Nearly a quarter of the U.S. is ‘functionally unemployed.’ Here’s what that means
According to the U.S. Bureau of Labor Statistics, unemployment rates have not shifted much in recent years. The current unemployment rate is reported as being 4.2%—just a slight increase from the 4% it hovered around between 2022 and 2024. But according to a new report, another measure of unemployment is much higher, and steadily growing. The April report, which comes from the Ludwig Institute for Shared Economic Prosperity (LISEP), a nonprofit that produces original economic research, documents what it calls the “true rate” of unemployment. That rate refers to “functional unemployment,” which takes into account those who are job-seeking yet unable to find work, as well as those with full-time jobs but whose earnings put them below the poverty line (under $25,000/year). The functional unemployment rate has risen for three consecutive months and is currently 24.4%. That means about one in four U.S. adults are considered functionally unemployed. LISEP Chair Gene Ludwig said in a press release that the outlook on the trend shows “little signs of improvement” amid lack of an “influx of dependable, good-paying jobs.” The report showed the functional unemployment rate rising 1.4% among Black workers to 26.7%. It decreased slightly for white workers, moving from 23.1% to 23%. While the rate for men increased (by 1.2%) bringing the total to 20%, women narrowed the gender gap. Women’s true unemployment rate dipped 0.8 percentage points to 28.6%. While it’s no secret that the federal government has been steadily shedding jobs, there haven’t been major increases in the unemployment rate. However, the new findings paint a grim picture of how many U.S. workers are struggling to find employment and a livable income. Meanwhile, wage increases haven’t kept up with a rising cost of living, not to mention the cost to raise a child, which has ticked up 25% in the past two years alone. “Amid an already uncertain economic outlook, the rise in functional unemployment is a concerning development,” Ludwig explains. “This uncertainty comes at a price, and unfortunately, the low- and middle-income wage earners ultimately end up paying the bill.”
According to the U.S. Bureau of Labor Statistics, unemployment rates have not shifted much in recent years. The current unemployment rate is reported as being 4.2%—just a slight increase from the 4% it hovered around between 2022 and 2024. But according to a new report, another measure of unemployment is much higher, and steadily growing.
The April report, which comes from the Ludwig Institute for Shared Economic Prosperity (LISEP), a nonprofit that produces original economic research, documents what it calls the “true rate” of unemployment. That rate refers to “functional unemployment,” which takes into account those who are job-seeking yet unable to find work, as well as those with full-time jobs but whose earnings put them below the poverty line (under $25,000/year).
The functional unemployment rate has risen for three consecutive months and is currently 24.4%. That means about one in four U.S. adults are considered functionally unemployed.
LISEP Chair Gene Ludwig said in a press release that the outlook on the trend shows “little signs of improvement” amid lack of an “influx of dependable, good-paying jobs.”
The report showed the functional unemployment rate rising 1.4% among Black workers to 26.7%. It decreased slightly for white workers, moving from 23.1% to 23%. While the rate for men increased (by 1.2%) bringing the total to 20%, women narrowed the gender gap. Women’s true unemployment rate dipped 0.8 percentage points to 28.6%.
While it’s no secret that the federal government has been steadily shedding jobs, there haven’t been major increases in the unemployment rate. However, the new findings paint a grim picture of how many U.S. workers are struggling to find employment and a livable income. Meanwhile, wage increases haven’t kept up with a rising cost of living, not to mention the cost to raise a child, which has ticked up 25% in the past two years alone.
“Amid an already uncertain economic outlook, the rise in functional unemployment is a concerning development,” Ludwig explains. “This uncertainty comes at a price, and unfortunately, the low- and middle-income wage earners ultimately end up paying the bill.”
