That said, the standard unemployment measure the author is objecting to is just as (more really) disingenuous in practice. It also stacks confusion. "Unemployment" used as a primary barometer for the labour economy.
People (including journalists, politicians... high stakes stuff) assume that unemployment captures most unemployment. They don't consider that most unemployed 58 year olds are not counted because they "retired," stopped seeking work or receive a disability benefit. When/if these become substantial, the measure means very little.
Every time a journalist note record high/low unemployment of X%, it's probably just as deceptive or (more likely) misleading. The measure itself means something different in 2020 than it did in 1980, or in a different country/region.
At least the "true" appendage makes clear that there are differing and divergent ways to measure unemployment, and that these cn result in huge differences.
Why should any of these people be considered "unemployed"?
Every time there's a discussion of unemployment, or inflation, people bring up the measurements as "misleading". The BLS tracks this stuff because people in the real world need to use it, not because there's some disingenuous political purpose. There are a ton of different metrics to get a broad picture of the labour market, as defined, and they put them out there, free to use. The idea that the army of economists at the BLS don't understand things like people being retired is just wrong.
We spend a lot of time criticizing journalists and politicians, but how many people bother to look at the data themselves if interested?
https://www.bls.gov/news.release/empsit.nr0.htm
and the numbers:
https://www.bls.gov/news.release/empsit.t01.htm
It's actually kinda straightforward, and very clear about what measures they're using. The numbers are bit scary - "The employment-population ratio, at 56.6 percent, changed little over the month but is 4.5 percentage points lower than in February."
"The number of persons not in the labor force who currently want a job, at 7.2 million, changed little in September; this measure is 2.3 million higher than in February. These individuals were not counted as unemployed because they were not actively looking for work during the last 4 weeks or were unavailable to take a job."
So that's 12m officially unemployed, plus 7m "not in the labor force" but who want a job.
So yeah, the article is kinda on point; that the numbers don't mean what they think we mean. But I have to agree: that's not because the numbers aren't available for anyone to look at and understand.
54.0 million over 65
48.9 million on disability
328.2 million total population
185.8 million people employed at 56.6% employment
128.1 million people not employed (including children)
54 million people not employed, but marginally employable (max income is $1,260 per month if on disability and $18,240/yr when retired)
In any case, under-employment is still a bigger issue than unemployment.
That said, the real figures are still startling. They represents 4.4% of the US worker population but some states rely incredibly heavily on the program.
Alabama - 8.0% of the population
Arkansas - 7.9% of the population
Kentucky - 7.6% of the population
Maine - 7.4% of the population
Mississippi - 7.5% of the population
West Virginia - 8.6% of the population
The reality is that "unemployment" is a highly visible metric. Sure, the data itself is available... A big part of the reason why it's important to have this data available is exactly for this purpose: call bullshit on the unemployment numbers when necessary...
...especially considering that "want a job" is measured in very specific ways.
Is it though? The photos of queues for jobs and unemployment benefits is something of the distant past. Find out that a different measure makes the rate 3x higher came as news to me.
Because we're actually trying to count "people who would be employed, were there more jobs available"
But as we can't read people's minds, we can't tell the person who's happily retired at 58 from someone the same age who'd rather be in work but can't find it, and has started drawing their pension out of necessity.
Opportunistically earning some extra cash is a lot different than having to work for a living.
Wouldn't any such effect be temporary though? As wages rise, doesn't inflation rise as well, negating the benefit of a rising wage.
Wouldn't it also be true that as certain goods deflate in price, labor force participation should go up as well since the same wage allows you to buy more stuff?
This goes back to wealth isn't the money you have, it's what you can buy. Today most people, even those at the bottom, have access to many things today than even John D. Rockefeller didn't have access to when he was alive.
Anyways, not asserting anything in particular here, but just raising that it seems far more complicated than just wages rising lead to greater labor force participating.
No. Inflation is primarily caused by the government printing money, not by rising wages.
If wages rise but productivity does not increase, yes, that will cause inflation, but if productivity is not increasing wages cannot rise because there is nowhere for the increased wages to come from.
If wages rise because productivity is increasing, there are more goods and services available, so supply keeps up with demand and prices don't rise. (In fact they will generally fall in the areas where productivity is increasing, if the money supply is not being messed with.)
> Wouldn't it also be true that as certain goods deflate in price, labor force participation should go up as well since the same wage allows you to buy more stuff?
There will probably be more people willing to work, yes. Whether that translates into more actual jobs will depend a lot on how easy it is to start new businesses, since that's where the new jobs will have to come from. Our current regulatory regime makes it much more difficult than it should be to start new businesses.
> wealth isn't the money you have, it's what you can buy. Today most people, even those at the bottom, have access to many things today than even John D. Rockefeller didn't have access to when he was alive.
This is a very good point, which I wish more people would recognize.
A change in the savings ratio could also cause demand-pull inflation without an increase in printing money. As could a change in reserve requirements.
There are also cost-push inflation from things like oil supply shocks, poor farm yields or changes in exchange rates.
I would also expect changes in the aggregate balance of payments between a country and all its trading partners to impact inflation experienced by people in that country.
Theoretically it certainly can be. To take the simplest idealized example, if the production of goods and services is unchanging, and people's needs are unchanging, the only possible source of price changes is a change in the money supply.
In the real world, of course, the quantity of goods and services does change and so do people's needs. But that just means the price system now has a genuine function: to inform people about the changes in supply and demand through changes in prices. Messing with the money supply just obfuscates those price signals with an arbitrary quantity of noise. So while it's true that messing with the money supply isn't the only cause of price changes in a real economy, that's certainly not an argument that printing money is okay.
