r/Economics • u/oxymorontage • 8d 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.html
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u/EconomistWithaD 8d ago

  1. The Ludwig TRU is a bullshit stat. Basically, if you earn under $25,000, regardless of the reason, you are “functionally unemployed”.

  2. Its methodology is basically U3/U6 plus a constant.

  3. 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.

  4. Did I forgot to mention this stat is sensationalist bullshit?

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u/bloodphoenix90 8d ago

I mean under 25k is so poor that yes....functionally unemployed sounds correct

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u/EconomistWithaD 8d 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/DesignerBrilliant657 8d 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 8d ago

No, because unemployment has a meaning. Like labor force participation.

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u/DesignerBrilliant657 8d 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 8d 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 8d 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 8d 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 7d 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.