Gallup Finds Underemployment at 18.3% in June, a 2010 Low

by Dennis Jacobe, Chief Economist

Job Creation Index suggests net hiring in the federal government is lower, but strong

PRINCETON, NJ -- Underemployment, as measured by Gallup, fell to 18.3% of the U.S. workforce in June -- down from 19.1% in May, and a new 2010 low.

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

Gallup's underemployment rate has two components: the percentage unemployed and the percentage of those working part time but wanting full-time work. It is reported on the basis of 30-day rolling averages and includes interviews with approximately 17,000 U.S. adults aged 18 and older in the workforce. Results are not seasonally adjusted and tend to be a precursor of government reports by approximately two weeks.

Declines in Unemployment, Part-Time Employees Wanting Full-Time Work

Unemployment, as measured by Gallup, was 9.2% in June -- down from 9.4% in May and 10.8% in January. At the same time, the percentage of those working part time who want full-time work also declined, to 9.1% in June from 9.7% in May. The net result is that June's underemployment rate is the lowest of the year to date.

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

Job Creation at Best Level of Year, but Federal Hiring Creates Distortions

Gallup's Job Creation Index, a separate measure of the job market based on the self-reports of working Americans concerning their employers, was at +8 in June -- its highest level since October 2008. Twenty-nine percent of employees last month reported that their employers are hiring, while 21% said their employers are letting people go.

Job Creation, December 2009-June 2010 Trend

As Gallup has reported, hiring reports vary between government and nongovernment workers, and by level of government as employer. Specifically, a higher percentage of federal employees than of state and local employees or nongovernment workers reported that their employers were hiring in June. However, federal employees were more likely in June than in May to report that people were being let go -- probably as temporary census workers were finishing up. As a result, the Job Creation Index was higher for the nongovernment sector last month than for the federal government -- a major change from April and May.

Job Creation Index, by Type of Employer, April-June 2010 Trend

How Gallup's Findings Relate to Friday's Jobs Report

Statistical analysis based on Gallup's underemployment rate and Job Creation Index suggests the Bureau of Labor Statistics Friday morning will report a June unemployment rate in the 9.5% to 9.7% range, depending on the seasonal adjustments and size of the workforce. This contrasts with the consensus expectation of a slight increase in the U.S. unemployment rate, to 9.8%.

Of course, the jobs situation is somewhat muddied by the recent hiring and then letting go of several hundred thousand new, temporary census workers. Gallup Daily tracking data seem to be picking up, at least in part, this hiring and then departure of these temporary federal employees during recent months. However, Gallup's Job Creation Index reflects only the percentage of employers hiring and firing, but does not attempt to measure the magnitude of such hiring and firing.

In this regard, ADP reported Wednesday that private-sector jobs grew by just 13,000 in June -- far less than the markets expected, and bad news for an already shaky stock market. The increase in jobless claims on Thursday added to the negative jobs picture. Further, Gallup's job creation data suggest that state and local governments continue to let go far more employees than they are currently hiring. So, it is possible that the unemployment rate would decline on Friday while job growth (based on the establishment survey), excluding federal census takers, could be anemic -- somewhat similar to what happened in May.

Whatever the government reports on Friday, the nation needs to increase its focus on private-sector job creation -- and include not only the unemployed but also the underemployed. Despite perceptions of a poor job market, the percentage of underemployed Americans who are hopeful that they will find work in the next four weeks now stands at 42%.

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

It is important that this level of optimism among the underemployed be increased during the months ahead, because Gallup data show the underemployed to be particularly vulnerable to stress and illness. A decline in "hopefulness" may mean not only increased hardship for these individuals and a further expansion of the social safety net, but also another challenge to the viability of the economy going forward.

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 approximately 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 15,000 telephone interviews completed on a monthly basis. These results are based on interviews conducted June 1-30, 2010. 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 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

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