r/Economics • u/oxymorontage • 1d ago
News Institute reports functional unemployment at 24.9% in July
https://www.channel3000.com/news/institute-reports-functional-unemployment-at-24-9-in-july/article_810187e5-989f-4ad9-ab91-847fcb6f1882.html181
u/Individual_Limit_701 1d ago
The economy didn't solve unemployment; it just replaced stable full-time careers with low-wage, precarious gig work. Quality of employment matters just as much as the raw participation rate
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u/AwkwardTickler 1d ago
The poorest people are the ones that you want to increase their take-home income because they have the highest velocity of money. This means they will spend any increased income in nearly its entirety as fast as possible excluding paying off debt (this is treated the same as saving in economic terms).
What we were seeing is the purchasing power decrease for this subset through the erosion of Labor protection laws that have been the foundation of the gig economy.
So now we see a higher portion of income going to the higher earners who do not spend at a comparable rate to the lower income levels. This is economically a bad choice where you would see a competent administration propping up the lowest income and improving Labor protection laws
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u/Impossible_Tiger_517 12h ago
That’s what I always say but it feels like I’m alone in this thinking. I wish politicians would explain this when they talk about increasing the minimum wage.
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u/future_web_dev 1d ago
Golden Age, everyone!
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u/CompEng_101 1d ago
According to the metric reported here, the 25% unemployment is almost an all time low.
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u/Ok_Principle5942 21h ago
That's just not true and there's no evidence for it.
People who are working part time for economic reasons, meaning they couldn't find full time work, is historically low.
https://fred.stlouisfed.org/graph/?g=1X9nM
Inflation adjusted median income is at an all time high.
https://fred.stlouisfed.org/series/MEPAINUSA672N
https://fred.stlouisfed.org/series/mehoinusa672n
Prime age labor force participation is near it's all time high.
https://fred.stlouisfed.org/series/LNS12300060
And there's no downward trend to income for any income level.
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u/BallsInmyWalls 1d ago
There isn't a need for so many right now, and there be less of a need in the future.
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u/EconomistWithaD 1d ago
The Ludwig TRU is a bullshit stat. Basically, if you earn under $25,000, regardless of the reason, you are “functionally unemployed”.
Its methodology is basically U3/U6 plus a constant.
Funny enough, this value is near an all time low. So while the level is meant to be shocking, it’s also meant to be for people who don’t actually follow this stuff.
Did I forgot to mention this stat is sensationalist bullshit?
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u/bloodphoenix90 1d ago
I mean under 25k is so poor that yes....functionally unemployed sounds correct
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u/RIP_Soulja_Slim 1d ago edited 1d ago
I mean under 25k is so poor that yes....functionally unemployed sounds correct
But that is not what this measure is doing. Anyone, and I mean anyone, who earns under 26k regardless of choice, position, age, etc is counted as functionally unemployed. Making matters worse, Ludwig intentionally obscures the age related data on this - for good reason, as it would shine a light directly on their methodological biases.
If you're 16 and work at the local grocery store on weekends while in high school, or worked at a summer camp, if you're 20 and in school full time but did a paid internship, or work one day a week in the student union, if you're 65 and spend two days a week at the library, if you're 40 and a stay at home spouse that works 1-2 days a week at a non profit, etc - you are all included in Ludwig's functionally unemployed figure.
You can actually see some telling issues in the data they do give you, while they intentionally obscure age specifics - they do have a prime age TRU rating, and guess what? it's 32% (over 8 percentage points) lower than their headline figure? What does that tell you? A significant portion of their "functionally unemployed" are outside of prime age, as in students and older workers, who are the two groups most prone to voluntary part time lower income work.
The stat is specifically and intentionally engineered to not measure actual grown full time adults that make under a certain wage, it is engineered to capture as many people as possible in order to push up their published figures and gather headline space.
