Economy

At 18.6%, Underemployment at Lowest Level of the Year

by Dennis Jacobe, Chief Economist

Unemployment falls to 9.1%; part-time workers wanting full-time work falls to 9.5%

PRINCETON, NJ -- The underemployment rate, as measured by Gallup, fell from 19.2% in mid-May to 18.6% in mid-June, its lowest level of the year.

Underemployment, January-June 15, 2010

Gallup's underemployment measure includes both the unemployed and 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, collected over a 30-day period and reported daily and weekly. Gallup's results are not seasonally adjusted and tend to be a precursor of government reports by approximately two weeks.

Fewer Unemployed, Fewer Part-Time Employees Wanting Full-Time Work

The unemployment component of Gallup's underemployment rate (not seasonally adjusted) continues to improve, declining to 9.1% in mid-June from 9.4% in mid-May. Gallup's unemployment rate was as high as 10.3% just two months ago. At the same time, the percentage of employees working part time who want full-time work fell to 9.5% in mid-June from 9.8% in mid-May.

Underemployment Components, January-June 2010

However, Job Creation May Be Slowing

Gallup's Job Creation Index, a separate measure of the job market based on the self-reports of working Americans, is at +6 for the week ending June 13. This is a relatively positive read compared with the beginning of the year, but is down from +8 the prior week and +9 in late May. As of mid-June, 28% of employees report that their companies are hiring, while 22% say their companies are letting people go.

Job Creation Index, January-June 15, 2010

Assessing the Job Market

The jobs picture seemed to sour at the end of May, as the improvement in Gallup's underemployment rate stalled, and the government reported that far fewer private-sector jobs were created than many had hoped. While the Labor Department also reported an improvement in the unemployment rate, as anticipated by Gallup's job measures, the markets seemed to discount this improvement because the government's hiring of more than 400,000 temporary census workers affected the May numbers. Further, the disappointment over the lack of private-sector job growth (based on the government's establishment survey) relative to street expectations tended to drown out any discussion of the decline in the unemployment rate.

Regardless, Gallup's mid-June results are a precursor of what the government is likely to provide in its June jobs report. The improvement in both components of underemployment -- the unemployment rate and the percentage of part-timers looking for full-time work -- during June is good news for the U.S. economy. Getting more people employed, particularly on a full-time basis, increases consumers' financial wellbeing as well as consumer spending.

On the other hand, Gallup's Job Creation Index, which had been signaling steady improvement in the jobs picture during April and much of May, declined a little during the first half of June. This is not unexpected, given the sharp increase in economic uncertainty created by the financial crisis in Europe, the decline in the U.S. stock market, and the problems in the Gulf. Given such conditions, it would not be surprising if some employers decided to hold back on their hiring, regardless of their companies' currently perceived needs.

In sum, Gallup's job measures continue to suggest a slow, moderate improvement in the jobs situation -- not the sharp surge in jobs some may have hoped for not long ago.

Gallup.com reports results from these indexes in daily, weekly, and monthly averages and in Gallup.com stories. Complete trend data are always available to view and export in the following charts:

Daily: Employment, Economic Confidence and Job Creation, Consumer Spending
Weekly: Employment, Economic Confidence, Job Creation, Consumer Spending

Read 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. Gallup's Job Creation Index is based on more than 3,000 telephone interviews completed on a weekly basis. For these results, one can say with 95% confidence that the maximum margin of sampling error is ±3 percentage points.

Interviews are conducted with respondents on landline telephones and cellular phones, with interviews conducted in Spanish for respondents who are primarily Spanish-speaking. Each daily sample includes a minimum quota of 150 cell phone respondents and 850 landline respondents, with additional minimum quotas among landline respondents for gender within region. Landline respondents are chosen at random within each household on the basis of which member had the most recent birthday.

Samples are weighted by gender, age, race, Hispanic ethnicity, education, region, adults in the household, cell phone-only status, cell phone-mostly status, and phone lines. Demographic weighting targets are based on the March 2009 Current Population Survey figures for the aged 18 and older non-institutionalized population living in U.S. telephone households. All reported margins of sampling error include the computed design effects for weighting and sample design.

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.

For more details on Gallup's polling methodology, visit www.gallup.com.

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