> If all the wealth currently currently squirreled away in places that banks can't trivially lend out (art, real estate, etc.) were instead cash in the hands of the lower and middle classes, I would expect a lot more money to be chasing those goods and services against which we measure inflation.
That would depend on where the cash came from. In the case of real estate, for example, if you want a mortgage, the government will print most of the money (all but the three percent or so that banks in the upper reserve tranche have to put up--but IIRC even that minimal requirement was waived by the Fed fairly recently). So turning real estate into cash (by, say, taking out mortgages to buy homes from lower and middle income people who have more house than they want or who would rather rent instead) just means the government prints more money. Which will indeed increase average prices, but that's just an example of what I was talking about.
If, OTOH, you're talking about something like auctioning off expensive art works and using the money to start a business that employs people, so those people now have more cash to spend, that just means a transfer of cash from whoever buys the art works. That won't affect average prices at all; it will, however, increase the price of art works (assuming that the supply of those is basically static) and decrease the price of whatever things the people who bought the art works would have bought instead. Those two changes will cancel out on average.
I'm talking more about on a practical level in terms of the prices that most people will see/experience when they are going about there daily life. I even cited very real examples of both demand pull and cost push inflation that have nothing to do with the money supply. These as far as I know are all examples acknowledged by economists as causes of inflation.
If for example tomorrow there were a super volcano explosion and a catastrophic decline in the world's food supply, we would see a massive spike in food costs. Everyone needs to eat and the food supply would be limited, so prices will go up. Since food costs are an input cost for the well being of all workers around the world, we should expect that there will be upwards price pressure on many goods and services used to measure inflation most people actually feel and experience.
It's quite true that people are used to seeing a particular price level, and changes in either direction tend to cause them problems, even though, abstractly speaking, decreases in prices should be seen as a good thing.
> I'm talking more about on a practical level in terms of the prices that most people will see/experience when they are going about there daily life. I even cited very real examples of both demand pull and cost push inflation that have nothing to do with the money supply. These as far as I know are all examples acknowledged by economists as causes of inflation.
And this is a misuse of the term "inflation", because "inflation" is supposed to be bad, and so economists are basically trying to argue that the natural ups and downs of business, which are unavoidable in a world where things are constantly changing and nobody has a crystal ball, are bad things that the government needs to intervene to stop. We would all be much better off if economists would stop peddling such nonsense and just frankly admit to us all that, well, the natural ups and downs of business are unavoidable in a world where things are constantly changing and nobody has a crystal ball--not even economists.
> If for example tomorrow there were a super volcano explosion and a catastrophic decline in the world's food supply, we would see a massive spike in food costs
Yes, and what would happen next?
In a sane world, what would happen is that entrepreneurs would start figuring out ways to produce more food, because there is obviously a huge need for that, as shown by the huge price signal in food. Maybe they would build huge greenhouses with solar lamps powered by nuclear electricity. Maybe they would figure out how to harvest algae in quantity to make algaeburgers.
In our actual world, what happens is that governments wring their hands and pontificate and monkey with the economy and make things worse instead of better.
There are other possibilities. Suppose that employers gain bargaining power relative to the workers, but people are really resistant to taking a pay cut. The employers all raise prices instead.
Not in that particular hypothetical. All the things you cite are only relevant in a world where things do change. So if you want to talk about that world, it's pointless to respond to a hypothetical of mine where that kind of change is ruled out to make a particular point.
> Suppose that employers gain bargaining power relative to the workers, but people are really resistant to taking a pay cut. The employers all raise prices instead.
In the real world, where things do change and everyone knows and expects that, how do employers magically "gain bargaining power relative to the workers"? The only way that can happen, if the government is not messing with things (the money supply, but also other things, like the laws and regulations that govern employment), is for some technological change or some exogenous factor to favor employers over workers. And if that happens, and you're a worker, yes, you just got blindsided by change, and if you're an employer, you just got an unearned benefit (assuming you're not the one who actually invented the technological change). Welcome to the real world.
Of course, in the real real world, where the government does mess with things, there are plenty of ways for employers, particularly large corporations that have lots of cash, to gain bargaining power over workers without having to do anything to earn it. And yes, workers would probably be resistant to taking a pay cut, since they know that the bargaining power the employers are trying to use against them was not earned. And yes, employers would probably raise prices instead. And the best way to prevent all that is for the government to stop messing with the economy, so employers can't buy their way out of bad business practices.
...is changes in expectations about future needs or productivity.
Or are we pretending that the omniscient, time-unbound actors of rational choice theory are a real thing?
Which are only rational if such things in fact have changed in the past. In that particular hypothetical of mine, they don't. And everyone knows that, the same we we all know in the real world that such things do change. That doesn't require omniscience; it just requires ordinary knowledge of the past and common sense.
Of course in the real world, as I just said, such things do change; but, as I said in my earlier post, that just means that monkeying with the money supply masks real price signals that should not be masked.
Exactly. Which means you can't count what you say you're trying to count. What you're trying to count requires telepathy.
That's why economists look at revealed preference--what people actually do, not what you guess they might be thinking. So the correct way to see if there are people who would be employed if there were more jobs available, is...to let private individuals start new businesses and see if the increased number of jobs increases the number of people who are employed. But that would require the government to stop trying to micromanage everything, which is why the obvious solution of making it easier to run businesses so that more people will start them in order to create more jobs is a nonstarter politically.
Being easily and consistently measurable is one virtue. It's nice that "unemployment" can be measured this way monthly without too much measurement controversy. Useful for charting trends with high resolution.
That doesn't change the fact that it is not an estimate of "unemployment," defined in a way that we care about more. If you ignore the involuntarily retired 58 year old because measurement is subjective then you are undercounting by a lot. You're not undercounting evenly, especially over time, geo or in extreme circumstances (like recession).