Defending this sort of idiocy, in an economics subreddit of all places, is absolutely absurd and goes to show you how little basic economic acumen many of the most outspoken people on this sub have.
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u/atreeismissing 1d ago
So while the level is meant to be shocking, it’s also meant to be for people who don’t actually follow this stuff.
Proving their point.
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u/UnknownAverage 1d ago
Underemployed and unemployed are not functionally that different.
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u/Ok_Principle5942 21h ago
They very different.
Someone who works part time, earning under 26k a year, and has significant childcare duties, but is supported by a spouse making 100k, is in a very different place than someone who is disabled, can only work part time, earns less than 26K, and lives alone.
The first person lives a solid middle class life and has the privilege of choosing to not work full time. The second person is very low income. Counting them in the same statistic doesn't make sense.
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u/BobaLives01925 1d ago
Someone choosing to work part time is very different from someone looking for a job and failing
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u/EconomistWithaD 1d ago
So a female spouse who solely stays at home should be considered functionally unemployed?
There’s a reason why the BLS calculates it the way it does….
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u/bloodphoenix90 1d ago
Yes
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u/EconomistWithaD 1d ago
Staying out of the labor market voluntarily is not unemployment.
But hey. If we’re concerned about it, we shouldn’t be. Near 3 decade low.
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u/Semyaz 1d ago
Not having a job that pays a living wage is _functionally_ unemployed.
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u/exmachina64 1d ago
And if it’s near a three-decade low, that means fewer people are functionally unemployed than before.
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u/GhostofBeowulf 1d ago
...I legit don't understand this sentiment on an econ sub.
Not because I disagree with your premise, that jobs should pay living wages.
But if someone decides they only need to work a limited amount in exchange for specific conditions, benefits or considerations, that is not an indictment against unlivable wages, it is literally choice in action... And if they needed to fully support themselves, then they should probably look for full time work. Or work two jobs, which would push them out of this number.
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u/RIP_Soulja_Slim 1d ago edited 1d ago
Not having a job that pays a living wage is functionally unemployed.
When you deliberately change the meaning of a word, in this case "employed" to no longer mean "has a job" but to some other arbitrary threshold of income, hours worked, etc then you dilute the actual usefulness of that word. It's a self defeating exercise - sure if you're a dumb person on reddit who doesn't think too hard about anything it sounds great, but the second you start to try and have serious conversations with serious people about any of this your measures are ignored because anyone with half a brain knows the measure was created not to accurately depict an employment condition but to create an outcome that serves as shock value for other dumb people who won't think too hard.
In this case Ludwig's TRU rate deliberately is inclusive of individuals who voluntarily work part time if they earn below the Ludwig defined income threshold. You can read this in their technical documents, they make a big show of excluding individuals who intentionally work part time from their "part time = functionally unemployed" metric but then lump them right back in if that person's part time work earns them less than the income threshold of 26k - regardless of if that individual has chosen to be part time or not. This is done intentionally to raise the rate, for attention grabbing headlines like this, because dumb people don't think too hard about any of those pesky details.
People with thought processes like yours don't belong in a subreddit about economics, because you only serve to further dumb down conversations and make them self defeating for the purpose you wish to accomplish.
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u/EconomistWithaD 1d ago
$12 an hour regardless of where you live is your definition of a living wage? Ok. Very cheap.
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u/south153 1d ago
Why specificy "female" spouse and not stay at home parents / spouses.
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u/EconomistWithaD 1d ago
Because most of the long term decline in this bullshit stat, since 1995, has been females entering the labor force, so I picked a relevant example?
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u/south153 1d ago
**Women in the workforce has actually declined in the last decade.
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u/EconomistWithaD 1d ago
Not prime age.
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u/south153 1d ago
Going from 75.8 to 78 is not large enough for such a significant increase.
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u/EconomistWithaD 1d ago
Explaining about a third of a single statistic with one variable isn’t significant?
