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America's True Unemployment Rate (axios.com)
419 points by jbegley on Oct 20, 2020 | hide | past | favorite | 349 comments



This is phrased in a very deceptive way. There are lots of issues with the 'Unemployment' metric. It is indeed a deceptive metric. However, it is deliberately misleading to append 'True' to 'Unemployment Rate' with a custom definition intended to make an argument. You are stacking confusion on confusion instead of clarifying. If you want to create a different metric around a 'living wage,' then it should be defined in a way that makes that more clear.

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.


I agree that there is no "true" measure, just different measures.

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.


>They don't consider that most unemployed 58 year olds are not counted because they "retired," stopped seeking work or receive a disability benefit.

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?


I thought I'd bother after reading your comment.

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.


74.1 million children

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.


Am I reading this right: almost 1 in 5 American adults is on disability?


Yes. Disability numbers are shockingly high. It's an issue that is really not talked about enough.


Collecting disability doesn’t necessarily mean you’re incapacitated or can’t work at all. Depression is a common disability, for example. It’s very common for veterans who served more than 4 years to get some amount of disability if they are persistent, and often not for crippling injuries (sleep apnea is a popular one)


Yes, it is truly scary. A large portion of them are in more rural areas that have been decimated. Also, IIRC states pay money to trainers/consultants that help people get on the national disability programs.


That number doesn't match what the SSA publishes in their annual reports.[1]. They put the figure on disability at 8.9 million disabled workers, with 11.2 million total beneficiaries once you include the disabled workers' children.)

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

1: https://www.ssa.gov/policy/docs/statcomps/di_asr/2019/di_asr...


No idea why this was downvoted into oblivion, so I vouched for it. It seems to state factual information and cites direct sources. The information presented is located on page 29. Maybe instead of just drive-by downvoting, you can state some reasoning for doing so.


For a second I thought I'd lost my ability to vouch, then I reloaded and found you had already done so. Thanks for recognizing good posts!


Exactly right.

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.


> reality is that "unemployment" is a highly visible metric.

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.


> Why should any of these people be considered "unemployed"?

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.


Well it's a spectrum. Many of those who are happily retired would be willing to go back to work if someone offered them enough money. As wages rise the labor force participation rate also goes up.


That’s like saying your house is for sale because if someone offered you enough money you’d sell it. Therefore all houses are for sale?

Opportunistically earning some extra cash is a lot different than having to work for a living.


Yes all houses are for sale. What's your point?


> As wages rise the labor force participation rate also goes up.

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.


> As wages rise, doesn't inflation rise as well

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.


Intuitively, printing money can't be the only cause at least at a non-macro level. 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. This demand-pull inflation against the goods and services we use to measure inflation would cause the measure of inflation to rise and everything that indexes against this measure would adjust.

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.


> Intuitively, printing money can't be the only cause

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 think we're talking past each other here. I don't disagree with you at all on a theoretical level. Yes you need more money chasing the same goods.

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.


> 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.

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.


If both "demand pull inflation" and "cost push inflation" are standard economic terms, how can you claim that it's a misuse of the term inflation?


> 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.

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.


> There are other possibilities.

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.


> if the production of goods and services is unchanging, and people's needs are unchanging, the only possible source of price changes

...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?


> ...is changes in expectations about future needs or productivity.

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.


But that’s exactly how the survey works. They ask people if they are available to work and if they are actively seeking work, regardless of age.

https://www.bls.gov/cps/cps_htgm.htm#unemployed


You can want a job, but not be looking for a job because your prior attempts to secure one have been unsuccessful. This is called discouraged unemployment and figures into the overall category of marginally-attached workers.


> we can't read people's minds

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.


This is how economics goes astray.

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


>Why should any of these people be considered "unemployed"?

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...


Yeah, but that information is captured under an different measure.

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.


>"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."

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.


Most people retire with an income stream that is enough to live one. Now I'll grant that enough to live on is low standard of living, but it will pay for food, health care (most get some form of medicare), your apartment, and you can afford a basic car. Of course if you live in a high cost of living area like San Francisco it isn't enough, but for most of the US you will live an nice enough life. You can always want more, but your needs are met.

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.


I think the bit you're missing is that there is a cohort of people who haven't retired, precisely because they lack an income stream that is enough to live on, but they are counted as retired by most measures of unemployment.

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.


Off topic: I wish people would correct errors in my views and my understanding using a style like yours.


How do you know he was counted as retired? BLS shares their survey and how they determine if someone is unemployed - they basically ask if they are available to work and actively seeking work. I didn’t see any cutoff for age.

https://www.bls.gov/cps/cps_htgm.htm#unemployed


I could definitely be wrong, but my understanding is that when unemployment benefits run out, so does one's status as unemployed, since they've lost the point of contact that enables them to ask those questions.

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.


Number of unemployment insurance claims is sometimes cited as an economic indicator, but it's definitely not the main measure of unemployment.

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...

