US: Gallup Good Jobs Rate

September 1, 2016 01:00 CDT

level 46.5

August Gallup Good Jobs (GGJ) rate was 46.5 percent, down from the record high 47.1 percent reached in July, but still higher than any other monthly rate Gallup has recorded since measurement began in 2010. GGJ typically peaks in the midsummer months of June and July and begins to fall in August, so this decrease is in line with the typical seasonal pattern. The current rate is also 1.2 percentage points higher than in August 2015, suggesting an underlying increase in full-time work that goes beyond seasonal changes in employment.

The percentage of U.S. adults in August who participated in the workforce -- by working full time, working part time or not working but actively seeking and being available for work -- was 67.4 percent. This is down nominally from 67.8 percent in July but is in line with the rates recorded since April of this year.

Gallup's unadjusted U.S. unemployment rate was 5.4 percent in August, up nominally from July's 5.1 percent, which was the lowest for any month in Gallup's six-year trend. This month's rate is almost a full point below the 6.3 percent recorded in August 2015. Gallup's measure of underemployment in August was 13.2 percent, up nominally from 12.7 percent in July but still the second lowest Gallup has recorded to date.

Gallup tracks daily the employment status of the U.S. population and the workforce. Based on an individual's responses to the question series, 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. The data are based on a nationally representative sample of 29,000 interviews, including 18,000 in the workforce. Daily results reflect 30-day rolling averages.

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.