Slack Work Increasing in Softened Job Market

Adding to mounting evidence of a softened job market, new Labor Department data finds that in an effort to cut costs, more and more businesses are pushing employee hours below the full-time employment threshold of 35 per week.

So-called "slack work"—involuntary part-time labor as a result of belt-tightening at a company—is at its highest level in four years: 2.9 million people worked this type of part-time hours in 2007, up 8 percent from 2006 and only second to its brief peak of 3.1 million in 2003.

Reducing working hours is a common move among companies worried about a slowdown, allowing them to stave off layoffs and retain their skilled workers by reducing their payrolls.

"This is always the quandary of a recession, that in an effort to remain profitable, a company needs to lay people off," Alex Cullen, vice president and research director of Forrester Research, told eWEEK. "There is a long precedent, dating back to my grandfather when he worked for a telephone company during the Depression, that reduced pay and hours is better than no job."

Though the number of workers put into the slack category as a result of slow business is just 8 percent, or a relatively small part of the 25 million U.S. part-time work force, the growth of this segment is typically a sign of a rising unemployment rate.

Indeed, the U.S. unemployment rate rose to 5 percent in December, up from 4.4 percent in December 2006, and at its highest level since November 2005, the Bureau of Labor Statistics reported Jan. 4.

However, the end result is that the squeeze is put on workers, who in many cases lose their benefits once their hours dip below full-time, even if they don't end up actually working much fewer hours.

"Reducing hours is very complicated, especially in IT. Few of us work for the number of hours we're paid for. It's not an easy proposition to make someone work less hours if you're not tracking their hours in the first place," said Cullen.

Cullen said that in the IT department, the only people who are likely to quickly feel the effects of the housing crisis are contractors, and even this is only happening in directly related companies.

"The only variable part of IT is project work, and the only way you see a change in this is if that part of the budget is cut. So far, we're only hearing from CIOs on the cutting edge of the recession—in housing and credit markets—that they've needed to cut discretionary spending," said Cullen.