It's an issue if the primary unemployment measure does not even estimate "unemployment" harmonious with a common sense definition
Because they still need to find work to live, pay heath expenses, and so on, and can barely make it in third-world style conditions without it...
The reported U-3 unemployment rate is measuring the rate of full-time job loss in the economy. That makes a good barometer of the economy as it can describe if job losses are accelerating or not.
You can pick any of the alternate measures and they all say pretty much the same thing. But by overlooking those who have dropped out of the labor market, the U-3 focuses more on what is happening with the labor market now not several years ago.
You can try this for yourself by plotting the U-1 through U-6 rates on the same graph and picking the one you think is most useful as a snapshot of the labor force. You'll probably land on the U-3 as the U-1 doesn't show upticks in unemployment very well and the U-6 muddies the severity of upticks in unemployment. The broad strokes will be the same, but the nuance is missing.
I think this is a perceptive statement; U-3 is most like the derivative of unemployment, so it's sensitive to changes, but not to steady-state issues.
We should probably look at U-6 to help understand where we stand long-term, and U-3 to get a glimpse of whether things are getting better or worse. Unfortunately, I don't think many people want to think about these issues separately, so they'll only want one number.
Third world conditions are much worse than that. I've seen families sleeping on sidewalks. No car, no health care.
Sure everybody wants more. There are a lot of retired people who would like a job, but that is as much about the social connection as money. There are also those who lost their money (scams target retired people) and need a job, but that isn't most of them.
My father turns 70 in three days, and he has struggled to find long-term work for the last ten years. He'll work for a year, search for work for 15 months, work for another 18 months, etc. He would like to be working now, but COVID-19 probably marks the end of his working days forever.
He's been counted as retired a few times during the last decade, though he never was until this year.
At least twice in the last decade, he's been unemployed so long his benefits ran out. Perhaps the label in that case isn't "retired," but he wasn't counted as unemployed, either.
The BLS tracks six measures of unemployment rate via survey called U1-U6. U3 is the official unemployment rate, but they report the others as well[1].
For U3, you are considered unemployed if you do not have a job, have actively looked for work in the prior 4 weeks, and are currently available for work. U4 is that plus anyone who wants a job, but gave up looking because they don't think they will find one. U6 adds in people who only have part-time work but want full-time work.
[1] https://en.wikipedia.org/wiki/Unemployment#United_States_Bur...
They basically survey 60,000 people and ask a specific set of questions to figure out which "bucket" people are in.
There is no abstract reason, unless we're just talking about what the word unemployed "really" means. Pointless semantics.
The reason they should be considered unemployed is contextual. "Unemployment" is the measure used by journalists & politicians to gauge the labour market. In that context, it is very important to consider these people who have stopped expecting to work unemployed. They are part of the "slack." Their experience experience of the labour market is "i can't get a job."
If unemployment is lower than it was in year X because people stop applying or qualifying for some unemployment benefit... that doesn't mean the labour market is better.
Everything is contextual. People arguing for alternative unemployment measures aren't (generally) arguing semantics. Their arguing that the metric is misleading us.
if you want to know how well we're allocating our (labor) resources as an economy, it's important to get a full picture of how many capable people are un-/under-employed.
when we make national economic policy, it should be to make meaningful progress toward putting all of our capable and willing people (true unemployment) to highest and best use, not arbitrarily just those who have recently become un-/under-employed (nominal unemployment).
There is no single "we" who allocates those resources. That is a fundamental fallacy in this whole way of looking at things. We seem to have this belief that, if only our government experts could find the right aggregate measure and micromanage the economy based on it, everything would work just fine. That belief is false.
> when we make national economic policy, it should be to make meaningful progress toward putting all of our capable and willing people (true unemployment) to highest and best use
That's not something the government should even be trying to do, because no central planning entity can do it.
What the government should be doing is guaranteeing a level playing field, and letting freedom work. Historically, times when the government has done that have been the times when the US economy has created the most wealth.
Well, right now they are "macromanaging" it away from a system that could possibly work. Central bank policy heavily skews toward capital and thereby into deflation (or at least lack of inflation). Inflation is the treadmill that keeps the economy going and it has been broken for a long time.
The more I get into economics the more I understand that the real world is not meaningfully different from a game in terms of policing. The details are different but general concepts like deflation or inflation are still the same. The fact that economies can only function if money is in the hands of those who are doing the work is still the same. In the most realistic economy games it is even possible to liquidate your company and start fresh after messing it up. So there is now the obvious problem that if you want a growing player base you can't just let the biggest players take over 90% of the market and force newcomers to compete with them and let almost all of them fail like in the real world. Unemployment can't exist in such a game, "unemployed" players aren't playing the game!
Well, the obvious answer to solving unemployment is a job guarantee funded through "printing" money. If people are unemployed they will take the job guarantee which in turn creates new money. Suddenly there are lots of paying consumers but since the guaranteed job doesn't actually increase the supply of goods we get to see inflation among consumer goods. Now you may be thinking that this will cause runaway inflation except it can't. When demand for products increases, so does the demand for labor. New jobs are created which pay more than the job guarantee but they don't cause inflation. It's a self balancing system.
Yes, but not the way you are claiming.
> Inflation is the treadmill that keeps the economy going
If by "inflation" you mean printing money, no, that is noise in the price signals that keep the economy regulated. And as central banks print more and more of it, they mask valid price signals more and more and thereby make the regulation of the economy worse and worse. And then they claim they need to print more money to "fix" the problem.
If by "inflation" you mean "prices going up", if the money supply were fixed, the prices of everything going up would signal an unhealthy economy, not a healthy one. With a fixed money supply, in the short term, whenever the supply/demand situation changes (and it is always changing), some prices will go up and some will go down. In the long term, the general price level would be expected to go down as average productivity improves. If the general price level is going up, it means average productivity is getting worse, which, as noted, is a sign of an unhealthy economy.
