Friday, February 7, 2014


February 6, 2014

U.S. Payroll to Population Rate Falls to 42.0% in January

Labor force participation rate rises to 66.2%

by Ben Ryan
WASHINGTON, D.C. -- The U.S. Payroll to Population employment rate (P2P), as measured by Gallup, continued its recent decline in January, dropping to 42.0% from 42.9% in December. This is the lowest level for P2P since March 2011, when it was 41.9%.
U.S. Payroll to Population Employment Rates, January 2010-January 2014
Gallup's P2P metric tracks the percentage of the U.S. adult population aged 18 and older that is employed full time by an employer for at least 30 hours per week. P2P is not seasonally adjusted. However, because of seasonal fluctuations, year-over-year comparisons are often helpful in evaluating whether monthly changes are attributable to seasonal hiring patterns or true growth (or deterioration) in the percentage of people working full time for an employer. The P2P rate for January 2014 is down 1.6 percentage points from the 43.6% found in the same month last year and in January 2012.
The latest results are based on Gallup Daily tracking interviews with approximately 30,000 Americans, conducted Jan. 2-31, by landline and cellphone. Gallup does not count adults who are self-employed, working part time, unemployed, or out of the workforce as payroll-employed in the P2P metric.
Seasonally Adjusted Unemployment 8.0% in 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 report, are based on the percentage of the workforce. Gallup defines the "workforce" as adults who are working or actively looking for work and available for employment. The U.S. workforce participation rate in January was 66.2%, up slightly from December's 65.8% but still down from 68.1% in January 2013.
Gallup's seasonally adjusted U.S. unemployment rate for January, using an estimate of the government's likely adjustment factor, is 8.0%, up from 7.6% in December. Gallup calculates this rate by applying the adjustment factor the government used for the same month in the previous year. Last year, the government adjusted January's rate downward by 0.6 points. The exact adjustment the government uses for January 2014 will not be known until Friday's BLS release.
Gallup Adjusted and Unadjusted U.S. Unemployment Rate Trend, January 2011-January 2014
Underemployment, as measured without seasonal adjustment, was 18.6% in January, up from 17.2% in December, and up from 17.5% in January 2013. Gallup's U.S. underemployment rate combines the percentage of adults in the workforce who are unemployed (8.6%) with the percentage of those who are working part time but looking for full-time work (10.0%). An increase in unemployment mainly explains the increase in underemployment vs. December, partly attributable to more out-of-work Americans now reporting they are looking for work.
Gallup's U.S. Underemployment Rate, Monthly Averages, January 2011-January 2014
Bottom Line
The overall percentage of the U.S. adult population that was employed full time for an employer dropped in January to 42.0%, its lowest point since March 2011. Further, despite a rise in labor force participation in January, the 33.8% of all Americans who were not in the workforce is high compared with the rates Gallup has found over the past four years. The combination of falling P2P and the modest increase in the labor force -- attributable to more out-of-work Americans looking for work -- pushed unemployment up by more than a full point, from 7.4% to 8.6%, without adjusting for seasonal variations.
While both Gallup and BLS data are based on robust surveys, the two have important methodological differences. Although Gallup's employment numbers highly correlate with BLS rates, Gallup's numbers tend to have more month-to-month variability, and the unemployment rate that BLS reports each month does not always track precisely with Gallup's estimate.
Gallup's U.S. Unemployment Measures, January 2014
How Gallup's Unemployment Measure Differs From the U.S. Government's Measure

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