[2] https://www.bls.gov/cps/cps_htgm.htm#unemployed


Check out the link in my reply above, it's pretty interesting. It lays out exactly how they collect the unemployment statistics and calls out that they can't use unemployment insurance numbers for the exact reason you said - benefits run out, but people are still looking for work.

They basically survey 60,000 people and ask a specific set of questions to figure out which "bucket" people are in.


U-3 does not exclude those whose benefits have run out but are still actively looking for work. It relies on social insurance claims in part, but also uses surveys to estimate how many folks are looking for work that aren’t receiving unemployment.


>> Why should any of these people be considered "unemployed"?

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.


> "Why should any of these people be considered 'unemployed'?"

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).


> if you want to know how well we're allocating our (labor) resources as an economy

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.


>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.

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.


> right now they are "macromanaging" it away from a system that could possibly work

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.


that "we" is the whole of the citizens and residents of the country, not a central planning committee. the government is the power apparatus that is meant to express and realize our common good. as a power apparatus, it cuts both ways, and we must remain vigilant as citizens on keeping it aligned with our goals and desires.

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.


> that "we" is the whole of the citizens and residents of the country, not a central planning committee

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.


Yup, the occasional hedonistic adjustments and product substitutions that they do for CPI is already prime fodder for perpetual inflation conspiracy stories. It will be a disaster when they do even more subjective "degrees-of-unemployment weights".


Wouldn't it be great if HBO provided us a link to their "important new data" but since they don't we can't look at it for ourselves.


> people in the real world need to use it

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.


But the article's graph shows exactly the opposite. According to the "true unemployment rate", the job market has fully recovered from the COVID shock and is sitting at where it was in 2017-18, whereas the official unemployment rate indicates that there's still a problem. I assume we can agree that there is indeed still a problem, so it seems like the official statistics have it right here.


While this may be true, the article's premise that the BLS was somehow cooked up to hide the "true" unemployment rate rings hollow, mainly because the BLS also tracks and reports tons of other labor-related statistics, including for example "discouraged" workers, those working part-time but want to work full-time, overall labor force participation rate, etc.

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.


Question: which figures are reported more prominently by the BLS?

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).


BLS calls U-3 the "official unemployment rate" I guess, but they publish it in a table with 5 other measures that count different things. I'm not entirely sure it's fair to blame them for the fact that most people just focus on that one measurement.


The fault is with the US newsmedia, which very consistently always talks ONLY about the U-3 number, and in my years, has never acknowledged that their are other numbers worth discussing.


The BLS statistics are pretty much like the food labels: They'll slap a huge "0% fat" sticker on the front of the package to appease the public conscience. But you need to carefully read the fine-print on the back to find out what's that you're consuming.


>They'll slap a huge "0% fat" sticker on the front of the package to appease the public conscience. But you need to carefully read the fine-print on the back to find out what's that you're consuming.

...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?


> being "honest" by slapping a "contains scary sounding chemicals" sticker

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.


> People (including journalists, politicians... high stakes stuff) assume that unemployment captures most unemployment.

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.

https://fred.stlouisfed.org/series/LNS12300060


What's the source of the general increase from 1960 to 2000? The trend away from couples having one member stay at home running the house toward having both members with outside employment?


Yes, exactly.


This rate seems like it would hide the extremely real phenomenon of people being forced to work after 55.


> people being forced to work after 55.

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.


Thanks for posting this site. I was a bit confused by the recent dip in this chart:

https://fred.stlouisfed.org/series/TOTLL2564

Until I realized it's likely due to COVID-19 deaths.


This is the labor force, as it says: "the sum of employed and unemployed persons."

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

https://www.bls.gov/cps/definitions.htm#nilf


That dip is more than 4M people, so I think it's still unexplained. Perhaps due to a shift in response rates or another artifact of COVID churn in the survey methodology?


No most of the COVID-19 deaths were in the older cohort. That wouldn't significantly impact the civilian labor force.


It’s a drop of 5M. 5M people haven’t died from Covid in the US. Plus it just went up by 2M.

But I am curious about that drop.


You're right, I was skim-reading it as a few thousands (and jumping to conclusions). Not sure what's going on with that dip.

Edit: It would be interesting to compare this to an up-to-date graph of US deaths (all kinds), if one exists.


Yeah. I remember back in 2016, all the self-proclaimed fact checkers insisted that the official headline unemployment rate was the real unemployment rate, and that any claims about employment that didn't match up with it were lies by Trump. Now that he's the incumbent...


> 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

Would not "high stakes" non-dilettante observers know about, and review trends in, the labor participation rate and other metrics?


The “true” is a little sensationalist though I doubt they were expecting anyone to care about their investigations. They were still going for “a more true”. They’re not accounting for retired 65+ year olds. That’s a little suggestive of just wanting to quickly look away.

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.


>People (including journalists, politicians... high stakes stuff) assume that unemployment captures most unemployment.

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.


