1b9a9e2 Black Box Intelligence (formerly TDn2K)’s “State of the Industry” quarterly member webinars feature a special industry guest to share their insights and prediction about the restaurant industry. Today, our Q2 webinar, we were lucky to have economic expert Joel Naroff share his insights. Joel L. Naroff is President and Chief Economist at Naroff Economic Advisors; a strategic economic consulting firm that advises corporations and financial institutions on the risk and opportunities economic developments can have on the organization’s operating environment.

If you missed part one, you can view it here

Q: In the past we have pegged forecasts for improving restaurant sales to real disposable income? Is that still a relevant metric?

Over the long-term, real disposable income is key. However, we may be in a period where income gains, regardless of the level of inflation, may be the key factor in consumer spending. It has been so long that many workers have received wage increases that a rise in compensation could lead to an outsized rise in spending. As people feel better about their income situation and rising wages would do that, restaurant sales should follow.

Q: Are there good statistics available about full vs. part time employment? Is the growth in jobs really being fueled by part time? How does that impact the economy long term?

There are good data on full vs. part time jobs in the monthly employment report or on the Bureau of Labor Statistics website. The first thing to keep in mind is that the data on job gains and the data on full vs. part-time jobs come from two different data sets so they are not comparable.

That said, if we do use the numbers in the two data sets, the numbers do not show that most jobs created are part-time jobs. The total number people holding part-time jobs increased by 198,000 between June 2013 and June 2014. The total number of jobs created was 2.5 million. In other words, 8% of the jobs created might be ascribed to part-time positions but part-timers make up about 19% of the workforce. The conclusion, if you want to mix and match the data sets, is that part-time employment is actually growing more slowly than full-time positions. I simply prefer to stay out of the discussion since I don’t think the comparisons make any sense.

Q: Is there a new definition of “full employment”?

The definition of “full employment” has not change but two things have: The perceived level and view of what is an unemployed worker. Economists peg the “full-employment” unemployment rate at a level that is related to the growth in the labor force and “friction” in the market. Anything that allows people or businesses to find each other more easily, lowers the rate. The Internet has done that. On the other hand, people who cannot sell their homes are not free to take jobs anywhere and that increases friction and increases the full-employment rate.

As for the perceived level, economic changes and the politicization of economic data have brought in other issues such as labor force participation rates, the number of long-term unemployed and the number of people who work part-time but want to work full-time. Unfortunately, it is not the number that matters but why that number is where it is that is critical and few understand what are the real underlying trends.

I believe the unemployment rate is a decent measure of labor market tightness, given my study of the reasons for the high levels of long-term unemployed, part-time workers and declining participation rates.

Economists currently put the “full employment” rate at roughly 5.5%. We could reach that level within a year. But before that rate is hit, labor shortages in regions, industries and occupations will start appearing.

You can read more about our conversation with Joel here

If you are interested in receiving information about future webinars contact Sarah Atkinson [sarah.atkinson@tdn2k.com]