The Labor Department says the unemployment rate fell to 7.7% in November. So the US labor market must be getting stronger, right?
Maybe not. That number includes part-timers and excludes discouraged workers. Is there a better number out there than what the Labor Department provides to show the true state of the jobs picture?
Pollster Gallup thinks so.
Its “Payroll to Population” metric — an estimate of the percentage of the US adult population aged 18 and older who are employed full time by an employer for at least 30 hours per week — “was 43.7% for the month of November, down from 45.7% in October. This is the largest month-over-month decline in P2P since Gallup began tracking it in January 2010 … November’s P2P decline likely results from workers becoming unemployed or dropping out of the workforce altogether.”
These results are based on landline and cell phone interviews with some 29,000 Americans throughout the month. Adults who are a) self-employed, b) working part time, c) unemployed, or d) out of the workforce are not counted as payroll-employed in the P2P metric.
And as Gallup also notes:
Traditional unemployment rates are based on the workforce, not the total U.S. adult population, so people dropping out of the workforce can actually mask a declining employment situation. Payroll to Population, on the other hand, is based on the total population, and therefore gives a more accurate representation of the job climate. November’s reading demonstrates how a shrinking workforce and rising unemployment can be a double whammy. The two-point P2P decline paints a more negative picture — but also a more accurate one — than does the 0.8-point increase in Gallup’s U.S. unemployment rate.
Maybe superstorm Sandy caused some big distortions. We’ll see in a month. But with GDP growth probably less than 2% right now — maybe less than 15 — we shouldn’t expect any huge job gains.