so here's my question when someone says that for example in the US in April unemployment is 4.2% do you feel that that reflects your neighborhood your city your peers or maybe even your own family and here's why I'm asking that question on paper the US unemployment rate in April was a fairly impressive 4.2% that's the kind of number that economists and investors like to hear so it kind of sounds like things are pretty much under control but here's the catch 4.2% only tells you half of the story are in fact not even half i want to look at the Lwig Institute for Shared Economic Prosperity today LIISEP and they've coined something better known as the true rate of unemployment TRU or true I'm going to call it in this video and that's a broader more inclusive gauge and it covers underemployment and also underpaid work and their April TRU number 24.3% that is nearly six times the BLS headline rate that's the Bureau of Labor Statistics and that's a story I'm going to look at today because behind every one of those data points there is a person could be you could be a friend could be a family for many the American dream it's more about surviving these days less about prospering as we know it in the traditional sense so I want to summarize the key numbers in this report today first off the headline inflation according to the bureau in April 2025 4.2% now when you look at true rate of unemployment the TRU that's 24.3% when you look at the true out of population so that's ages 16 plus 52.4% over half of the adult population is functionally unemployed now let's look at the definition of unemployed because this makes a huge difference the bureau they define employed as if during the survey reference week they meet any of the following criteria worked at least one hour as a paid employee worked at least one hour in their own business profession trade or farm were temporarily absent from their job business or farm whether or not they were paid for the time off worked without pay for a minimum of 15 hours in a business or farm owned by a member of their family lys modifies the bureau's official definition with the following very important stipulations it says an individual must either have a full-time job 35 plus hours per week or have a part-time job but no desire to be in full-time for example students in many case also the second stipulation is that an individual must earn at least $25,000 annually you'll note the screen says $20,000 but that was changed to $25,000 as of January of last year so they're saying that 24% of Americans are functionally unemployed and I want to look at where they get that 24% number from um actually let's look first at who Lysup is and this is a small nonprofit that was founded back in 2019 by Eugene or Gene Lewig he's the former US comproller of the currency and Dr carol Lewig and its stated mission is to produce original economic research and develop more transparent metrics like the true rate of unemployment TRU that's what we're talking about here today they also do the true living cost TLC and the minimum quality of life the MQL indices and they have the goal here of shedding some light on the economic challenges that are facing specifically low and middle inome Americans and the organization itself it is a little bit controversial mainly because of its small size the fact that they rely heavily on the bureau's statistics to actually form their bases so people in support of Lyset they will say that it's credible they'll say that they have notable leadership they have openness they have updated data and they have recognition in some high-profile media they do face their fair share of criticism about possible oversimplification some of the concerns are they work as a valuable supplementary lens on economic well-being especially for those low middle inome Americans but definitely should be viewed alongside other sources and methods for a balanced perspective i have no problem with that at all so when we look at what LISE does zero in on they look at workers who are unemployed actively looking with no job or undermployed so they're working part-time but they're seeking full-time hours or possibly they're working at a poverty level wage even though they are working full-time hours but their pay is below the sustainable level so this is an intentional shift from the bureau's minimum bar of that 1 hour in two weeks definition that counts you as employed regardless of your income now the true algorithm it uses that BLS data but it adjusts for that $25,000 per year poverty threshold and updates it with inflation for those below that unless they're earning more they're deemed to be functionally unemployed they also address those who are working under the table and they say that they have a separate informal economy that shows the off the books work that added 2.8 8 million jobs into functional employment but they're saying that that hardly moves the needle on their broader labor challenges that we're experiencing out there today now finally here TRU true is published on a monthly basis and usually comes out about 2 weeks after the BLS releases its report so when we break down these numbers the TRU shows a rather disturbing uh racial gender and educational disparities when we look at the actual data if we look at by race black workers have a TRU of 26.7% Hispanic workers 28.2% white workers 23% by gender women 28.6% men are 20% we look at it by education no high school 50.7% are functionally unemployed high school diploma or some college around 28% with a bachelor's or higher that's much lower 16% with a bachelor's degree 13.1% with an advanced degree now I want to talk about the implications of all this information here and if you believe that the official 4.2% rate is true then you're probably going to assume that the labor market is still pretty strong and you would support decisions like you know delaying interest rate changes perhaps reducing some labor market interventions but when you look at the LIEP numbers they warn that treating this sort of borderline or poorly paid workers as successful employment that could lead to pretty poor policy design that includes underinvestment in the workforce development housing affordability or child care these are areas that make it harder to close that affordability gap inflation even if it's moderate does hit hardest on those who are barely at survival or just above survival wages the Federal Reserve officials they say that they look through these low wages but a lot of Americans don't have any cushioning at all if costs do in fact rise now the question is does that 4.2% reflect the worker experience or is that just the economic data that comes out true asks is the job enough to get by or barely enough to get through and it's sort of a nudge toward rethinking the labor stats some many probably in this case are going to argue the TRU overounts temporary unemployment or that informal work will fill those gaps but LISEP's data show that the informal economy adds negligible relief and that the underpaid workers remain underresourced to me it's pretty obvious out there that a lot of Americans don't just lack jobs but they lack sufficiency from the work that they are doing so when we look ahead if the policy makers if the bureau if they start using some richer metrics like TRU does then we could see some stronger wage support potentially increasing minimum wages or tax credit another point if inflation stays low or if wages do edge up then that TRU could tick downward gradually that said if wage pressure does fade if the gig economy holds strong then millions may remain sort of trapped in this underemployment range underpaid and certainly uncertain does that make sense certainly uncertain i think that it does so here's my question again when someone says 4.2% unemployment do you feel that that reflects your neighborhood the people that you know or even your family what does a job really mean in 2025 let me know what you think below should these be the measures that matter more in policy in business or quite frankly even in elections let me know what you think as always I'll say thank you so much for watching and we'll see you in the next