I feel like it is on the reader to understand that to some extent everything about measuring is about HOW you measure.

This article is one of MANY that recognize this, and it's by a journalist, and I've seen politicians note it as well....


Sean Hannity talked about it non-stop during Obama's second term, then mysteriously dropped it when Trump took office.

Basically, there are no surprises here. Everyone uses the numbers that favor them and hurt their opponents. Everyone.


I think there is a varying level of folks intent and awareness of their biases to the extent that 'everyone' isn't accurate.


There's labor force participation and it is measured. It's just much more complex and can not really be understood as a single number - people can be out of workforce because they are retired, because they are sick, because they are wealthy, because they can't find work, because they are in prison, because they rely on somebody else to supply their income, etc. etc. Probably too complex for an average newspaper headline.


The statistic they are describing as the “True Rate of Unemployment” isn’t that. It’s the rate of which society is earning a poverty level wage or less. It’s a useful statistic and one that deserves discussion but it’s not the “True Rate of Unemployment”. They are just different.


I completely agree, and reports on unemployment rates are one of my biggest Internet peeves:

"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.


this is the first time I've seen U3 and U6. I didn't realize BLS had different stats. For those interested, here is their definitions.

https://www.bls.gov/lau/stalt.htm


Article does start with:

> 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.


> A person who is looking for a full-time job that pays a living wage — but who can't find one — is unemployed

"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.


It's not that deep, or confusing. If you look at the unemployment chart, it has a caption.

   Data: Ludwig Institute for Shared Economic Prosperity; Chart: Axios Visuals
The source for that data is a hyperlink to [1], which defines the living wage at $20,000 per year before taxes.

> 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].

[1] https://www.lisep.org/

[2] https://assets.website-files.com/5f67c16a6ca3251ecc11eca7/5f...


> which defines the living wage at $20,000 per year before taxes.

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.


Did you read the second link I posted? Because that's spelled out on page 2 in the Methodology section. More generally, are you here for curious conversation? Because your comment is full of generalizations and cynicism rather and does not address anything I, or the linked study, said.


$20,000 was chosen because LISEP concluded that anything beneath that wage could fairly be considered a poverty wage, based on the U.S. poverty guidelines put out by the Department of Health and Human Services, which considers a three-person household to be in poverty if it has an income of less than $20,000 per year.

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.


I think you just explained the point of the article to yourself.

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.


Unemployment is not the only economic measure. Basically what you're advocating is fighting misleading claims by politicians by creating your own, even more misleading (at least the politicians talk about unemployment when they say "unemployment") metrics which makes even harder for the voter to understand what is going on because it mixes a half-dozen of different societal problems into one number.

> 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".


>$2000/month is enough to live comfortably with a personal car in low cost of living regions.

If that 2k/mo comes with reasonable health insurance and some retirement plan.


Retirement comes with medicare in the US, so there is somewhat reasonable health insurance.

> 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.


You realize that's $24k/yr right


More than the vast majority of the world lives on, including many in first world countries. And this is pre govt transfers, which usually amount to quite a bit more in benefits.


Hey, live like there's no tomorrow, isn't that part of the American Dream? :D


Completely disagree. Yes there is some level of subjectivity here but the definition this article is using is muchcloser to the definition to what an uninformed person would assume whereas the traditional definition is intentionally deceptive.

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.


Yes, I completely agree with you. The top comment, like many top comments on HN, fails to understand the bigger picture/message, and instead nitpicks one thing thus making everything "false". It's a really, really said phenomena amongst this hyper logical crowd.


2000 a month is really tight, even if you live in some of the cheapest rural towns in America. If you have a family, it’s poverty wage.


$2000/mo take home in a cheap area is great. $2000 gross is going to be a lesson about taxes.


> $2000 gross is going to be a lesson about taxes.

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.


People really get hung up on the name and I can't blame them. Calling it the "Employment Index" would be a better fit. It's only ever meant as an indicator and not to be a pat answer to very complex question.


IMO labor participation rate is a better, existing, metric for understanding what is happening with labor, cross racially.

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.


Throws the ordinary unemployment rate into the category of 'false', which I agree with. To class 'any job' as employment is unhelpful and greatly misleading.

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.


I generally agree with you, but in this particular case, they defined "living wage" very conservatively as $20,000/year [1], which is $1667/month or $9.62/hr assuming a 40-hour week.

So, if anything, I'd say it's low-balling the number.

[1] https://www.lisep.org/


I thought the title was okay—I got exactly what I expected.

"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 think the problem that Unemployment has been a Key Performance Indicator for government that has now been completely gamed by the government to the point of being useless as an indicator.

I don't think that trying to come up with an improved metric which highlights the real situation on the ground is 'deceptive'.


> $2000/month is enough to live comfortably with a personal car in low cost of living regions.

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 live in a major US city for $2k/mo. It's not that hard. And if I lived in a cheaper area or city I could be much more comfortable.