The main purpose of printing money is to allow governments to obfuscate the fact that they are making the economy worse by masking what would otherwise be obvious price signals showing it. Every ordinary person understands that if the prices of everything are going up, that's bad. So governments, politically, cannot allow sustained increases in the general price level, unless they are so small as to not be noticeable except over many years. But they can't micromanage their way to a healthy economy either, so their only choice is to print money to disguise what is going on.
> the obvious answer to solving unemployment is a job guarantee funded through "printing" money
This would be government micromanagement on an even more massive scale and would be a disaster.
The obvious answer to solving unemployment is to make it easier for people to start businesses, since that is what creates new jobs. The way to do that is for the government to stop micromanaging the economy and let individual people figure things out.
wealth by itself, especially as we measure it, is hollow and a poor collective goal, and its singular pursuit expressly undermines the level playing field and much of our humanity. prosperity is a more holistic expression of our collective goal, with wealth creation not being the principal ingredient of prosperity. industry, purpose, solidarity, community, well-being, welfare, success, esteem, respect, free expression, etc. are all (much) higher on that list.
it behooves us to look beyond simplistic ideologies (which only benefit the political, by collapsing our horizons insidiously) to perform our duties and responsibilities to each other as a society.
But none of us have the power to run the entire country, and we couldn't do it properly even if we had the power. So saying that "we" should do things that are beyond our power is pointless.
If you think not enough people have jobs, start a business and hire some. If everyone who complains about unemployment went and did that instead, if it didn't completely solve the problem, it would certainly make a huge dent.
> the government is the power apparatus that is meant to express and realize our common good.
If "our common good" just means ensuring a level playing field and letting freedom work, sure. That's what the US government was originally intended to do.
However, governments today have gone far beyond that to try to dictate to everybody what "our common good" should mean based on some particular interest group's ideas about social policy. That is a recipe for disaster, and we should stop doing it.
> wealth by itself, especially as we measure it, is hollow and a poor collective goal
I'm not sure what you mean by "as we measure it". If you mean that "we" measure it in money, then of course you are correct: money is not wealth.
If you measure wealth as economists actually measure it, however, by the possibilities that are open to people--the range of things they can choose to do with the resources and options available to them--then people today are wealthier than pretty much every human being who ever lived.
> industry, purpose, solidarity, community, well-being, welfare, success, esteem, respect, free expression, etc. are all (much) higher on that list.
If you think these are valuable things, then go build them.
If you think government should dictate to people that they need to build these things, whether they want to or not, IMO you are being inconsistent, since the whole point of all these good things is that people can only do them voluntarily; if they are forced to do them, you don't get them, you get sham imitations instead. So once again, government should not be used to impose these things on people; it should be used to ensure a level playing field so free people can build them as they see fit.
There is absolutely no purpose other than propagandistic for the percentage commonly referred to as "unemployment" with no other qualifiers. That number's only purpose is to start dropping a short time after an unemployment shock whether or not any jobs were actually added to the economy.
The other numbers aren't to give a "broad picture" of the labor market, they're to give the entire picture of the labor market. "Unemployment" contributes nothing. At the time of a shock it echos other metrics, and after a pause of a few months it announces that whatever the administration announced its reaction to the shock would be is starting to work, no matter what the other numbers say.
These days I even see mainstream media outlets report lots of different numbers beyond the "baseline" unemployment rate, so I just feel like this whole article is written from the "you're not considering my preferred statistic as the 'true' one so you're wrong" angle.
I am asking because my country's equivalent tends to report unemployment figures, based upon a similar definition to the US, more prominently. This is especially true if a casual seeker is unfamiliar with the terminology used while reporting these figures.
Incidentally, it is also worth noting that one does not have to believe that the numbers are cooked up to believe that they are misleading. Having a consistent definition is important when comparing figures, unfortunately having a consistent definition also means that the reported numbers may not reflect societal expectations over time (e.g. regarding retirement or multiple income households).
...as opposed to what? being "honest" by slapping a "contains scary sounding chemicals" sticker on the front of the package? how can a manufacturer possibly know what people would hate, considering that people can hate literally any ingredient?
You don't even have to go to "scary chemicals" and conspiracy theories. Have you ever checked how many "0% fat" foods are heavy on refined carbs, and vice-versa?
> how can a manufacturer possibly know what people would hate, considering that people can hate literally any ingredient?
Have you ever heard about market research? The promoted cherry-picked facts are not there because people are unpredictable and the manufacturers are clueless, but because people are predictable and the manufacturers have researched their behaviour.
No, this is intentional deception. The party out of power talks about "real" inflation rates and "real" unemployment rates, and the party in power touts the official numbers.
The best number to go by for unemployment has always been the prime age employment (not unemployment) rate, and all honest discussions of the current state of employment start with it.
Did you mean 65? Only teachers and a few other public union members regularly retire at 55 in the US, and even for them many choose to continue working to earn a fatter pension.
Except, of course, for the rare people disciplined enough to be frugal and invested a lot of every pay check, and became self made multi millionaires.
https://fred.stlouisfed.org/series/TOTLL2564
Until I realized it's likely due to COVID-19 deaths.
So it only includes people who are working or looking for work. This kind of distinction is the key to the OP.
So thankfully the dip is mostly not deaths, but for example
- a second earner in a household who lost a job in April but hasn't looked for new work since, due to child care commitments
- a cook who was furloughed but knows there are no new kitchen jobs going right now, but isn't yet willing to do something else, so isn't looking
- a person who lost a job one year out from retirement and is just retiring early
But I am curious about that drop.
Edit: It would be interesting to compare this to an up-to-date graph of US deaths (all kinds), if one exists.
