Everyone knows the stats are false but I don't know an alternative.
I've been unemployed after graduating for a year and because I didn't use unemployment benefits I didn't show up in the statistics in switzerland. I know many cases like mine.
For me the true problem which most countries dont even acknowledge is low wealth and capital gains tax. Salaries are not enough because of land prices and the prices inflation it causes through out the economy. You bring down price of home land rent then price of everything else comes down. And their is a lot more economic activity as trillions of dollars are not parked in real estate for wealth generation.
Income from capital has a low tax rate in the US (and many other countries) because you can deduct neither losses due to inflation nor losses due to risk, both of which are substantial for capital income but non-existent for wage income. The lower tax rate is simpler than actually accounting for these differences.
Treating wage and capital income equivalently would require recognizing losses due to inflation and risk that simply don’t exist in a meaningful way for wage income. Taxing them similarly without very negative consequences requires recognizing these differences in some fashion.
Taxing wealth has myriad additional problems. In the US, about 2/3 of wealth is completely non-liquid so any theoretical valuation is fiction and highly leveraged.
A wealth tax would also be beneficial in reducing wasteful stock buybacks. Without any benefits from high stock prices, boards and shareholders will be less inclined to impose those price targets on CEOs, CEOs will be less incentivised to "cheat" on quarter-based performance and the myopic share price performance view of their companies, hence will reduce stock buybacks and returning money to shareholders. That leaves very few options - either reinvest into the company or pay out dividends, and the latter is unfavorable for shareholders compared to the former.
If a land value tax would fix rich people from parking money in real estate, it would price regular people out of real estate.
I know LVT is the libertarian dream, but in practice it means only the rich can own real estate long-term, in most cities. It also means the rich can drive out the poor by driving up land values around them, to the point where the taxes are too much to afford.
LVT simply wouldn't be a good system, if applied in the real world.
Unfortunately that doesn't really help. It has the effect of eroding the asset value such that it quickly means the owner can't sell.
In other words, if selling removes much of your capital, you then don't gave capital to spend on the next place.
Conversely investors become even more motivated not to ever sell. They can defer the LVT forever, and just use the property as collateral for loans (ie getting liquidity without selling.)
And LVT just becomes an expense built into the cost of rent. The investor never pays it anyway, the tenant ultimately pays it.
Is capital gains / wealth tax a fix here though? Definitely not saying it doesn't work, I have no idea. But I'd be curious to hear both sides of the argument.
I agree, but taxing real estate as an investment would break the wealth structure of many voters (and politicians) above the 80th percentile of wealth. For half a century, in France, it's been told that real estate was the safest/best investment for households; everyone was passively peer pressured each year, whatever the macroeconomic situation at the moment, to buy. This is a Ponzi scheme, so even the middle class households that recently bought their own shitty flat in Paris will never vote for such a tax because their overpriced asset would lose value and it's often their only lifelong investment.
The same fear will happen if you just target investors owning multiple real estate with this tax, or simply forbid by law from owning several flats in high demand areas. The right wing would scream that the hard working French guy won't be able to invest his hard won money, but the very rich foreigners from Saudi Arabia or investments funds from USA will find a loophole thanks to their infinite money and buy all the french real estate.
Hell, most people in my country are against inheritance tax despite a huge part of them not rich enough to pay it, meanwhile inequalities are rising because of inherited wealth. So taxing the land won't happen, the bourgeoisie has been too effective in its propaganda.
Or you tax it. Or, more correctly, you remove the current protections that allow land to appreciate tax-free for decades. That would move capital out of land and free it for other uses. The current system was designed to put money/people into houses post WWII but has gone too far in promoting radical multi-generational wealth structures.
We already assess property each year for purposes of local property taxes. Treating a 10% rise in value as taxable income each year would shake up the real estate market. Speculative gentrification would certainly stop. And those sitting on empty houses would either sell or try to find renters.
Significantly less. Wanted a job? Walk through any neighborhood being built with a tape measure in your pocket. You'd have a job doing something before you made it past the 4th house. Had a car? Delivering food paid enough to afford a modest apartment.
there is a cliff, such that a the 2 adults, 2 children on 22,500 gross income may have access to $48,700 after refundable tax credits, SNAP, housing, etc [linked in other comment].