I think living on about this income is common for grad students, who mostly live in areas with "opportunity to advance upward".


What city could that possibly be? You must be living in a paid off house and act like everyone has that luxury.


I pay rent. Finding a place to live for under $1k/mo is really only hard in a few cities. In many places you can do better if you can buy.


$2000k = $2,000,000. And sorry, even that isn't enough to live comfortably in SF.


Oops. That's what I get for staying up too late.

I wouldn't wish living in SF on my worst enemy.


I think most of my worst enemies already live there voluntarily.


Different Unemployment Rates are defined and calculated differently because they are different. Simply listing a number called the unemployment rate is in itself disingenuous as the context of what type of rate is important. But it's easy for an article to list a number that fits their narrative and not explain what the number means. The context matters, per usual.


I agree this is a weird way to measure it but I think we don't measure it correctly. We don't measure underemployment, meaning people who used to work full time but have stopped even looking for work (*and are not retired). I'd like to see unemployment measured more like total population minus those employed.


They do have a measure that also reflects underemployment. The broadest measure is called U-6, "Total unemployed, plus all persons marginally attached to the labor force, plus total employed part time for economic reasons, as a percent of the civilian labor force plus all persons marginally attached to the labor force." That also include the U-5, "discouraged workers, a subset of the marginally attached, have given a job-market related reason for not currently looking for work."

The measures are available, and they're usually in the vicinity of twice the regularly-reported (U-3) rate.

https://www.bls.gov/news.release/empsit.t15.htm


The BLS reports 6 different unemployment metrics. https://www.bls.gov/news.release/empsit.t15.htm

Several of them do measure underemployment.


This is the key.

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.


U-3 will still be useful for answering many questions even if it becomes a lesser-used stat among politicians, because it's been tracked for much longer and because it's tracked by almost every nation. You're not going to magically squeeze U-6 numbers out of Ireland in 1952.

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)?"


Absolutely true. No disagreement there.

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.


That's captured in the workforce participation rate, which is indeed at a 20 year low: https://fred.stlouisfed.org/series/CIVPART


(I've scrolled 1/3rd down the page and am picking you at semi-random for this comment, so this isn't just a criticism of your framing, but of plenty I've seen so far)

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.


Fair enough. I should have been more specific. My intent is that it is people of working age. This needs to also account for status of school and retirement. However, we should be able to get trivial numbers for these from SS and college reporting to get an fairly accurate number.


In that sense you'll get people such as Bill Gates as unemployed as they are not on the payroll.


So? He's not statistically significant.


Right - the second that they included 16-17 year olds in this, I started to pay less attention. I do want to go back to this and look further to see if I can glean out that demographic as well.


Reminds me of the official interest rate. I don't think it even goes by original CPI calculations anymore.


I believe the other rate has been traditionally called "underemployment"


> $2000/month is enough to live comfortably with a personal car

Weird how you assimilate living comfortably and having a car.


FTLW Unemployment Rate (FTLW: full-time living wage).

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.


For a simpler source of better food for thought just check the official participation rate.

https://www.bls.gov/charts/employment-situation/civilian-lab...

The article crafts a nice shocking headline, but the substance is disappointing. The BLS measures unemployment many different ways (U1-U6)[1] plus the civilian labor force participation rate, so the official data also shows these higher unemployment rates as U6, and has tracked them over time. Of course politicians and the media like to pick apart that data and focus on whichever part of it best supports the narrative they intend to tell. But the data is all there for all of us to see and interpret for ourselves.

1: https://www.bls.gov/lau/stalt.htm


The book "Men Without Work: America's Invisible Crisis" by Nicholas Eberstadt also points to this too. Even though it's four years old, it uses BLS data to show the labor force participation rate and how it has been gradually declining for decades. There also isn't a clear solution since there are so many different causes that contribute to the high number.

The Axios article is highlighting the problem, but is going about it in the wrong way by conflating terms and not offering any further insight into the issue. If they mentioned the participation rate or the types of measurement that you noted, it would be a much stronger piece. But I want to underline your point that the data is available and anyone curious should look at it to see the trends for themselves.


I agree, the structure of the argument in the Axios piece is misguided: BLS produces U6, and the journalists don't talk about it, so the BLS is doing something wrong (says journalist).

The idea of a national living wage is ridiculous, given the vast disparities in the cost of living.


Why should it matter that cost of living varies?

If you move to San Francisco, you should know that your money isn't going to go as far; conversely if you move to Tulsa you should reasonably be able to take advantage of the low cost of living to build up your savings. If you're residing in Tulsa and still only just surviving, you're not earning a living wage.

Then there's the fact that besides food and rent pretty much everything we buy nowadays is nationally priced - amazon doesn't give you a discount for moving to a low cost of living area; and you don't get to pay lower taxes because cost of living is higher.

But beyond all this, the disparities arise almost exclusively because of a few outliers - maybe 5% of people in the country can live comfortably on less than $20k/yr and less than 10% require substantially more; the vast majority of Americans are close to the average.