Would not "high stakes" non-dilettante observers know about, and review trends in, the labor participation rate and other metrics?
They looked at people that are structurally unemployed or stopped looking because they were disillusioned after some time; they also tried averaging a national rent gauge (yeah, regional would’ve been better - so that means approving them grant funding) to better understand the cost of living and who can afford to survive off their wage/salary. So they drew a line across the chart saying people below $X can’t even afford surviving in America right now. There’s some PBS specials on rural American single moms unable to feed their kids mid COVID - enter school lunch funding issues - and Twitter also has its share of people posting their anecdotes of plight.
Is that the case? A journalist covering an economic story will know and be familiar with U3 and U6. Maybe a local politician like a city council person, mayor, or potentially a freshman state rep in some American state might not know, since some of them are really just used car salesmen or local lawyers who've convinced their local party to put them in as their candidate but even then I suspect that they learn the conceptual if not the technical difference very quickly. I am not familiar with the political systems of all countries of course but I think you would struggle to find, say, a Dutch of British MP who would not know this.
This article is one of MANY that recognize this, and it's by a journalist, and I've seen politicians note it as well....
Basically, there are no surprises here. Everyone uses the numbers that favor them and hurt their opponents. Everyone.
"The official unemployment rate is artificially depressed by excluding people who might be earning only a few dollars a week."
This reads like paranoia. Regardless of how U-3 originated, U-3 reflects an international standard of defining "unemployment". If different countries use different definitions of unemployment in their studies, then meaningfully comparing unemployment statistics among countries is futile (or just really really difficult).
I guess one could argue that, say, U-6 should be the international standard. But whatever definition one uses doesn't actually change anything in the real world. The different measures are trying to describe reality, not define the magical all-true unemployment rate. The point is to look at many different definitions to identify trends. Attempts to blindly point at U-6 and say that this is more "real" than U-3 is just as deceptive as claiming success over lowering the U-3 rate (even if it's because people are leaving the labor force).
It should be up to outlets like Axios to explain these nuances rather than argue that one measure is more "true" than another.
> A person who is looking for a full-time job that pays a living wage — but who can't find one — is unemployed. If you accept that definition, the true unemployment rate in the U.S. is a stunning 26.1%
I admit the word "true" in the title is kind of misleading, but the article itself isn't.
"living wage" here adds a layer of confusion. Some argue "living wage" is at least $15 an hour, some argue even more. Certainly living in San Francisco on $15 an hour wage, even working fulltime, would be a challenge. However, this has nothing to do with "unemployment" as it is commonly understood. This is just confusing separate economic and societal problems to arrive at flashy number that actually doesn't mean much, as it is a result of different people having different economic and personal challenges.
Data: Ludwig Institute for Shared Economic Prosperity; Chart: Axios Visuals
> What is the “True Rate of Unemployment”? The True Rate of Unemployment, as defined by the Ludwig Institute for Shared Economic Prosperity (LISEP), measures the percentage of the U.S. labor force that is functionally unemployed.
> Using data compiled by the federal government’s Bureau of Labor Statistics, the True Rate of Unemployment tracks the percentage of the U.S. labor force that does not have a full-time job (35+ hours a week) but wants one, has no job, or does not earn a living wage, conservatively pegged at $20,000 annually before taxes.
> Just as an accurate census is a prerequisite to funding American communities equitably, policymakers depend on economic indicators to shape economic policy. LISEP developed the True Rate of Unemployment to provide analysts and decision-makers with a more accurate measure of Americans’ financial well-being.
> For a more in-depth explanation of the True Rate of Unemployment, please reference this white paper[2].
[2] https://assets.website-files.com/5f67c16a6ca3251ecc11eca7/5f...
But why? Just an arbitrary number? What that number means? Defining "functionally unemployed" as "earning less than an arbitrary number we pulled out of our noses" is hugely misleading. Maybe that person can't earn more because they don't have skills, or have personal issues that prevent them from being more productive, or maybe earning high wage is not their priority right now (e.g. internship or apprenticeship). Unemployment has specific meaning - e.g. that by creating more employment opportunities you could fix it. Stuffing anybody that is not earning over $20K, for any reason whatsoever, under the term, just confuses the matters.
I get that it looks flashy - "the government is lying to you, the Real Truth is only available from us!" - but it's not useful to just change definitions of established terms because it sounds good in a soundbite. There are many other terms - like "labor participation", "underemployment", "economical hardship", "working poor", etc. - one could coin many more. Redefining existing one while slapping the misleading label "true" to it is not helping.
Which underlines my point - poverty is not the same as unemployment. For starters, not all people live in three-persons households, especially ones that earn low wages (e.g. single young people just starting their professional careers). Secondly, defining every poor person as "unemployed" is making the term meaningless - just say "poor" then.
> Because your comment is full of generalizations and cynicism
I raised very specific issues with this methodology, and with the terminology specifically, but if all you can do is dismiss them as "cynicism" (do you even know what it means? it doesn't match any part of my objections) then fine, whatever.
I am objecting to the use of an established term to mean something this term is not supposed to mean. There's nothing "cynical" about it.
That when a politician brags about unemployment being so low to a voter, they're doing so to fool the voter, who likely associate unemployment rate as a measure of how well off everyone is doing, while in reality it doesn't, because if you look at the "true" unemployment, i.e., what that voter is thinking, which is how poor are Americans overall, well you'd actually see a pretty glooming picture with a large number of Americans living below poverty and the number growing year over year.
> if you look at the "true" unemployment, i.e., what that voter is thinking, which is how poor are Americans overall
Unemployment is not a measure how poor people are. While unemployment can lead to poverty, it's not the same as poverty. It's like saying "we'll add a number of sick people, obese people, people not working out, old people, people eating too much sugar, people not eating enough vegetables, people who smoke and people who drink alcohol - and call it 'true health index' and will demand to treat this number as if all these people were actually sick". Somehow you think it's more clear this way?
