US: Gallup US Payroll to Population

Thu Feb 05 07:30:00 CST 2015

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The U.S. Payroll to Population employment rate (P2P), as measured by Gallup, was 44.1 percent in January. This is statistically similar to the 44.3 percent measured in December, but it is the highest measurement of P2P for any January since Gallup began tracking the metric in 2010. January is typically one of the lowest months for P2P in any year.

The workforce participation among U.S. adults rose slightly from 66.3 percent in December to 66.7 percent in January. Since January 2010, the workforce participation rate has ranged narrowly between lows of 65.8 percent and highs of 68.5 percent. But since mid-2013 it has most often registered below 67 percent. The small uptick this past month may be another positive sign that a strengthening economy is bringing discouraged workers back into the workforce. However, workforce participation does remain below the 2010-2014 average.

Gallup's unadjusted U.S. unemployment rate rose 1.3 percentage points to 7.1 percent in January, similar to the 1.2-point rise last January. Unlike Gallup's P2P rate, which is a percentage of the total population, traditional employment metrics -- such as the unemployment rates Gallup and the U.S. Bureau of Labor Statistics (BLS) report -- are based on the percentage of the workforce. The rise in unemployment that Gallup recorded in January is partly attributable to seasonal effects -- unemployment always rises in January both in BLS figures and in Gallup's measures since 2011. January's rise in unemployment is also partly related to the rise in the number of Americans who were previously considered out of the workforce and who are now looking for new jobs. This is one scenario where a rise in unemployment may be considered "good news" economically, as more of the adult population becomes motivated to seek work even if they may not have found it quite yet.

Gallup's measure of underemployment in January is 15.8 percent, up from the level registered in December, 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 (7.1 percent) and those who are working part time but desire full-time work (8.8 percent); these two figures add to 15.8 percent due to rounding. While Gallup's measure of unemployment rose in January, the percentage working part time but who want full- time work fell slightly at the same time, resulting in a smaller half-point increase in the underemployment rate.

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.