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U.S. Unemployment Declines in March

U.S. Unemployment Declines in March

by Dennis Jacobe

PRINCETON, NJ -- U.S. unemployment, as measured by Gallup without seasonal adjustment, declined to 8.4% in March from 9.1% in February, while Gallup's seasonally adjusted rate fell to 8.1% from 8.6% in February.

Gallup Adjusted and Unadjusted Unemployment Rate Trend, January 2010-March 2012

These results are based on Gallup Daily tracking interviewing conducted in March, including interviews with 31,283 U.S. adults, 67.8% of whom are active in the workforce. Gallup's seasonally adjusted unemployment rate is based on the adjustment used by the Bureau of Labor Statistics in the same month of the previous year.

On an unadjusted basis, the March unemployment rate matches the previous low since Gallup began monitoring and reporting unemployment in January 2010. The unadjusted unemployment rate was last at 8.4% in October and November 2011. On a seasonally adjusted basis, March's 8.1% reading is near the monthly low of 7.9% for Gallup's U.S. unemployment rate, seen in January of this year. In both cases, Gallup trends show the U.S. unemployment rate declining dramatically over the past year.

Fewer Working Part Time but Wanting Full-Time Work

Not only did more Americans get jobs last month, but fewer settled for part-time work when they wanted a full-time job. The percentage of Americans working part time but looking for full-time work fell to 9.6% in March from 10.0% in February, on an unadjusted basis. Still, this is higher than the 9.2% of a year ago.

Percentage of U.S. Workers Working Part Time but Wanting Full-Time Work, Monthly Averages, 2010-2012

Underemployment Plummets

Gallup's U.S. underemployment measure combines those unemployed with those working part time but looking for full-time work. As a result of sharp declines in both of these groups, the underemployment rate, on an unadjusted basis, fell to 18.0% in March from 19.1% in February 2012. The underemployment rate declined to as low as 18.0% last July before reversing course in August; it also increased from November through January.

2010-2012 Trend: Gallup's U.S. Underemployment Rate, Monthly Averages

Looking Ahead to the Government's Unemployment Report

Gallup's seasonally adjusted unemployment rate trend is generally consistent with the official Bureau of Labor Statistics unemployment rate trend of the past couple of years. However, methodological differences between BLS's sampling processes and calculations and Gallup's more direct phone survey approach sometimes produce differing results in a given month. For example, Gallup's monitoring of the unemployment situation includes the entire month, while the BLS uses a mid-month reference week.

Gallup's seasonally adjusted unemployment rate was essentially unchanged at 8.5% in mid-March from 8.6% in February, but then fell to 8.1% for all of March. How much of the sharp decline in unemployment during the second half of March will be picked up in the government's mid-month reference week is unclear. The current consensus forecast among economists is that the government will announce a seasonally adjusted unemployment rate of 8.3% -- unchanged from February -- on Friday morning.

In a second example of the important differences between the two measures, Gallup's seasonally adjusted unemployment rate was 7.9% in January compared with the government's 8.3%. Gallup picked up an increase in unemployment to 8.6% in February but the BLS did not. Gallup's measurement processes are based on an independent, random phone sample of approximately 30,000 Americans each month. The government's sampling is based on a panel approach involving 60,000 households, a percentage of which stay in the sample from month to month. As a result, Gallup's monitoring of unemployment tends to be more sensitive to short-term variations in the employment situation throughout the month, and therefore somewhat more likely to quickly reflect short-term changes in direction.

Gallup and BLS Seasonally Adjusted Unemployment Rate Trend, January 2010-March 2012


Gallup's seasonally adjusted unemployment rate decreased in March to 8.1%, slightly higher than January's 7.9% reading but an improvement from 8.5% in Gallup's preliminary mid-March estimate. The March and January rates are the two lowest since Gallup began monitoring and reporting unemployment in January 2010. They are also consistent with Gallup's other behavioral economic data for March showing a new high in Gallup's Economic Confidence Index and a post-recession high in its Job Creation Index as well as strong consumer spending.

While the sharp drop in the U.S. unemployment rate during recent months is clearly good news, it raises some significant economic questions. Traditional economic analysis raises the question of why the unemployment rate is falling much more rapidly than can be justified by the modest pace of current economic growth. Answering this question is essential to determining the sustainability of the declining trend in unemployment.

Federal Reserve Board Chairman Ben Bernanke made this issue the centerpiece of his recent speech to the National Association for Business Economics, noting, "the better jobs numbers seem somewhat out of sync with the overall pace of economic expansion." He went on to explain his hypothesis that companies shed many more jobs than necessary during the recession and financial crisis of 2008-2009, and now they are correcting their workforces for this understaffing of the past. The chairman went on to suggest that achieving further declines in the unemployment rate is likely to require a more rapid pace of economic growth going forward.

If Bernanke is right, then the rapid decline in the unemployment rate might be approaching its end as individual businesses achieve a right-sizing of their workforces. Further, traditional economics also suggest that many people who have been sitting on the sidelines waiting for the economy to improve might decide that now is the time to seek a job, increasing the baseline figure used to calculate unemployment. In turn, this could keep the unemployment rate from decreasing or even send it higher, negatively affecting economic confidence and the overall economy -- not good news for political incumbents, including the president.

On the other hand, the economy might continue to build on the momentum indicated by the current positive trend in Gallup's behavioral economic data, or perhaps the economy is already growing faster than the current economic data suggest. Either way, if true, the unemployment rate could fall below 8.0% in the not-too-distant future -- particularly if the workforce does not grow -- meaning good things for the economy, incumbents, and the president's re-election effort.

Gallup Unemployment Measures, March 2012

How Gallup's Unemployment Measure Differs From the U.S. Government's Measure reports results from these indexes in daily, weekly, and monthly averages and in stories. Complete trend data are always available to view and export in the following charts:

Daily: Employment, Economic Confidence, Job Creation, Consumer Spending
Weekly: Employment, Economic Confidence, Job Creation, Consumer Spending

Read more about Gallup's economic measures.

View our economic release schedule.

Survey Methods

Results are based on telephone interviews conducted as part of Gallup Daily tracking from March 1-31, 2012, with a random sample of 31,283 adults, aged 18 and older, living in all 50 U.S. states and the District of Columbia, selected using random-digit-dial sampling.

For results based on the total sample of national adults, one can say with 95% confidence that the maximum margin of sampling error is ±1 percentage point.

Interviews are conducted with respondents on landline telephones and cellular phones, with interviews conducted in Spanish for respondents who are primarily Spanish-speaking. Each sample includes a minimum quota of 400 cell phone respondents and 600 landline respondents per 1,000 national adults, with additional minimum quotas among landline respondents by region. Landline telephone numbers are chosen at random among listed telephone numbers. Cell phone numbers are selected using random-digit-dial methods. Landline respondents are chosen at random within each household on the basis of which member had the most recent birthday.

Samples are weighted by gender, age, race, Hispanic ethnicity, education, region, adults in the household, and phone status (cell phone only/landline only/both, cell phone mostly, and having an unlisted landline number). Demographic weighting targets are based on the March 2011 Current Population Survey figures for the aged 18 and older non-institutionalized population living in U.S. telephone households. All reported margins of sampling error include the computed design effects for weighting and sample design.

In addition to sampling error, question wording and practical difficulties in conducting surveys can introduce error or bias into the findings of public opinion polls.

For more details on Gallup's polling methodology, visit

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