> well you'd actually see a pretty glooming picture with a large number of Americans living below poverty
There already are statistical measures of poverty. You don't need to call them "true unemployment". Call them "measures of poverty".
If that 2k/mo comes with reasonable health insurance and some retirement plan.
> The maximum possible Social Security benefit in 2020 depends on the age you begin to collect payments and is: $2,265 at age 62. $3,011 at full retirement age (65-68). $3,790 at age 70.
While many do retire on less, they also contributed less over the years and so are used to living on less. However we can safely say that if you only get $2000/month you retired too early and this should have been an intentional choice - retire early to a lower standard of living.
So no, it is not "the one true unemployment rate" but it is a lot truer as perceived by the average person than the standard definition.
Depends on state and family status, but probably not. Someone making $28k/yr is paying pretty much FICA taxes and not much else federally speaking.
If they happen to have any dependents then they are probably paying negative tax rates via the EITC. Sometimes substantially so.
Source: I do taxes for a about a dozen folks "back home" growing up in a more economically disadvantaged area than average.
https://www.bls.gov/charts/employment-situation/civilian-lab...
You can see that starting 2013 and continuing on even under trump African American + Latinx labor force participation has made relative gains compared to White+Asian. I believe this is why some claim that Trump has been good for African Americans, though really the trend started under Obama. (And I'll concede who knows what really is the causal factor...)
https://www.bls.gov/charts/employment-situation/civilian-lab...
IMO Labor Participation Rate is also useful because it helps illustrate what percentage of the population is bearing the labor load of the society.
I'd prefer a measure of total working class income perhaps, maybe a ratio with cost of living. Then we'd know what all these jobs add up to exactly. Counting heads is hardly a 'true' rate of employment.
So, if anything, I'd say it's low-balling the number.
"True Unemployment Rate" implies "I don't think our standard measure of employment accurately captures the state of the economy" which then implies "I'm going to provide my own metric, and explain why it's different and why I think it's better."
I don't think that trying to come up with an improved metric which highlights the real situation on the ground is 'deceptive'.
I really doubt this to be true. You would almost have to choose to live in a place with no opportunity to advance upward for this to be the case .
I think living on about this income is common for grad students, who mostly live in areas with "opportunity to advance upward".
I wouldn't wish living in SF on my worst enemy.
The measures are available, and they're usually in the vicinity of twice the regularly-reported (U-3) rate.
Several of them do measure underemployment.
The government and media largely rely on U-3 (IIRC) when reporting unemployment. The upside is consistency - they all use the same number. The downside is this figure may not be fully representative of the economy.
I would argue that U-5 or U-6 better represent the state of the economy (as it relates to employment), as both included some set of under-employed and recently-given-up would-be workers.
But, we'd have to make a concerted effort to cut over to those numbers to avoid confusion.
Examples:
"How bad is our current recession compared to the great depression for the workforce?"
"How might raising the top marginal income tax bracket to 70% affect the labor market?"
"How does relaxing strict immigration policies contribute to job loss in a nation (if at all)?"
But, given an increasing income disparity between the top ~5% and bottom half, and a continuing sense of "being left behind" by many workers in labor-intensive industries, it seems doing a better job of describing those disenchanted workers (whether they be part-time at AutoZone, or recently given up looking, etc) would be beneficial to all.
For one of those disenchanted employees, seeing "Unemployment is at all-time lows! The DOW is at a record high!" on the evening news (while they're working 3 part-time jobs for $9/hour and zero benefits) isn't just unhelpful, it's insulting.
A lot of comments here are heavily biased towards accurately accounting for the retirement end of life, without considering the other end - people who are intentionally not working or are under-employed for some other reason. The one I had mainly in mind was highschool and college-aged students who are working part-time: they'd get included in under-employment, but aren't necessarily looking for a living wage yet because they have other priorities, so they don't get included in unemployment counts.
Also,
> I'd like to see unemployment measured more like total population minus those employed.
This measure would include children who can't even work part-time.
Firstly, the US is different from many parts of the world. Not only it's massive, but swaths of American urbanization are shaped around cars as a basic necessity, especially with the adoption of suburbs. Most of the US outside of big cities are car-first towns both in infrastructure, planning, and services.
In turn, having a car for many Americans is more than an efficient way to get around, it is the only way to move safely and reliably.
Many parts of the US have no public transportation, no reliable ride-sharing, no safe way to bike (both the roads and the culture are hostile towards cyclists).
For more information, I'd suggest reading on the phenomena called "Automotive city" https://en.wikipedia.org/wiki/Automotive_city
It may be hard for people in many places to grasp, but even in eastern states there are many, many areas where you could pick a direction and walk many miles without seeing anyone.
Below a certain population density (likely in the hundreds to low thousands per square mile), public transportation simply is not feasible.
Most major American cities that existed before the car still have public transportation. NYC is a prime example of somewhere you can live without a car. Most other cities still have functioning bus systems, though not great.
It's the suburbs where you really need a car, and the development of suburbs was spurred in large part by the car. So you have your historical order wrong.
But mostly it’s the suburbs and small towns where cars are totally necessary. Those areas were settled less densely because everyone already had a car. They never had subways and bus routes.
Are there any first world cities that substantially grew in area since 1920 that aren’t primary automotive cities?
Outside of a very small number of major metro areas, cities in America are not livable without a car.
And I say that as someone who really, really despises how required car ownership is, and who has spent a lot of time trying to find alternatives.
Even in reasonably large metro areas where there is a decent bus system, and a passable metro (Atlanta, in this case) a nice E-bike is still nowhere near enough to replace my car.
