Underemployment is at 18.3% -- an improvement from May but the same as in June 2010
PRINCETON, NJ -- Unemployment, as measured by Gallup without seasonal adjustment, is at 8.7% at the end of June -- similar to the 8.9% in mid-June, but down from 9.2% at the end of May. It is also lower than it was during the same period a year ago.
The percentage of workers who are part time but want full-time work is 9.6% at the end of June -- an improvement from 10.0% at the end of May, but not from a year ago (9.1%).
Underemployment Down Slightly, but Matches June 2010
Underemployment, a measure that combines the percentage of unemployed with the percentage working part time but wanting full-time work, is 18.3% at the end of June -- down from 19.2% at the end of May. Nevertheless, underemployment is just as high now as it was at the end of June 2010.
Gallup's U.S. unemployment rate suggests something of a modest improvement in real job market conditions in June 2011 compared with the end of May and June 2010. This may partly result from a seasonal increase in employer hiring; Gallup's data do not adjust for such changes. However, as noted in mid-June, seasonal factors may not explain everything. In this regard, the year-over-year improvement in Gallup's unemployment data seems to imply that the real U.S. unemployment situation is probably a little better than government data indicate.
However, the improvement Gallup finds in the unemployment rate masks what the underemployment rate reveals: an even more modest improvement in the employment situation. Underemployment remains at 2010 levels. In essence, year over year, the decrease in the unemployment rate has been offset by an increase in the number of employees working part time but looking for full-time work. Although it is better to have part-time work than none at all, this is not a real solution to today's unemployment problem.
Often in the past, an increase in part-time jobs has been seen as a positive sign for the job market, as employees would progress from part-time to full-time jobs, and the unemployed would in turn take those part-time jobs. However, this may not be happening in 2011, with the underemployment rate remaining at year-ago levels instead of declining, as should be true in an improving job market.
It could be that many businesses are still cautious about the prospects for the U.S. economy -- particularly in light of the current "soft patch" -- and are engaging part-time workers so as to delay hiring more full-time employees until these businesses have more economic visibility. If this is the case, any improvement in jobs is fragile. While Gallup's Job Creation Index suggests a slight improvement in net hiring, Wednesday's Challenger report showed a second straight monthly increase in announced company layoffs during June -- another potential indicator of this job market fragility.
How the U.S. lowers the unemployment rate is nearly as important as the goal of lowering that rate. That is, real improvement in the job situation will be seen only when unemployment and underemployment decline simultaneously.
Author's note: When the government reports the U.S. unemployment rate on Friday, it will be referencing data collected during mid-June. As a result, its findings are most likely to correlate with the results Gallup reported at mid-month, suggesting little or no improvement in the seasonally adjusted unemployment rate from May's 9.1% -- which matches the consensus forecast for June.
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Gallup classifies American workers as underemployed if they are either unemployed or working part time but wanting full-time work. The findings reflect more than 18,000 phone interviews with U.S. adults aged 18 and older in the workforce, collected over a 30-day period. Gallup's results are not seasonally adjusted and are ahead of government reports by approximately two weeks.
Results are based on telephone interviews conducted as part of Gallup Daily tracking from June 1-30, 2011, with a random sample of 18,543 adults, aged 18 and older, living in all 50 U.S. states and the District of Columbia, selected using random-digit-dial sampling.
Interviews are conducted with respondents on landline telephones and cellular phones, with interviews conducted in Spanish for respondents who are primarily Spanish-speaking. Each sample includes a minimum quota of 400 cell phone respondents and 600 landline respondents per 1,000 national adults, with additional minimum quotas among landline respondents for gender within region. Landline telephone numbers are chosen at random among listed telephone numbers. Cell phone numbers are selected using random-digit-dial methods. 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, and phone status (cell phone only/landline only/both, cell phone mostly, and having an unlisted landline number). Demographic weighting targets are based on the March 2010 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.