However if that same household earns just $5,600 more annually nearly all of those transfers cease to be available and the total income accessible becomes $36,400. It really is a case where making more is too expensive. That's less than 110 extra pre-tax dollar per week across both adult earners, and so just about 1.35 an hour raise for each adult, or 2.70 for either one of them is a real loss of over 12,000 dollars. It takes nearly $5 an hour raise for BOTH adults at the 22,500 to become even minimally better than the loss of those transfers.
There is a significant number of households in the second quartile (at or slightly above 36.4K) than in the bottom quartile, and yet those are living on less than what has been defined as the 'survivable wage' by the 48.7K number
So yes, the "True Rate of Barely Getting By" is even higher than the number of households earning 26K would reveal.
This number is before transfers, you really cannot just look at the raw income. A family of 2 adult 2 kid making $22,500 in raw income makes more like $48,700 after refundable tax credits, SNAP, housing, etc [1].
A family of 4 with $22,500 in income is well below the poverty line in the US, which is ~$33,000/year.
But do you think a family of 2 adults and 2 children with a "feels like" income of $50,000 is still not scraping by in the US? That's basic survival at best.
As someone who grew up below the poverty line for much of my life — 2x the poverty line seemed like wealth to me. There are absolutely people getting by on “feels like” 50k a year.
There are not really frills, but in terms of “have shelter and food” it can work. Not everywhere is SF.
As someone who lived much of their life in real poverty, you can live a pretty decent life on $50k in most of the US. Yeah, you won’t be posting your vacations on Instagram but who cares. Many people live a decent life within these income constraints. There is an enormous amount of government subsidies if you are this poor.
Don’t exaggerate what is required for a decent quality of life in America. It doesn’t benefit anyone.
I have to wonder how much of this is "would like a full time job but has a part time job paying over 26k." Because of mandatory benefits (such as health insurance) for full time workers, a lot of companies only hire part time workers, but often people are making a living wage from those jobs. I'm not sure if a bartender making $50k+ (including untaxed tips) working 32.5 hours a week should count as unemployed.
It all depends on the definition of "Unemployment". Most governments do not count you as unemployed if you've stopped looking for work, been unemployed for over 6 months, or if you made $25 as an Uber driver for 1 hour's work that month.
Folks I've been talking to see a huge hit coming for us. Mining is getting automated (and coal/gas have huge problems). Education is getting hit by AI. Agriculture is good but employs relatively few people. Property is and always has been a zero-sum game that soaks up capital but doesn't return anything. Construction is getting pulled into building data centres for US hyperscalers.
We don't seem to be able to differentiate our economy away from resources at all - every attempt to do this (Turnbull's Ideas Boom being the classic) has failed.
> We don't seem to be able to differentiate our economy away from resources at all
Or, equally importantly, control the means of production better than we've been doing to date - for a number of mineral resources and a great deal of energy we seem content with being tossed scraps in exchange for granting access for others to extract and sell on elsewhere.
> looking pretty bleak for the Lucky Country.
Pretty much as Donald Horne wrote when he popularised the saying for his book title.
While I struggle to see the value here, I dont trust the official numbers and applaud their efforts to come up with alternatives.
However, I fear they conflate "living wage" with desire for full time work in this metric. It also seem to so closely track the official unemployment rate as to not be useful.
Also, as others states, 26k is a surprisingly low number to be called a living wage. I think that number also varies depending on household make up, but I can see why they skipped that complexity.
> 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 $26,000 (in 2025 dollars) annually before taxes
Seems like reasonable criteria. "Regular" unemployment is
# unemployed/# employed
where unemployed is they do not have a job, have actively looked for work in the prior four weeks, and are currently available to work. But not much criteria in terms of what work people are finding.
It is typically who is able to be part of the labour force.
remove the elderly, those for who it would be illegal to work or still engaged in formal education, the so significantly handicapped no work is manageable.
I see some odd effects. I wonder how these would be explained?
According to the headline rate, unemployment was about the same in 1995. According to this alternative measure of unemployment, it's gone down by around 8% overall.
When split by race, it's gone down the most for Hispanics.
By education, it's gone down the most for people who didn't complete High School.
State level minimum wages were much less common in 1995, so it was easier for workers to be below their poverty threshold. Even though the federal wage got stuck, in many states today, the minimum wage is high enough that it's not possible for a full time worker to make less than $26,000 in a year.
