REPORT: 1 in 4 Americans Are ‘Functionally Unemployed’

Stressed woman with hands on face at a desk.

The nation’s reported unemployment rate of 4.2% masks a troubling reality: nearly one in four Americans are struggling to find meaningful work.

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The Ludwig Institute for Shared Economic Prosperity (LISEP) reveals a “true rate” of unemployment (TRU) at 24.3%, spotlighting a significant gap between official figures and the actual plight of American workers.

About 25% of Americans are “functionally unemployed,” meaning they cannot find jobs that pay a living wage.

This startling figure emphasizes the disparity between the rosy picture presented by official statistics and the harsh economic realities faced by many.

These individuals are either jobless, relegated to part-time positions, or trapped in low-wage jobs.

Gene Ludwig, Chairman of LISEP, has been vocal about the severity of the situation.

He points to the “economic opportunity gap” that continues to widen, leaving many Americans behind.

For example, demographic disparities are stark: while black workers saw their TRU increase to 26.7%, Hispanic workers experienced an even higher rate of 28.2%.

Amid an already uncertain economic outlook, the rise in functional unemployment is a concerning development.

This uncertainty comes at a price, and unfortunately, the low- and middle-income wage earners ultimately end up paying the bill.

The gender gap also highlights troubling trends. While women’s TRU has slightly decreased to 28.6%, men’s numbers climbed to 20%.

In light of these statistics, Ludwig calls on policymakers to adopt a new stable metric-based approach to better serve working Americans.

Despite a low official unemployment rate suggesting a healthy U.S. economy, such measures can mislead.

Individuals who are barely employed, having worked perhaps an hour in two weeks, are still considered “employed.”

Many Americans earn substantially less than the $67,000 necessary for a decent standard of living, with average earnings lingering at $38,000.

Larger implications arise from the gaps in official versus true unemployment rates.

Ill-informed policy decisions will continue to affect, and possibly devastate, middle- and low-income Americans.

LISEP’s research captures intricacies often missed by traditional indicators, thereby providing a necessary foundation for effective and equitable policymaking.

While the government touts low unemployment, the facts tell a different story. A significant portion of the population continues to face economic vulnerability.

The so-called prosperous labor market may not be so prosperous after all, and until effective measures are adopted, we risk widening the economic divide for American families.