December U.S. payroll to population employment rate (P2P) was 44.3 percent in December, virtually unchanged from November's 44.2 percent. The percentage of Americans employed full time for an employer in 2014 did not show a steep end of year decline as it did in 2012 and 2013, offering hope that the P2P metric may strengthen more in the new year.
Workforce participation among U.S. adults dipped slightly from 66.9 percent in November to 66.3 percent in December. Workforce participation measures the percentage of adults aged 18 and older who are working, or who are not working but are actively looking for work and are available for employment. Workforce participation generally falls in the fourth quarter as retirements and layoffs are often pegged to the end of the year. The workforce participation rate has ranged narrowly between lows of 65.8 percent and highs of 68.5 percent since January 2010, but the 66.3 percent in December is among the lowest figures recorded in that time span. Workforce participation since mid-2013 has most often registered below 67 percent, whereas in prior years it was typically higher than that. This pattern reflects both a growing retiree population and declining participation among those still in their prime working years.
Gallup's U.S. unemployment rate represents the percentage of adults in the workforce who did not have any paid work in the past seven days, for an employer or themselves, and who were actively looking for and available to work. Gallup's unadjusted U.S. unemployment rate fell to 5.8 percent in December, continuing a relatively steady decline over the past 12 months, and reaching a new low in Gallup's five year trend.
Gallup's measure of underemployment in December is 15.1 percent, unchanged from November, but still lower than what Gallup has measured in prior years. Gallup's U.S. underemployment rate combines the percentage of adults in the workforce who are unemployed (5.8 percent) and those who are working part time but desire full-time work (9.3 percent). While Gallup's measure of unemployment fell slightly in December from November, the percentage working part time but who want full-time work rose the same amount, leaving the combined underemployment rate the same.
Gallup tracks daily the employment status of the U.S. population and the workforce using a set of questions designed to measure U.S. employment accurately, in accordance with International Conference of Labour Statisticians standards. Based on an individual's responses to the question series (some of which are asked of only a subset of respondents), Gallup classifies respondents into one of six employment categories: employed full time for an employer; employed full time for self; employed part time, but do not want to work full time; employed part time, but want to work full time; unemployed; and out of the workforce.
Payroll to Population is a measure of those who are employed by an employer for at least 30 hours per week, and is calculated as a percentage of the total population.
Underemployed respondents are employed part time, but want to work full time, or are unemployed. Unemployed respondents are those within the underemployed group who are not employed, even for one hour a week, but are available and looking for work. Unemployment and underemployment are calculated as a percentage of the workforce.
Because results are not seasonally adjusted and there are methodological differences in data collection, they are not directly comparable to BLS numbers. However, the two measures are correlated, and Gallup's employment metrics follow the general BLS trend. Gallup reports P2P and underemployment at the state level on a semiannual basis.
Gallup unemployment data -- collected daily since 2010 -- are correlated with unemployment rates reported by the BLS. Gallup's unique Payroll to Population employment measure gives a clear picture of the employment situation for the entire U.S. population, without the complexity of the frequently changing size of the workforce. When U.S. workforce size decreases, unemployment rates can actually improve, even though fewer people are working. In contrast, Payroll to Population declines when fewer people are working full time, and rises when more people find full-time work
Unlike unemployment rates, the P2P percentage provides information about economic energy. For example, increasing retirement rates, such as will happen as those in the U.S. baby boomer generation move through their 60s into their 70s, will result in a lower overall P2P value unless there is an unusually high influx of immigrants. This means fewer people are sustaining the economy or contributing to the tax base. This decline in employment, which goes undetected in traditional employment measures, could have significant consequences. Alternatively, an increase in P2P rates can lead to sustained economic growth.
Additionally, the U.S. government's BLS calculations involve seasonal and other adjustments each month. While valuable, these can mask underlying trends. Traditional unemployment metrics count Americans who are working at least one hour per week as employed. In contrast, Payroll to Population will increase or decrease only if there is a change in the number of Americans working at full-time jobs.