This definition sounds like U-6 unemployment (https://fred.stlouisfed.org/series/U6RATE) with an additional term for people making below a living wage. That's better constructed than most of these "real stats" I see, so I hate to be too critical. But they don't really engage with the important question of whether this metric is sufficiently robust for policymakers to use. Just eyeballing it, it seems to be quite a bit more volatile than the headline rate; if the Fed tried to target it, for example, would they end up doing a bunch of unnecessary rate cuts to stave off unemployment spikes that aren't real?
I don't see the revelation, it still appears we're near historical lows and it's not spiking. It's not like there is any divergence between before and now. It's not bad to know what this rate is but it's also not revealing a lie. If you apply their stat methodologies to other G-7, you get similar results.
The revelation is that the official unemployment rate is so skewed it is meaningless, even misleading since high unemployment is a serious social issue thus should be a high priority political concern.
There is no revelation. The authors are intentionally misleading you by comparing 2 different metrics to pretend their formula is meaningfully different than what BLS provides.
"Headline" unemployment rate is U-3 unemployment. If they compared "TRU" to it's analogous match U-6 the graph would be less striking as it's a 1:1 match.
Just because the economic system we have has always been shitty for a high percentage of our neighbors doesn’t mean it always has to be that way. Other top economic countries being similar doesn’t excuse it.
Everyone knows the stats are false but I don't know an alternative.
I've been unemployed after graduating for a year and because I didn't use unemployment benefits I didn't show up in the statistics in switzerland. I know many cases like mine.
Anybody who believes ~30% of the workforce was functionally unemployed in 1999 does not know what those words mean, or was not an adult in 1999.
I get what they are trying to convey, but the stronger message is the more straightforward: there are too many jobs that do not pay enough to live on.
For me the true problem which most countries dont even acknowledge is low wealth and capital gains tax. Salaries are not enough because of land prices and the prices inflation it causes through out the economy. You bring down price of home land rent then price of everything else comes down. And their is a lot more economic activity as trillions of dollars are not parked in real estate for wealth generation.
Income from capital has a low tax rate in the US (and many other countries) because you can deduct neither losses due to inflation nor losses due to risk, both of which are substantial for capital income but non-existent for wage income. The lower tax rate is simpler than actually accounting for these differences.
Treating wage and capital income equivalently would require recognizing losses due to inflation and risk that simply don’t exist in a meaningful way for wage income. Taxing them similarly without very negative consequences requires recognizing these differences in some fashion.
Taxing wealth has myriad additional problems. In the US, about 2/3 of wealth is completely non-liquid so any theoretical valuation is fiction and highly leveraged.
A land value tax would fix rich people parking money in real estate. A wealth tax or capital gains tax would not.
A wealth tax would also be beneficial in reducing wasteful stock buybacks. Without any benefits from high stock prices, boards and shareholders will be less inclined to impose those price targets on CEOs, CEOs will be less incentivised to "cheat" on quarter-based performance and the myopic share price performance view of their companies, hence will reduce stock buybacks and returning money to shareholders. That leaves very few options - either reinvest into the company or pay out dividends, and the latter is unfavorable for shareholders compared to the former.
If a land value tax would fix rich people from parking money in real estate, it would price regular people out of real estate.
I know LVT is the libertarian dream, but in practice it means only the rich can own real estate long-term, in most cities. It also means the rich can drive out the poor by driving up land values around them, to the point where the taxes are too much to afford.
LVT simply wouldn't be a good system, if applied in the real world.
LVT can be deferred to the time of sale.
Unfortunately that doesn't really help. It has the effect of eroding the asset value such that it quickly means the owner can't sell.
In other words, if selling removes much of your capital, you then don't gave capital to spend on the next place.
Conversely investors become even more motivated not to ever sell. They can defer the LVT forever, and just use the property as collateral for loans (ie getting liquidity without selling.)
And LVT just becomes an expense built into the cost of rent. The investor never pays it anyway, the tenant ultimately pays it.
Is capital gains / wealth tax a fix here though? Definitely not saying it doesn't work, I have no idea. But I'd be curious to hear both sides of the argument.
