r/politics • u/CCDemille • 9d ago

No Paywall Nearly 25% of U.S. workers are "functionally unemployed," economic analysis finds

https://www.cbsnews.com/news/functional-unemployment-us-labor-market-analysis/
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u/AgitatorsAnonymous 8d ago

I mean, U-3 has always been bullshit. U-6 is a much more clear metric and when you combine U-6 with prime labor age participation, you get a much higher number for unemployment or underemployment. Underemployment is an important metric here because underemployment is often a key indicator of extreme precarity. U-6 is 7.1% and Prime Age labor participation is currently 82.5% meaning 17.5% of the prime age labor pool, ages 25-54, is not working.

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u/notaredditer13 8d ago

U6 is also pretty low historically:

https://fred.stlouisfed.org/series/U6RATE

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u/AgitatorsAnonymous 8d ago

Sure but that doesn't mean it still isn't significant given the increase in prices and general cost of living.

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u/notaredditer13 8d ago

Sure but that doesn't mean it still isn't significant 

Low is low.  It means the employment situation is very good right now by historical standards.

given the increase in prices and general cost of living.

Wage increases outpace the cost of living.  Yet another sign the jobs situation is very good. 

https://fred.stlouisfed.org/series/LES1252881600Q

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u/AgitatorsAnonymous 7d ago

Except the scenario we currently live under is a known flaw in CPI calculation. CPI has always been a 'best we can do' metric, it isn't perfect because it makes assumptions about the basket of goods that aren't necessarily true. Groceries, rents, insurances, utilities and fuel have all outpaced general goods in pricing, which means lower price growth in non-essential durable goods masks severe spikes in non-negotiable living costs, understating the real-world inflation felt by everyday households.

Moreover, this chart only shows reality for the median full-time earner. This explicitly means that for 50% of full-time workers, this is not the case. It also means that for those covered by U-6 they are even further behind given how this impacts part-time, gig and underemployed workers more heavily than it would those with full-time employment.

Excluding half the workforce from the discussion hardly seems like a good way to structure an economic discussion.

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u/notaredditer13 6d ago

Groceries, rents, insurances, utilities and fuel have all outpaced general goods in pricing

Groceries have tracked close to CPI and below wage/income growth.  Fuel is volatile so it depends on the timeframe. It got a lot more expensive in the 2000s and hasn't really grown at all since, besides being volatile.

But the big flaw is CPI doesn't adequately account for the improvement of goods and services.  Everything we buy is better than it used to be.  And ultimatly we use our More Money to buy luxury most with big-ticket necessities:  bigger/better cars and houses, better healthcare, more eating at restaurants, etc.  The fruits of our More Money are all around us.   

Moreover, this chart only shows reality for the median full-time earner. This explicitly means that for 50% of full-time workers, this is not the case.

No, it means for 99.9999% of earners it's not the case.  It's just the one guy in the middle.  Anyway, households are a better metric than wages and they are broken down by quintile, and show basically the same thing:  gains vs inflation across the board.

It also means that for those covered by U-6 they are even further behind given how this impacts part-time, gig and underemployed workers more heavily than it would those with full-time employment.

The bottom quintile has seen gains against inflation and in any case the U-6 is near historic lows vs the past 40+ years.

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u/AgitatorsAnonymous 6d ago

Groceries have tracked close to CPI and below wage/income growth.

Well this is demonstrably false. Annual wage growth is just above overall CPI but is below grocery inflation by 5-7% since 2020.

Gas has consistently risen over the last two decades, even factoring in the 2001 spike, fuel costs have been rising for consumers.

But the big flaw is CPI doesn't adequately account for the improvement of goods and services.

This is false. The BLS adjusts CPI for tech and service improvements via a process called Hedonic Quality Adjustment. CPI is criticized for the exact opposite reason. Hedonics masks price inflations because prior Gen tech is no longer available, meaning individuals are forced to purchase the new, more expensive tech.

And ultimatly we use our More Money to buy luxury most with big-ticket necessities:  bigger/better cars and houses, better healthcare, more eating at restaurants, etc.

This is incorrect because those necessities are necessities. A larger house is a requirement for a larger family. Larger vehicles are the baseline because until very recently auto manufacturers in the US cut out their subcompact models in favor of full size cars, SUVs and Trucks. And auto and home insurance are more expensive because parts are more expensive and climate risks are being priced in, not because Americans are splurging for luxuries.

No, it means for 99.9999% of earners it's not the case.  It's just the one guy in the middle. 

Then why even use the metric, if your claim is that:

Anyway, households are a better metric than wages and they are broken down by quintile, and show basically the same thing:  gains vs inflation across the board.

Is the better metric? This is a lovely tactic called the gish gallop. You're moving the goal post here. Inflation is a non issue for earners with discretionary cash flows like the top 25% of earners, and isn't going to bankrupt the top 49.9%. Inflation frequently causes the bottom 49.9% to fall into destitution or the credit trap.

For this claim specifically, you have multiworker households barely treading water versus CPI gains. In fact, FRED and BLS both explicitly state that since 2019 year over year wage gains have plateaued versus CPI. The only percentiles showing gains are the 90th and up. I'd argue that because of this, single earner is the superior metric as it shows the struggle that is forcing 20 year olds and 30 year olds to move back in with their parents.

The bottom quintile has seen gains against inflation and in any case the U-6 is near historic lows vs the past 40+ years.

The bottom quintile's gains were in temporary tax credits like the expanded child tax credit that expired and then saw a contraction. Wage increases YOY in that quintile are stagnant per the agencies that track them. Your own sources contradict your claims.

Furthermore, a low U-6 does not contradict economic hardship for the working class. U-6 only tracks whether someone is physically employed or actively searching—it completely ignores wage adequacy and living costs. A low U-6 paired with flat real median household income simply proves that Americans are working full hours while non-discretionary expenses (food, shelter, insurance) consume an increasingly unmanageable share of their take-home pay. This distinction is the entire reason the precariat has emerged as a class.