It's tougher to say that people in high COL areas need to uproot themselves when they fall on hard times. Depending on the means testing scheme, this can actually come out more expensive for the welfare system. Sure it can spend less on rent, but now that you're 3000 miles away from Grandma it also has to buy childcare. Now that you're in a new place with no friends, maybe you get depressed and need mental health services. Etc, etc.


Rent is absolutely not nationally priced. It can vary 10x.

Because we don't want to set a baseline unemployment statistic which counts people as unemployed when they are earning enough to live in a decent apartment, while the same wage would leave them homeless in a city. By setting higher minimum wages, we effectively raise the cost of living everywhere, as the price for the slow changing supply of housing rises. As the cost of living rises, the comparative advantage of goods produced in the USA is further reduced in comparison to countries with lower costs of living. This results in less manufacturing occurring in the country, and eventually more real unemployment.

What we should be doing is allow for the creation of more low cost of living areas, where what is globally a decent salary is sufficient.


I don’t know if participation rate is fair either. Largely because (a) the population is aging and is likely to retire (with wealth amassed and (b) this is really only possible because the government has started subsidizing pretty much everything (food, healthcare, housing, etc) either generally or for those “too poor”.

I personally know a significant number (at least 10-15) that exclusively live from government handouts (this is beyond simple social security). They have little incentive to try and find a job, frankly and many actively live with food stamps, housing subsidies, free healthcare, and just kinda bum around.


> I personally know a significant number (at least 10-15) that exclusively live from government handouts (this is beyond simple social security). They have little incentive to try and find a job, frankly and many actively live with food stamps, housing subsidies, free healthcare, and just kinda bum around.

I will be very honest: this is a very unsubstantiated claim, even if you know personally 10-15 people who are just bumming around and living on benefits that is a very small portion of benefits claim in society and this kind of behaviour will always exist. Benefits fraud is a thing, the good that benefits and welfare does to a society are much larger than the impact of fraud.

Do you really believe that someone who lives with handouts from the government have very little incentive to get better? Do you believe that this almost less-than-baseline level of living is enough to make a significant portion of the populace unwilling to work? To the level where participation rate would become unfair? Have you ever lived on that lifestyle to check your assumption that they have "very little incentive to try and find a job"?


As someone who grew up relatively disadvantaged, I think I probably know a larger percentage of those “taking advantage” over the the “average” American. Further. I also used to volunteer regularly helping donate food, helping families, etc.

I don’t think people realize how good “baseline” really is, compared to even 2-3 decades ago. Just as an example, most people can get free housing from the state provided some paperwork (again I helped quite a few people, including family members, with this.).

I actually stopped volunteering in this space, BECAUSE I saw it being taken advantage of. Probably 75% of the people I assisted were capable of working physically. Now, mental faculties are a bit of a different issue, only probably 50% had the mental disposition to work a regular job.

That being said most people can contribute something in exchange for wages. Unfortunately, many don’t because it’ll either cut their incentives there’s a valley between maintaining life quality off the state and the minimum wage. You have to make significantly more than minimum wage to have the same quality of life in some cases. You can even see stories of this with the pandemic (people making more on unemployment, so they don’t work).

I’m also not arguing if it’s a good thing or a bad thing. Just that, at least from my experience, it appears to be a thing. I also don’t think we are collecting good data on this, particularly for political reasons (or incompetence). If we had the real stats I’m sure people who need these programs would also be left without them (because programs would be cut). I really don’t know a good solution. Just that it really should be explored, because many people have an inaccurate understanding (again from my experience).


I think it is really difficult to fix the issue where having a job is worse than not having one.

If you make sure the benefits are below what the market more or less defines as minimum wage, then people on benefits are going to have a dreadful time.

If you try to smooth the benefits loss, then you mostly end up subsidising employers. (I can reduce wages because the state will pick up the difference.)

If you increase the minimum wage, then you increase the numbers of people who "can contribute something" but not enough to make sense economically speaking.


yeah - but if you increase the minimum wage all you're doing is hurting the middle class. If i had a relatively Okay/good job that required some kind of education (phlebotomy, for instance) and get paid $20 an hour, I can live comfortably. Once you raise the minimum wage to $18 an hour, my pay isn't going to jump but you can bet inflation will.


> Benefits fraud is a thing, the good that benefits and welfare does to a society are much larger than the impact of fraud.

To back this up, Florida implemented drug testing for some welfare [1] and the cost of the testing _far_ outweighed the money lost via fraud. It may be hard to believe for some, but there are a staggering amount of needy families that wouldn't be able to survive without assistance. I concur with the article about living wage being an issue, but that number is very region-specific.

1 - https://www.tampabay.com/news/courts/florida-didnt-save-mone...


