There are two additional problems with the way we count people who are unemployed.

First, there’s no accounting for how many hours a part-time worker is working. By the BLS’ traditional definition, a handyman or private nurse who works for a single afternoon each week is counted in the headline national unemployment figure as “employed,” even if they want more work but can’t find it. Our unemployment figures make it look like the person working a handful of hours because that’s the only work they can get is just as “employed” as a full-time CEO. In practice, this means that the unemployment rate actively obscures how many workers are living in poverty in part not because they don’t have a job, but because they can’t get enough hours.

Second, the data doesn’t indicate whether the job a worker is doing pays enough to keep them out of poverty. The assumption implicit in the data is that if you’re “employed,” all should be well, but as the growing movement toward raising the minimum wage attests, it’s increasingly clear that many American workers are employed, often full-time, but still living in poverty.

So it’s time to stop using the unemployment rate as shorthand for how well the economy is going. After all, what good is an indicator that counts someone so underemployed that his family is living in poverty on the same side of the economic ledger as someone in the top 1 percent?

Functionally Unemployed

To be clear, the problem isn’t the data itself — the survey data compiled by the federal BLS remains the gold standard for assessing the labor market. The problem is that policymakers depend on the picture painted by the top-line statistic to help them understand reality. That picture is completely different if you filter the same BLS data to exclude part-time workers looking for full-time work and those making less than a poverty wage (pegged conservatively at $20,000 per year).

Anyone who wants full-time work but can only find part-time work, and those working full-time but earning too little to climb above the poverty line, should be considered functionally unemployed. I’ve begun to calculate this, which I’ve dubbed the True Rate of Unemployment. And the TRU in December wasn’t 6.7 percent — it was an alarming 25.1 percent.

The divergence between the official unemployment numbers and functional unemployment is stark, and it was bad even before the pandemic. In February 2020, when the economy was supposedly “hot,” the official BLS release suggested that a mere 3.5 percent of Americans were unemployed, but the “TRU” number was 24 percent. Think of that. So even when the economy was purportedly at its peak before the pandemic, approximately a quarter of Americans looking for full-time work at a livable wage couldn’t find it. And then at the nation’s worst moment in nearly a century, that number jumped, showing that 32.4 percent of the workforce was out of luck.

It gets worse. I’ve also been calculating the ratio of working-age adults who are functionally unemployed to the population at large, which would include those discouraged workers who’ve stopped looking for unemployment. As of December, a full 53.9 percent of working-age Americans do not have living-wage full-time jobs. More disheartening still: It’s 80 percent for those without a high school degree, and 59.5 percent for those with only a high school diploma.

Maybe most troublesome, our research reveals that Black Americans tend to glean marginally better employment opportunities for themselves during boom times — but then fall back farther when the economy turns sour, preventing them from ever establishing a real toehold toward economic equality. Today, the situation for Black Americans is disgraceful, with 30.2 percent unemployed by TRU, compared with 22.7 percent for white Americans.

Failed Response

The bottom line for too many Americans and for minorities in particular, is that for a long, long time, the American economy has not been performing as well as the headline unemployment rate suggests. And while that may be news to those living in comfortable neighborhoods and suburbs, it will not surprise those living in more downtrodden corners of many cities, let alone those who are living in places like the largely forgotten city where I grew up, York, Pa. Over the last several decades, as businesses including York Dental or York Air Conditioner have either closed facilities or scaled back, middle-class prosperity has become more of an impossible dream than an American Dream.

Washington, D.C., has failed to respond appropriately because the headline unemployment figures, particularly in good times, have given some policymakers of both parties license to embrace a narrative that in the absence of a crisis like the one we’re enduring today, our economic approach works fairly well.

We need an economic agenda born from the realization that the true unemployment picture is much worse than policymakers realize. A quarter of the workforce, including a disproportionate share of minority communities, can’t land a full-time job with a living wage even when the overall economy appears to be healthy. The window through which we view the economy matters. We’ve been using a broken measuring stick to keep track of our success.

It’s time to take a hard look at just what the unemployment rate tells us and stop thinking that it’s a good measure of overall economic performance. Until we begin seeing the economic landscape as it is, policymakers are unlikely to make much headway toward fostering the kind of economic growth that will have a genuine, broad-based impact on the lives of struggling Americans.