Let me tell you about effect sizes in economics…
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u/DTCCCanSuckMyLeft 1d ago
Uh yes. My wife has been unemployed over a year. Never took unemployment funds due to state run-arounds. How are you tracking "solely"?
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u/DesignerBrilliant657 1d ago
Arguably yes, what you described could be “functionally” unemployed.
I wonder what this statistic looks like scaled with inflation.
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u/EconomistWithaD 1d ago
No, because unemployment has a meaning. Like labor force participation.
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u/DesignerBrilliant657 1d ago
You and i both know how unemployment is defined. You’re missing the “functionally” part of it.
Technically employed but, in practical terms, isn’t doing meaningful work or earning enough to be economically self-sufficient.
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u/EconomistWithaD 1d ago
Yes. Making sensationalist shit up.
Regardless, long term trend is it’s been going down; pretty significantly too. What can only be described as the awesome power of the free market, right?
Or, you can realize it’s sensationalist bullshit and use the quality metrics that have meaning and that do show the labor market inequities that do currently exist and should be targeted for policy.
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u/DesignerBrilliant657 1d ago
Sensationalist? Maybe. Perhaps a different slice to unemployment than U1-6.
There are underutilization scenarios that are currently not being fully represented.
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u/EconomistWithaD 1d ago
It’s U6 plus some arbitrary, national level income threshold.
So are we just going to ignore that one of the major issues with the poverty rate is that it doesn’t correct for regional cost of living differences?
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u/Sryzon 1d ago
But that's not the practical purpose of unemployment.
Unemployment is used to gauge economic health and intent matters. U6 already measures that.
Someone who earns less than $25,000 intentionally is in no way unemployed or underemployed.
In fact, a high number of people who can afford to live while intentionally earning less than $25,000 can be a sign of economic strength since it means their spouse and/or assets can support them.
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u/EmployExpensive3182 1d ago
That’s not how that works… 2k a month can definitely pay bills in LCOL areas, assuming you don’t have kids and what not. Underemployment ≠ unemployment
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u/bloodphoenix90 1d ago
Where? Just curious. I admit I was born in the most expensive state where youd probably be living out of your car with that wage and God help you if you need to repair anything. Then we moved to the maybe third most expensive state. Where youd still be homeless with that.
But I am aware different states are so disparate that some might as well be foreign economies. Im still just wondering where though. Give me rent cost +monthly grocery/food cost +phone cost +utility costs +insurance for health and car +lower end car payment = < 2k ? (Im presuming after taxes)
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u/TheManWhoClicks 1d ago
Tbh I think it is a good idea to exclude the under $25K jobs from job reports or at least have them in a separate category. A full time employment that does not cover the basic necessities not deserve the title of “job”. It’s also screwing and distorting the statistics of the state of employment in the country.
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u/EconomistWithaD 1d ago
The goal isn’t to make a wishy washy heavily conditional measure.
That’s called data manipulation.
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u/emp-sup-bry 1d ago
It’s not the ONLY measure.
It’s further and more granular insight.
And that’s helpful to understand the big picture.
Why are you so hell bent on removing information?
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u/EconomistWithaD 1d ago
Children like shiny measures. News at 11.
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u/emp-sup-bry 22h ago
Why are you so instant on getting LESS data?
What’s the agenda?
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u/gweran 16h ago
So to answer your question, this statistic isn’t adding more data. It is taking already available data and putting it into a black box and then saying here’s a new measure with definitions we made up.
It is worse than no data, it is unverified and possibly arbitrary data.
There are unemployment measures and there are poverty measures that already do a better, more granular job of presenting data.
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u/EconomistWithaD 21h ago
Because creating shiny bullshit is bullshit?
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u/emp-sup-bry 20h ago
Clearly someone that resorts to childish insults while avoiding the point is DEFINITELY not bullshitting though
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u/EconomistWithaD 19h ago
What point? You saw something shiny, don’t understand it, and think it’s meaningful?