I agree, but taxing real estate as an investment would break the wealth structure of many voters (and politicians) above the 80th percentile of wealth. For half a century, in France, it's been told that real estate was the safest/best investment for households; everyone was passively peer pressured each year, whatever the macroeconomic situation at the moment, to buy. This is a Ponzi scheme, so even the middle class households that recently bought their own shitty flat in Paris will never vote for such a tax because their overpriced asset would lose value and it's often their only lifelong investment.
The same fear will happen if you just target investors owning multiple real estate with this tax, or simply forbid by law from owning several flats in high demand areas. The right wing would scream that the hard working French guy won't be able to invest his hard won money, but the very rich foreigners from Saudi Arabia or investments funds from USA will find a loophole thanks to their infinite money and buy all the french real estate.
Hell, most people in my country are against inheritance tax despite a huge part of them not rich enough to pay it, meanwhile inequalities are rising because of inherited wealth. So taxing the land won't happen, the bourgeoisie has been too effective in its propaganda.
Or you tax it. Or, more correctly, you remove the current protections that allow land to appreciate tax-free for decades. That would move capital out of land and free it for other uses. The current system was designed to put money/people into houses post WWII but has gone too far in promoting radical multi-generational wealth structures.
We already assess property each year for purposes of local property taxes. Treating a 10% rise in value as taxable income each year would shake up the real estate market. Speculative gentrification would certainly stop. And those sitting on empty houses would either sell or try to find renters.
Soo was it more or less than that? Don’t leave us hanging like that!
Significantly less. Wanted a job? Walk through any neighborhood being built with a tape measure in your pocket. You'd have a job doing something before you made it past the 4th house. Had a car? Delivering food paid enough to afford a modest apartment.
> ...or does not earn a living wage, conservatively pegged at $26,000 (in 2025 dollars) annually before taxes.
I couldn't easily tell how they decided on a $26,000 "living wage" figure but in most of the US, even double that is not Easy Street.
The "True Rate of Barely Getting By" is ridiculously high in the US from what I can gather.
there is a cliff, such that a the 2 adults, 2 children on 22,500 gross income may have access to $48,700 after refundable tax credits, SNAP, housing, etc [linked in other comment].
However if that same household earns just $5,600 more annually nearly all of those transfers cease to be available and the total income accessible becomes $36,400. It really is a case where making more is too expensive. That's less than 110 extra pre-tax dollar per week across both adult earners, and so just about 1.35 an hour raise for each adult, or 2.70 for either one of them is a real loss of over 12,000 dollars. It takes nearly $5 an hour raise for BOTH adults at the 22,500 to become even minimally better than the loss of those transfers.
There is a significant number of households in the second quartile (at or slightly above 36.4K) than in the bottom quartile, and yet those are living on less than what has been defined as the 'survivable wage' by the 48.7K number
So yes, the "True Rate of Barely Getting By" is even higher than the number of households earning 26K would reveal.
Might need to change the labelling from 'living' wage to 'surviving' wage.
This number is before transfers, you really cannot just look at the raw income. A family of 2 adult 2 kid making $22,500 in raw income makes more like $48,700 after refundable tax credits, SNAP, housing, etc [1].
https://www.google.com/search?q=average+us+income+including+...
Take a step back.
A family of 4 with $22,500 in income is well below the poverty line in the US, which is ~$33,000/year.
But do you think a family of 2 adults and 2 children with a "feels like" income of $50,000 is still not scraping by in the US? That's basic survival at best.
As someone who grew up below the poverty line for much of my life — 2x the poverty line seemed like wealth to me. There are absolutely people getting by on “feels like” 50k a year.
There are not really frills, but in terms of “have shelter and food” it can work. Not everywhere is SF.
As someone who lived much of their life in real poverty, you can live a pretty decent life on $50k in most of the US. Yeah, you won’t be posting your vacations on Instagram but who cares. Many people live a decent life within these income constraints. There is an enormous amount of government subsidies if you are this poor.
Don’t exaggerate what is required for a decent quality of life in America. It doesn’t benefit anyone.
I have to wonder how much of this is "would like a full time job but has a part time job paying over 26k." Because of mandatory benefits (such as health insurance) for full time workers, a lot of companies only hire part time workers, but often people are making a living wage from those jobs. I'm not sure if a bartender making $50k+ (including untaxed tips) working 32.5 hours a week should count as unemployed.
Similar statistics for Australia: https://www.roymorgan.com/findings/10192-australian-unemploy...
