal," Morici said. "We don't need an ideologue in that job."

He says that former Fed Vice Chairman Donald Kohn, the third person under consideration by President Barack Obama for the job, may end up getting the nod.

"It just depends on how much Mr. Obama wants to put somebody in there that is acceptable to a broad range of people and how much he wants to put someone in there who's acceptable to the women that want women," he said.

Editor’s Note: New Video: Obama Plans to Redistribute Seniors’ Wealth

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