The cost of fighting fraud often is more than the fraud you catch - because the act of fighting fraud means those who would commit fraud either don't, or hide their tracks. Thus the result isn't unexpected and doesn't say anything about if it is a good idea or not (which is a very complex argument that I don't know enough to get into)


> Have you ever lived on that lifestyle to check your assumption that they have "very little incentive to try and find a job"?

Yes, I've lived and clawed my way out of that lifestyle. And yes, I absolutely feel most have very little incentive to do so.

I am told these days welfare benefits fraud is something at some tiny fraction of less than 1%, but my experience and those of my friends who have grown up similarly really shows a vastly stark difference between lived experience and statistics.

If you'd have asked me growing up I would have told you benefits fraud was rampant and the norm. Now I'm not so sure, but I am absolutely certain the definition of fraud has changed. Fraud to me and many others is "someone who could otherwise get a job but puts no effort into doing so or improving themselves towards being a self sufficient person" - where to others it seems more outright fraud in a white collar sense like claiming too many dependents.

It's a difficult topic for me because the "science" so jarringly conflicts with my lived experience.


People vastly and I mean vastly under estimate how poor of living conditions many will accept if they don't have to lift a finger to provide for themselves.

More than half our federal budget goes to aid programs, from social security, medicare and medicaid, to thousands of assistance programs. States then add to this total. People routinely complain that the government does not do enough to aid the poor but what they fail to understand just how much is already spent and that a good portion is misdirected; too much ends up as jobs programs for friends and family of politicians.


The problem is it is hard to figure out what is required.

I knew a lady (she died of old age 15 years ago) who was able to work 20 hours a week - not quite enough to live on - but when she went over 25 hours a week had a mental breakdown and spent 6 months in the mental hospital. It took many repeats of the cycle before it was even realized that 20 hours was her limit, but those responsible for her case didn't have options to help her because she could partially support herself normally and appeared able to do more.

The above is but one case - probably unique to just her, but I know of many other unique cases each with a different situation. The point is we cannot treat the poor alike. However not being able to treat them alike means there will be fraud anytime someone figures out how to work the system.


The GP didn't imply nearly the level of judgement that you're projecting on him.

>this is a very unsubstantiated claim, even if you know personally 10-15 people who are just bumming around and living on benefits that is a very small portion of benefits claim in society and this kind of behaviour will always exist.

I know a little under ten people who do the same. Nobody so far in this thread is claiming they aren't a small portion of benefits claims. Nobody is claiming they won't always exist in some number. You're the first person so far to even use the word "fraud" here. Nobody is even saying they should be cut off. People are only saying that they don't fit cleanly into the existing unemployment metrics.

>Do you really believe that someone who lives with handouts from the government have very little incentive to get better?

What good is the incentive if you don't really have the life skills to work towards that end. It's the same kind of incentive that a plumber has to start the next Google and retire as a multimillionaire. Sure it would be nice but all of these people I know are not in a practical position to improve their situation through work.

>Do you believe that this almost less-than-baseline level of living is enough to make a significant portion of the populace unwilling to work? To the level where participation rate would become unfair? Have you ever lived on that lifestyle to check your assumption that they have "very little incentive to try and find a job"?

Unwilling is a strong word. It's not so much an unwillingness in that their existence is stable and they're not gonna rock that boat too much let alone run the rat race just to get inches ahead. These people, in my observation tend to do under the table work or deal drugs to increase their income since those paths are readily available whereas entry points into a career are far more foreign to them. (And before anyone projects their own biases on me, I consider small time drug dealers to be legitimate businesses and I don't think there's anything unethical about an under the table wage laborer job.) It's foolish to expect these people to get McJobs in light of their options and how their benefits tend to interact with income and how little that would improve their situation. The money goes right back out anyway. The value proposition of constantly working harder just isn't there.

These people's incentive to work a job is a lot like a middle age upper middle class white collar professional with a family and a mortgage's incentive to start their own business. Sure you can do it and you might make substantially more money doing it but it's a hell of a lot of work compared to what you're doing now and it comes with risk and since you're stable in your current situation you're probably gonna stay there.

I'm not sure whether there's enough of these people to be an issue for unemployment numbers but there's definitely a lot of them out there (which is regrettable).


> They have little incentive to try and find a job, frankly and many actively live with food stamps, housing subsidies, free healthcare, and just kinda bum around.

Like the sibling commenter, I find your post very suspect, mainly because (in the US at least) if you are a non-disabled person without children between the ages of 20 and 55 it is extremely difficult, if not impossible, to get enough gov't benefits to survive (at least outside of covid-times)


Feel free to read my other response. Generally, I agree you should be suspect of my statements. We should also be suspect if the statements you’re making.

The reality is that neither of us have solid stats because, in my opinion, politically no one wants to investigate how often the system is taken advantage of. Frankly, it’s hard to determine “can someone work” is a nearly impossible question to answer. Instead it’s, “how much money do you make a year” for many of these programs


Thanks, I thought this and your other response were very insightful.