I've managed to replace the car for my daily commute with a ~40 minute Marta ride, and an additional 20 minutes on the bike (Would be an additional 40+ if I used the buses), but the metro doesn't come within 20 miles of either of my parents houses, nor does it get me to my brother who lives in Athens, GA. Nor does it get me anywhere close to my grandparents. I wouldn't have been able to visit my now wife while dating without a car.
I'm assuming you're not American, but if you haven't visited for a while, I suspect you're just wrong about any sense of scale you might have. Atlanta alone has a metro area of 8400 square miles. Houston is 10,000 square miles.
My wife's family has this problem. They're from Taiwan. When I first visited they warned me about a long car ride to see some family in the country. Long meant 40 minutes.
40 minutes barely gets you across Atlanta. 2 hours gets you to Athens if traffic is decent. 2 hours 30 minutes the a different direction will get you to my family in north GA (and Atlanta is already well in the north half of GA). I can drive south at 80 mph for 4 freaking hours and still be in GA.
I guess NYC is one of the "very small number of major metro areas" and yet OP used it to show how you can't live comfortably without a car if you make $2k/month.
I understand how it can be a necessity to have a car, but we are talking about living, so before a car you need a roof, food, water, healthcare and heating. Based on what I've seen those last few months, there are (a lot of) people that owns a car but don't have a roof or can't buy food or can't have healthcare. So to me it's really weird to link "living comfortably" and "having a car".
> So to me it's really weird to link "living comfortably" and "having a car".
It depends on where you live. In the vast majority of the US, you simply cannot "live comfortably" without a car. You will be locked in your house/apartment unable to really do much other than get Amazon and some chain store food delivery options. There simply isn't infrastructure available for not having a car to be an option. In these areas, a car is worth more than a roof over your head if you still need it to get to work and other engagements.
In the few major cities in the US where you don't need a car - expenses are crazy. Chicago is considered cheap for a major US city, and is one of perhaps 3 to 6 cities you could say you don't need a vehicle to live in. Even here, you are spending considerable amount of money to be in a decent neighborhood within comfortable walking distance to reliable mass transit. You trade your $300/mo car payment for at least that much more in rent.
Cars are unfortunately a "good deal" in most of the US. They are incredibly cheap compared to many areas of the world, and the vast majority of our population requires them to economically sustain themselves. Very few times does the math work out in the other direction - a $3500 beater car is pretty cheap to maintain when it enables you to pay $1500/mo less in rent if you ignore all other quality of life metrics.
Camping and visiting family is definitely a bit tricky though.
Well under an order of magnitude off.
Paris is ~4600 square miles with 13 million pop.
Berlin's full metro is actually comparable. It's about 11,000 square miles, but it's also nearly 1/10th of ALL of Germany.
It's funny how out of touch many non-Americans (and to a greater than one would think extent, upper middle class Americans who live in a few select cities) are with the realities of day to day life in most of the US.
Except in a few select areas where transit is very good and the cost of owning a car is very high owning your own personal means of transportation goes hand in hand with a major quality of life improvement and it compounds your relative earning potential (by giving you more flexibility to work more lucrative jobs or reduce cost of living).
There's a reason it comes third after shelter and employment in the list of things you get as soon as you're out of jail (or a coma).
Even europeans often have this urban blindspot. In some places (eg netherlands), you may be able to live conveniently without a car. For a lot of places (eg >50% of ireland), not having a car is a major lifestyle inhibitor. Transport (or lack thereof) dictates a lot of your life... from work opportunities to whether or not you can access a supermarket.
Even in those European countries that generally have good public transportation, it is simply not the case that nobody needs a car. Many Dutch people I know who commute to work on their bikes also have cars. Anywhere outside the Randstad in NL, not having a car can be majorly inconvenient. In large parts of Groningen, Drenthe or Friesland it will be a substantial barrier to employment. Try living in Workum without a car. I hope you like Jopie Huisman because you're about to become reaaal familiar with his drawings as a sole form of entertainment.
In France, a political elite (btw all of whom do have cars) imposed a fuel tax increase on a population of outer-suburban and rural lower-middle-class workers who have to drive to work. Great result that had.
I think this is important for Americans to understand because if they have pinned their understanding of the art of the possible in terms of what has been done in Europe they should understand that putting in a better bus system is not a panacea and that some places are structurally just not going to be reachable with public transport.
A lot of this is just bad policies, and bad economics. Concepts like carbon taxation were intended to govern inter-country problems and large corporations. Applied to consumers, they often amount to simple regional and income discrimination. Country people drive more because they need to, and "pay up or consume less," applied is both heartless and not very efficient anyway. People drive because they need to, and prices must be exorbitant before these policies can eventually drive out the less fortunate.
I don't think most europeans are that fussy about "how" compared to americans. Car size issues, hybrids or electrics are all fine.
Btw, we should be having more pan-european political discourse. These policies are just bad, and unpopular. The fact that they've been "the gold standard" for so long is 50% lack of a decent feedback loop.
That's because Netherlands changed the country to not rely on cars. It used to rely on cars, just like most countries. It's still far from perfect; there's still loads of places where there are not enough options.
Car-only places is considered restrictive. Similarly, kids should be able to do things on their own. Seems nowadays kids rely on their parents to move them around. That's pretty crazy IMO.
Any other country could do the same. Also people in Netherlands complained that "government is going after cars", etc.
The problem arise when we "go after cars" without an alternative anywhere in sight. I'm pretty dubious of my government's (ireland) likelihood of achieving netherlands-like transport. I'm all for trying. But, the place to start is not by reducing rural car ownership. The reality is that electric cars will probably arrive before rural public transport... at least here.
