Economy

No Improvement in Gallup's Underemployment Rate in May

by Dennis Jacobe, Chief Economist

Forty-three percent of the underemployed are hopeful of finding work -- highest this year

PRINCETON, NJ -- Improvement in Gallup's underemployment rate stalled in May, at 19.1% of the U.S. workforce -- not much different from the 18.9% of April, but still better than the higher rates of earlier this year.

Underemployment in U.S. Workforce, December 2009-May 2010

Gallup's underemployment measure estimates both the percentage unemployed and the percentage of those working part-time but wanting full-time work. It is based on more than 17,000 phone interviews with U.S. adults aged 18 and older in the workforce, is collected over a 30-day period and reported daily and weekly. Gallup results are not seasonally adjusted and tend to be a precursor of government reports by approximately two weeks.

Fewer Unemployed but More Part-Time Employees Wanting Full-Time Work

Gallup's unemployment rate (not seasonally adjusted) declined to 9.4% in May from 9.7% in April and 10.4% in March. However, this improvement was more than offset as the percentage of those working part-time who want full-time work increased to 9.7% in May from 9.2% in April. The net result of these changes is that Gallup now finds more part-time workers wanting full-time work than unemployed workers.

Underemployment Components, U.S. Workforce, December 2009-May 2010

Underemployment Differs Across Demographic Groups

Looking across demographic groups for May, Gallup finds:

  • Women are more likely than men to be underemployed.
  • The percentage of underemployed generally decreases with education -- however, 13% of those with college degrees and 9% of those with postgraduate education remain underemployed.
  • More than one in four blacks and Hispanics are underemployed.
  • One in three younger Americans aged 18 to 29 are underemployed.

Underemployed by Group, May 2010

Hope Improves for the First Time This Year

For the first time in 2010, the percentage of underemployed Americans who are hopeful that they will find work in the next four weeks has exceeded 40%. May's three-point increase most likely reflects the positive impact of April's job gains on the expectations of those who remain underemployed.

December 2009-May 2010 Trend: Percentage Hopeful of Finding a Job in the Next Four Weeks

Looking Ahead to Friday's Jobs Report

The U.S. government on Friday is expected to report a surge in new jobs that could total half a million or more. Several hundred thousand of these are expected to be new, temporary census jobs -- far more than during previous months. Still, an increase in private-sector jobs is expected and consistent with Gallup's job numbers.

Consensus expectations further anticipate a modest decline in the government's unemployment rate to 9.8% in May from 9.9% in April. This is also consistent with statistical estimates based on Gallup's Job Creation Index and unemployment rate estimates, which together suggest the Bureau of Labor Statistics will report a May unemployment rate in the 9.6% to 9.9% range, depending on the seasonal adjustments and size of the workforce.

However, Gallup's finding that the underemployment rate did not improve in May, when hiring normally picks up, could be more meaningful than the addition of new jobs and even a slight decline in the unemployment rate last month. This stalling of the improvement in underemployment was first reported in mid-May and continued through the remainder of the month. In turn, this may suggest that the financial crisis in the European Union, the decline in the stock market, and the unprecedented oil spill in the Gulf are beginning to make potential employers more cautious about hiring full-time employees than they were just a month ago.

Regardless, the nation needs to expand its focus to include not only the unemployed, but also the underemployed, and build on their newly increased hope of finding full-time work. Devising a way to reduce the number of underemployed Americans far below May's 19.1% is essential to stimulating increased consumer spending and creating sustainable economic growth going forward.

Review and export the complete daily trends on these measures: Economic Indexes; Consumer Spending; Economic Outlook; Economic Conditions; Job Market; U.S. Workforce

Learn more about Gallup's economic measures.

Survey Methods

For Gallup Daily tracking, Gallup interviews approximately 1,000 national adults, aged 18 and older, each day. Gallup's underemployment results are based on more than 17,000 telephone interviews completed on a 30-day rolling basis. For these results, one can say with 95% confidence that the maximum margin of sampling error is ±1 percentage point.

Interviews are conducted with respondents on landline telephones (for respondents with a landline telephone) and cellular phones (for respondents who are cell phone only).

In addition to sampling error, question wording and practical difficulties in conducting surveys can introduce error or bias into the findings of public opinion polls.

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