I don’t see how your anecdotal data can be counted as more valuable than BLS data backed by payroll, benefits, and subsidy data from employers and providers.


It is concerning that the top comment on this article is an attempt to divert the argument from the substance and implications of the article to numbers. It is the equivalent of responding to a statement that "the ship is sinking" with a detailed analysis of the technique to measure the depth of water.

The truth is not a number, but a fabric of information. There have been frequent articles describing the large number of layoffs due to the pandemic, and a number of articles reporting that a substantial number of Americans cannot afford an unexpected bill of $300.

If you are one of the fortunate people who make a living wage as defined in the Axios article you might well consider what it means if in fact half or more of the people around you do not.


The problem is the article isn't reporting a fabric of information. The article even calls their metric the "True Unemployment Rate". The name of the metric alone should give you pause when the situation is as complex as it is.


As of right now, your comment is the top comment on this article. If you want to reply to someone's comment, why not just reply to it?


a number of articles reporting that a substantial number of Americans cannot afford an unexpected bill of $300

That reporting is wrong.

https://www.bloomberg.com/opinion/articles/2019-06-04/the-40...


How do you know the “ship is sinking?” What unemployment number is necessary such that the ship is not sinking?

This article admits that the true number has been relatively much higher for nearly the entire history that unemployment has been measured by the federal government.


The problem with unemployment numbers is that you only realize that the ship was sinking after the fact. The exact line of percent unemployment (and length of unemployment) at which a society falls apart isn’t a known factor.


I'd trust the article more if I were confident that it wasn't an attempt to sell another ship that may or may not have more holes than the current one.


The point I've always taken away from the US's faniciful unemployment numbers is that the USG could be doing A LOT more research in this area, but instead chooses not to. The Department of Labor, or some other government agency, could publish many different metrics that explore the issue of unemployment in many different ways. Because like any social phenomenom, there are lots of different ways to slice this pie.

Instead the USG deliberately chooses not to, because they don't want the issue of unemployment explored. Congress could mandate that unemployment metrics be gathered in dozens of different ways, with dozens of different definitions for what it means to be unemployed. But they don't. This is the point, and really the only point that matters.


That's patently false. The government has an array of measurements, all public.

https://www.bls.gov/news.release/empsit.t15.htm

I would argue the number they report to press is the wrong one (U-3 vs U-5 or U-6), but a single figure is used for consistency and ease of consumption.


The stats cited in this article are headline-worthy but they don't make much sense.

If you think about what employment means in the context of labor and wage earning, until the early 1900s, most in America would now be counted as unemployed, since they were rather "employed" in agriculture and domestic work, neither of which would be counted as a living wage today. In addition, most women, a large part of today's workforce, did not actively participate in the labor pool (looking for full-time employment as the BLS cites for employment), however that drastically changed in the 1960s and onwards.

As such, the current definition of employment is rooted in the realities of where employment was in the early 1900s. Today's definition might not jive with what the Axios article is stating, but what the Axios article is stating is not really about Employment, but rather about Income generation.

The notion of generating income must be separated from the idea of full-time employment. In the gig economy, side hustle world, most gig workers would not be counted in the employment rolls. As such, do the employment numbers matter and do we need something distinct to measure what Axios is stating here, which has more to do with income earning than full time employment?


Agreed, I am a freelancer making six figures married and my wife hasn't worked since we were dating. So according to their definition my wife is unemployed, not making a "living wage" and so am I. This is a perfect example of why I pay little attention to the news. They or their editor must have known this was bs but decided to publish it anyway for the clicks.


Whose definition are you referring to? The official BLS unemployment statistics only include people who are actively looking for work, so they wouldn't count your wife as unemployed.


The article's definition


qw3rty01 is correct, the articles definition.


Exactly. What is currently touted as an Unemployment number should be renamed: "% of those who are seeking full-time employment but not currently full-time employed". Perhaps "Unfulfilled Job Seekers" might be a better term than "Unemployed".

The other measure should be "% of working age Households where household income is not at or above average living wage adjusted by region". Then that is a measure of income and poverty and not a measure of "who has a full time job"


When I looked at this a while ago I selected the male 25-54 years old population to remove situations like the one of your wife, schooling, and retirement.

Graphs are a bit old:

http://guerby.org/blog/index.php/2010/01/31/211-larry-summer...


What? No, not at all. According to the definition of the article you aren't included because you aren't looking for a job.


> If you measure the "unemployed" as anybody over 16 years old who isn't earning a living wage...

Over 16 years old, a lot of people are at school / university and likely "funded" by their parents. And those who work in order to study because their parents can't/don't help them, they don't obviously pretend to earn more than 20K... they work simply to survive while they study but when they are graduated, it's another story... Is it all counted as "unemployed"?


Generically, depends on what you want to know.

No measure tells you everything, and measures that try obfuscate everything. Is it useful to know what portion of the population is working, what percentage of 16-22 yos are working?