In practice, there a lot of implicit and explicit anti-driving laws. Many/most of these take the form of economic "incentives." Most affect rural people more. Rural locals don't have much public transport. A lot of these policies are classist too. Changing vehicle standards affect old cars more, making driving unaffordable to poorer people. Same for petrol taxes. Implicit "policies" like allowing a broken insurance system also results in a lot of class discrimination.
In practice, in ireland, saying "you shouldn't own a car" is like saying you should move to dublin or "you shouldn't go anywhere." In cities it means "take the bus or cycle," but not everyone lives in a city.
Meanwhile, I didn't think it's fair that to have policies which essentially mean "poor people shouldn't drive," which many policies with a rural blindspot are.
I would be totally fine with severe anti-car policies in the city or anywhere alternatives exist.
See, Russia has a population density of 8.4/km2 (vs 33km2 in US).
But that doesn't stop Russian cities from building public transport. Just like how empty acreage and dessert wouldn't stop US cities from building decent public transport.
What matters is not the average density of the country, but the layouts of the cities.
A good example is NYC. According to your statement it shouldn't have public transport because the average of the country is too sparsely populated, but that doesn't really matter. Just like how the empty tundra in Russia doesn't prevent Moscow or St Peterburg from building public transport.
One major difference I noticed from the USA is that it's usually, at least in principle possible to get from any point A to any point B in a Canadian city over about 20,000 people, by public transit, because even small towns often have public transit systems in Canada. (It might take a couple hours, though.) In many US cities, it's simply not possible because there is no public transit system.
After all, in every developed country, most people live in cities. Government policy and funding seems to be most of the difference.
While I certainly agree there are substantial bright spots in parts of Canada for transit investment, there's also big and worsening issues.
Rural inter-city transit has been getting drastically worse out in much of country.
VIA Rail has mostly been in a long-term downward spiral of cuts/"service suspensions" outside the main Ontario/Quebec corridor.
Inter-city buses aren't much better. Recent years have had Greyhound giving up and quitting Western Canada, and Saskatchewan shutting down their inter-city bus company. The result being limited patchwork of services not coming anywhere close to the kind of service that used to be provided.
https://www.theguardian.com/world/2018/oct/29/canada-greyhou...
https://edmontonjournal.com/opinion/columnists/opinion-one-y...
And of course Canada has one of the lowest population densities when you average the population across the swaths of uninhabited arctic. But 90% of Canadians live within 100 miles of the US border in a handful of cities.
Regardless, reducing rural car ownership in most places means reducing quality of life. It also reduces economic well being. People have fewer employment options, can't access supermarkets and such...
The whole approach of "make driving expensive" as the main policy vehicle is heartless... The actual way it works is that only wealthier people can drive, and that driving is actually important to people's lives.
It's a totally different proposition in London and in the country. If England (scotland & Wales are more sparse) becomes the netherlands great... but losing your car without gaining regular bus routes is a genuine loss. People need to get around.
Safe bet, if they had succeeded she would never have been seen again.
Human trafficking is alive and well in the United States.
Younger ones always go in pairs, and always with adult seeing them.
Crude we were out for a walk the Other day and one kid was several hundred feed in front of us. Car slowed down and was pulling up next to her. Car pulled away quickly when sibling came out of bushes.
May have been nothing, but still a good scare.
We don't need a car here for most things. But it is still extremely convenient to have one.
Move out of the bigger cities, and things change even more. Bikes are popular, and often used. But very rarely are bikes and public transport able to replace a car. I'd guess like 10% of people go without a car because they don't need it. At the same time, I think almost everyone here will own a bike for just general purpose.
20 year olds in cities don't have cars. 40 year olds with kids generally do, and a lot depends on where exactly you live. The Netherlands does a nice job of providing multiple options. The train and bus links ing rural areas are especially impressive, compared to what we (ireland) have. But... it doesn't replace cars. Cars still exist. People use them, just less. It's moderate.
On the other hand, one could live in Copenhagen or Stockholm for an entire lifetime without actually _needing_ a car.
I can imagine the same applies for much of Eastern Europe as well.
Sprawl certainly plays a part but lack of investment in public transport is big reason why cars are so essential.
I'm a 5 minute drive to the nearest grocery store. For a walk, that's about 3-ish miles. On a bike, not so bad, but also keep in mind there's no bike lane or anything so you're sharing the road with cars. There's some added risk to that.
A car isn't a requirement, but it makes a massive difference in your ability to live.
I'd love to have a viable efficient public transit system, infrastructure, or culture built around it but it simply doesn't exist for well over the vast majority of Americans. All other transit options simply aren't viable alternatives.
Also the way the U.S is structured living comfortably without a personal car means you must be living somewhere where you can work without that personal car, which is a rare job to have, meaning that you can be locked into your employer. Or is that the funny part you're referring to?
on edit: I see lots of people made my second point as well.
That's due to zoning laws being the way that they are. If you'd change the way you'd build up and zone things it would be possible.
The YouTube channel "Not Just Bikes" goes into this in various videos. I couldn't find the exact video that explained the zoning laws, did find another: https://www.youtube.com/watch?v=ul_xzyCDT98 (kids in Netherlands go to school on their own).
Despite Netherlands being considered great for cyclists there's loads to improve. The channel goes into that detail as well, e.g. that major roads are being closed. See e.g. this video of a big road being closed in Utrecht: https://www.youtube.com/watch?v=fePpwYCs_JM (different channel)
Weird how you assimilate living comfortably and having a car.
Done. Wasn't that hard.
Now let's not get carried away with dodging the issue, and get back to the topic of real deception, happily perpetuated, treated as gospel, by the powers that be, since time immemorial.
There are also serious regional differences in what such a wage might be. $2000/month is enough to live comfortably with a personal car in low cost of living regions. In NYC it means you are probably stacked into a decaying apartment with many other people with no car.