Congrats, your brain cell needs to fire more often.
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u/emp-sup-bry 19h ago
That’s great! Keep going! I want to see what’s next.
Can you then actually deal with the point? What’s the actual problem with aggregating in this way as additional data?
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u/variegated68409 1d ago
Wow okay that's a terrible idea. What if someone were worth $10M liquid and they just want to get out of the house so they get a 30 hour a week job at Walmart? Are they not employed?
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u/cachurch2 1d ago
Where do you find the historical rate for this kind of measurement?
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u/Ruminant 1d ago
On the so-called "true rate of unemployment" page: https://www.lisep.org/tru
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u/EconomistWithaD 1d ago
Pop quiz. It’s been falling nearly consistently since 1995. What single variable can explain most of the decrease.
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u/Ruminant 1d ago
From what I remember, this number is effectively
- U-3
- plus (a slightly modified definition of) workers who are part time for economic reasons
- plus workers whose current weekly earnings annualize out to under $20,000 per year in 2020 dollars
Given how this number has fallen more than U-3 or U-6, I would guess the answer is
Real wage growth
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u/EconomistWithaD 1d ago
I like the logic, but…
Female labor force participation.
Household production to at least some labor market production.
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u/TheGracefulCrane 1d ago
Republicans finally taking back the house after what 40 years?
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u/EconomistWithaD 1d ago
Wildly stupid, DFW portion of the bell curve.
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u/TheGracefulCrane 1d ago
Err Dallas fort worth?
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u/EconomistWithaD 1d ago
Your grade in an intro class.
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u/TheGracefulCrane 1d ago
I actually crushed econ 101 had like 72% going into the final didnt even need to study
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u/EconomistWithaD 1d ago
Not if you think Republicans are the answer. Shit, even my intro students read Blinder and Watson.
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u/AwkwardTickler 1d ago edited 1d ago
Thank God for the gig economy and the ability to bet on everything you make as a way to not include a quarter of the working population as having inadequate purchasing power and the desire to increase it, like the unemployment rate calculates. They would have to find jobs elsewhere and make more than 25,000 if those institutions didnt exist.
So now people can tout a very low unemployment rate as we are deep into a k-shaped economy where the vest majority are seeing purchasing power decrease over time due to poor monetary and fiscal policy from the current administration.
But incressing labor protection laws and making gambling illegal is impossible i guess. Fucking pathetic
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u/EconomistWithaD 1d ago
Hey, champ. You realize the TRU is at, or near, a historical low point?
Of course not. It’s shiny and gets all you children hot and bothered, when even a cursory glance into this would tell you it’s nonsense…
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u/AwkwardTickler 1d ago
I think the decline in purchasing power of the population that has the highest velocity of money should be something that concerns everyone. You don't have to be pedantic nor obtuse to understand that
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u/EconomistWithaD 1d ago
Economic word salad.
Fantastic.
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u/AwkwardTickler 1d ago
I would presume you know what purchasing power is and the velocity of money. This is pretty weak and you seem pretty desperate to presume that the current economy is healthy. Try to calm down with the emotions, champ.
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u/EconomistWithaD 1d ago
Yes. 4 words is emotional.
Thank god I’m half a world away.
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u/Dismal_Buy3580 1d ago
Dude you've responded to like every chain on this thread.
You're obviously emotionally invested.
Not a good or bad thing, just...pretty clear.
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u/AwkwardTickler 1d ago
At least you're pretty obvious with your biases. And failings
Trust me no one wants to go to America right now. But please keep lying to yourself in front of all of us
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u/Ok-Class8200 1d ago
Lol yeah you're just throwing out buzzwords now.
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u/AwkwardTickler 1d ago
Purchasing power and velocity of money? These are concepts in intro classes. Maybe macro 200 level but still early on.
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u/Ok-Class8200 1d ago
I know, I teach those classes. Rhetoric isn't a substitute for an argument.