It all depends on the definition of "Unemployment". Most governments do not count you as unemployed if you've stopped looking for work, been unemployed for over 6 months, or if you made $25 as an Uber driver for 1 hour's work that month.
Thanks, this is interesting.
Folks I've been talking to see a huge hit coming for us. Mining is getting automated (and coal/gas have huge problems). Education is getting hit by AI. Agriculture is good but employs relatively few people. Property is and always has been a zero-sum game that soaks up capital but doesn't return anything. Construction is getting pulled into building data centres for US hyperscalers.
We don't seem to be able to differentiate our economy away from resources at all - every attempt to do this (Turnbull's Ideas Boom being the classic) has failed.
It's looking pretty bleak for the Lucky Country.
> We don't seem to be able to differentiate our economy away from resources at all
Or, equally importantly, control the means of production better than we've been doing to date - for a number of mineral resources and a great deal of energy we seem content with being tossed scraps in exchange for granting access for others to extract and sell on elsewhere.
> looking pretty bleak for the Lucky Country.
Pretty much as Donald Horne wrote when he popularised the saying for his book title.
While I struggle to see the value here, I dont trust the official numbers and applaud their efforts to come up with alternatives.
However, I fear they conflate "living wage" with desire for full time work in this metric. It also seem to so closely track the official unemployment rate as to not be useful.
Also, as others states, 26k is a surprisingly low number to be called a living wage. I think that number also varies depending on household make up, but I can see why they skipped that complexity.
Looking at the "True Rate" vs "Headline Rate" graph.... The "Headline Rate" seems to be a good proxy for the "True Rate".
As long as we are not comparing them in the absolute term, what's the problem?
an unemployment rate of about 3-4% is considered "full employment" aka "we're good".
If you switch the perspective to this other rates it shows there's a lot of work to do to reach "true full employment".
> 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 $26,000 (in 2025 dollars) annually before taxes
Seems like reasonable criteria. "Regular" unemployment is
# unemployed/# employed
where unemployed is they do not have a job, have actively looked for work in the prior four weeks, and are currently available to work. But not much criteria in terms of what work people are finding.
> the percentage of the U.S. labor force that does not have a full-time job ...
What is the "U.S. labor force" defined as? Is it a age group thing?
It is typically who is able to be part of the labour force.
remove the elderly, those for who it would be illegal to work or still engaged in formal education, the so significantly handicapped no work is manageable.
So it is an age group, with caveats.
I see some odd effects. I wonder how these would be explained?
According to the headline rate, unemployment was about the same in 1995. According to this alternative measure of unemployment, it's gone down by around 8% overall.
When split by race, it's gone down the most for Hispanics.
By education, it's gone down the most for people who didn't complete High School.
Just a guess but gig work might be picking up some of that slack?
State level minimum wages were much less common in 1995, so it was easier for workers to be below their poverty threshold. Even though the federal wage got stuck, in many states today, the minimum wage is high enough that it's not possible for a full time worker to make less than $26,000 in a year.
This definition sounds like U-6 unemployment (https://fred.stlouisfed.org/series/U6RATE) with an additional term for people making below a living wage. That's better constructed than most of these "real stats" I see, so I hate to be too critical. But they don't really engage with the important question of whether this metric is sufficiently robust for policymakers to use. Just eyeballing it, it seems to be quite a bit more volatile than the headline rate; if the Fed tried to target it, for example, would they end up doing a bunch of unnecessary rate cuts to stave off unemployment spikes that aren't real?
I don't see the revelation, it still appears we're near historical lows and it's not spiking. It's not like there is any divergence between before and now. It's not bad to know what this rate is but it's also not revealing a lie. If you apply their stat methodologies to other G-7, you get similar results.
The revelation is that the official unemployment rate is so skewed it is meaningless, even misleading since high unemployment is a serious social issue thus should be a high priority political concern.
There is no revelation. The authors are intentionally misleading you by comparing 2 different metrics to pretend their formula is meaningfully different than what BLS provides.
"Headline" unemployment rate is U-3 unemployment. If they compared "TRU" to it's analogous match U-6 the graph would be less striking as it's a 1:1 match.
Just because the economic system we have has always been shitty for a high percentage of our neighbors doesn’t mean it always has to be that way. Other top economic countries being similar doesn’t excuse it.
If you do this with PPP with every other country on earth, which ones look the best?