An increase in employment rate among women might mean more good jobs are available. It might mean that times are tough and women (or men) with small children need to work more. It might mean people can't afford to retire, or that 60+ people are having trouble finding a job, etc.

IMO the problem is an obsession with creating a measure that maps perfectly to an imprecise term. "Unemployment," in the abstract, is not a perfectly defined thing. The measure should not define the thing. Measures should be used to understand the thing.


> a lot of people are at school / university and likely "funded" by their parents

That's true only for kids of upper middle class families, and thus a vanishing component for a whole-workforce number like this. Kids of families whose parents bring home something close to the median household income ($70k or so) are not being "funded" at school in any meaningful way, certainly not at a number comparable to employment.


I agree with you, with different reasoning. The number of people without adequate employment (as in, they'd take a full time living wage job over their current situation) is a useful means of understanding the economic situation.

Counting a student who has reasonable expectations of living wage employment, post graduation, distorts that measure.


It should be.

For all practical purposes, all university students should always show up as "unemployed" in any statistics, because they are -- and they'll need to earn all of that cash back and then some extra, at some point in their lifetime.


Your definition differs from the one used in the article "A person who is looking for a full-time job that pays a living wage — but who can't find one — is unemployed"

I expect there's value in the statistic of everyone who lacks a full time job (unemployment in the sense you mention), but a student who has reasonable prospects of employment in X years, post graduation, is significantly different than someone failing to find an adequate job right now.


So why should we not include children of all ages and retied people as well then? They are also unemployed.

The reason you don't include full time students is the same for children and retired people. They are on their way to becoming productive citizens or have done their part for society.


What about retired people who aren't really retired, they are just drawing on their pension sooner than they'd like, as a desperate alternative to employment money to lengthen their rental runway to homelessness? Or they are drawing on a pension while doing food delivery gigs on the side to top it up to pay for essentials?

I'd suggest a useful definition of "unemployed" for the purpose of evaluating if there's a problem is: "needs a job but can't get one".

That covers retired-but-not-really people, and students who need to work for a living at the same time but are between jobs. But not children, or students with enough to live on from their parents.


Many full time students are employed throughout college. As someone who attended the state colleges my family could afford, most students had part time employment and many were working full time.


If they are "funded" by their parents - why would they need to earn any of that back? Is that really how it works in the US? It's a matter of course in other countries that parents fund the education of their children.


> It's a matter of course in other countries that parents fund the education of their children.

In some countries. In others (such as Australia), students take out an interest-free loan from the government, and are expected to pay it back, with or without the help of their parents.


Are most students funded by their parents? I certainly wasn't, and neither was my wife.


You can't forget the HN demographic of upper middle class white men who pay for their children's education. I'd say most young adults entering college have a loan in their name.

Cursory research [0] says

>Today, roughly 70% of American students end up taking out loans to go to college. The average graduate leaves school with around $30,000 in debt and all told, some 45 million Americans owe $1.6 trillion in student loans — and counting.

[0] https://www.marketplace.org/2019/09/30/70-of-college-student...


Again that is a very US-centric view. You don't pay 25,000$ a year for attending a university in Europe.


The post is titled "America's True Unemployment Rate," so it does make sense in this case to assume were talking about USA. I certainly was in my comment above.


Fair point about your comment, I'm just trying to make my point based on the original generalization I replied to: Part of it is simply wrong even for the US (see siblings), and the rest cannot stand as a generalization for the rest of the world, which "any statistics about students" doesn't account for.


Thanks, HN is a US-centric website.


> For all practical purposes, all university students should always show up as "unemployed" in any statistics, because they are

That’s funny because I worked the entirety of my time as an undergrad, as did many of my peers.


Sorry, I worked through my entire undergrad as well.

I meant we should never exclude young adults from unemployment metrics. If they aren't employed at a living wage, they aren't employed, being a student should not "bypass" that metric in any way.


Over 16 years old, a lot of people are at school / university..

This is especially important to note given that unemployment skews towards younger people.


Students attending school are classified as "not in the labor force" because they are not available for work.

https://www.bls.gov/cps/cps_htgm.htm#ui


Eligibility for UI is not related to the BLS classification of "unemployed": https://www.bls.gov/cps/definitions.htm#unemployed

A college student may be considered unemployed if it is actively looking for a job, but does not have one. Similarly, it may be considered employed if it does have a job.


> Is it all counted as "unemployed"?

Well are they employed by anyone? No. So they're unemployed. It's perfectly valid to be unemployed while studying... but you're still unemployed.


That makes it a less useful statistic for talking about problems around unemployment. I think that's why the BLS has so many different measures of unemployment.

If I had enough money in the bank to live the rest of my life comfortably, there's no way I'd be employed.


“Unemployed: People who are involuntarily out of work considered as a group.”

I think it’s misleading to classify these people as unemployed, since many of them choose to not work. If they wouldn’t have had a job anyways, it skews the statistic.

https://www.wordnik.com/words/unemployed


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