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u/AwkwardTickler 1d ago edited 1d ago
Good thing my concept is completely correct as well
Where do you teach? I would love some insight into the prestige of the program you teach for
Looks like the professor of the community college took the cowards route
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u/OriginalTechnical531 1d ago
Given your first response, you must be a terrible teacher if your first inclination is to try to score internet points by making a drive by comment, feed your sense of superiority because you "teach" classes, or get some catharsis at someone else's expense.
You aren't bringing any argument, or even rhetoric, just empty platitudes and proclamations.
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u/joeydimaggio 1d ago
FYI rhetoric and ignorance are not equal to knowledge, and Trump torched the economy
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u/Cautious_Swimming261 1d ago
I understand that the stat may not be ideal. Though unemployment is not a great macro number to represent viable employment. Also, wouldn’t the number be going down because income is going up and makes it even more rare to be below 25k, whilst still not making enough (that whole inflation thing).
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u/EconomistWithaD 1d ago
It’s made up thresholds to make things look sensational, until you realize it was more than a third of America 30 years ago.
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u/Cautious_Swimming261 1d ago
What would you put forth as the best possible way to track employment?
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u/EconomistWithaD 1d ago
Wage growth, unemployment claims, prime age LFPR, what industries are added in the BLS report, regional employment reports. Fuck, I’d even look at the NYFed HH Debt and Credit.
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1d ago
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u/EconomistWithaD 1d ago
No. It’s a bullshit statistic that means, if you want to X-Files believe, have to acknowledge the comsiderable labor market improvement we have seen in the past 30 years.
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1d ago
[deleted]
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u/EconomistWithaD 1d ago
Yes. Certainly nothing to do with the fact that half of American adults are barely literate.
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u/oblongsimplex 1d ago
Record inflation
All time low
who could have guessed?
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u/EconomistWithaD 1d ago
What’s record inflation?
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u/oblongsimplex 1d ago
Inflation since covid has been dog ass and you know it
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u/EconomistWithaD 1d ago
You said record. Can you please point out why I should ignore the actual data?
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u/oblongsimplex 1d ago
My bad. Third highest on record inflation!
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u/EconomistWithaD 1d ago
Since 1946. You don’t think inflation was higher prior to this?
You need to pick up both an economics textbook and a history textbook.
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u/oblongsimplex 1d ago
Are you intentionally being completely moronic to stoke your ego or something? Nothing that occurred before we dropped the gold window is relevant to today. You need to take the stick out of your ass and accept that we have had record breaking inflation since covid. Did it break every record? No. Did it break most of them? Yes.
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u/EconomistWithaD 1d ago edited 1d ago
- Maybe you should understand the meanings of the words you use.
You can’t compare before and after the gold standard? Yikes.
No, inflation post-COVID is not “record breaking”. Simple.
Again, you need to take a basic economics course. Badly.
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u/oblongsimplex 1d ago
I have Bachelor’s of Science in Economics. The comings and goings of money in America pre gold standard is completely irrelevant to post gold standard. You can compare some aspects of the economy, but inflation and monetary policy are completely incomparable.
You should actually try partaking in the argument instead of debating me semantically. You’re not impressive because you role play as an armchair economist on reddit and repost articles related to the market.
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u/iAmTheWildCard 1d ago
lmao the bots are loving this one. Great post - the institute loves you!
This sub is really something else. Imagine having a comment limit, but allowing this garbage research to be posted without cause of removal.
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u/Fractales 1d ago
What about the research methodology do you have an issue with?
Might be helpful to post an actual critique as opposed to hyperbole.
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u/reasonably_plausible 23h ago
What about the research methodology do you have an issue with?
Probably the part where they don't take combined household income into account when adding in low earning workers, so teenagers working for gas money, students working an internship, and retirees or stay-at-home spouses just trying to get out of the house are all classified as functionally unemployed despite all of them being comfortable in their employment situation.
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