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Time of India
2 days ago
- Business
- Time of India
Why are 24% of Americans still 'Functionally Unemployed' in a growing economy?
Caption: (Gemini) Amid headlines touting low unemployment and strong hiring numbers, a deeper, more troubling narrative is taking root across the American workforce. According to a report by the Ludwig Institute for Shared Economic Prosperity (LISEP), 24.3% of working-age Americans are "functionally unemployed"—a term that recasts the traditional definition of joblessness to reflect a far grimmer reality (LISEP, 2024). Unlike the official unemployment rate reported by the Bureau of Labor Statistics (BLS)—which stood at 4.2% as of May 2025—LISEP's metric includes individuals who are technically employed but still unable to secure full-time, living-wage work. That's more than 66 million Americans trapped in jobs that do not cover even the most basic cost of living. Redefining unemployment: What the numbers miss The federal government considers anyone who worked at least one hour in the past two weeks to be employed (BLS, May 2025 Report). But this narrow framework fails to capture underemployment and wage insufficiency. LISEP's True Rate of Unemployment (TRU) seeks to fill that blind spot by counting individuals as fully employed only if they work full-time (at least 35 hours per week) and earn at least $20,000 annually, adjusted for inflation, or are voluntarily in part-time roles and content with their hours. More than just a statistical tweak, this reframing exposes the widening chasm between having a job and making a living. A crisis in plain sight: The toll of functional unemployment The 24.3% 'functionally unemployed' rate represents workers in three key categories: The unemployed and actively seeking work Part-time workers who want full-time employment Full-time workers earning below $25,000 per year before taxes, below the federal poverty threshold for many households according to LISEP, 2024. Not just a number: Disparities across race and gender The crisis does not strike equally. Women experience a functional unemployment rate of 29.9%, compared to 19.3% for men, according to LISEP's latest analysis. The racial breakdown is equally stark: Black and Hispanic Americans consistently face higher rates of functional unemployment than their white counterparts. These disparities point to deep-seated structural inequalities, from occupational segregation and pay gaps to reduced access to education, transportation, and caregiving support. The traditional employment metrics gloss over this hidden labor divide. TRU, in contrast, brings these injustices to the surface. A shrinking job market or skills mismatch? Much of the national discourse has fixated on the so-called skills gap—the idea that workers lack the training needed to compete in a modern economy. But that explanation oversimplifies the problem. Many Americans are skilled but remain locked out of sectors where automation, outsourcing, and wage compression have reduced the availability of viable work. The bigger question: What counts as work in America today? At its core, the issue of functional unemployment is about more than data; it's about how we value labour and human dignity in a 21st-century economy. LISEP's findings force policymakers to confront the uncomfortable truth: Tens of millions of Americans are technically employed, yet economically invisible. It's not just a matter of training workers better. It's about rebuilding pathways to meaningful, sustainable employment, jobs that pay living wages, provide benefits, and allow for upward mobility. Is your child ready for the careers of tomorrow? Enroll now and take advantage of our early bird offer! Spaces are limited.
Newsweek
3 days ago
- Business
- Newsweek
America Warned of Millions Who Are 'Functionally Unemployed'
Based on facts, either observed and verified firsthand by the reporter, or reported and verified from knowledgeable sources. Newsweek AI is in beta. Translations may contain inaccuracies—please refer to the original content. While headline unemployment may be stable, an increasing number of Americans are experiencing what is referred to as "functional unemployment," a term that highlights the deeper issues facing America's workforce. According to the Ludwig Institute for Shared Economic Prosperity (LISEP), 24.3 percent of the country now find themselves "functionally unemployed," defined as "the jobless plus those seeking, but unable to find, full-time employment and those in poverty-wage jobs." This is up from 24.2 percent in April, but down from 24.7 percent at the same time last year. Why It Matters While topline employment figures remain among the most commonly consulted labor indicators, LISEP's metric captures other elements that factor into the overall health of the U.S. labor market. In doing so, the think tank argues, it can reveal overlooked issues while providing policymakers with "more accurate measure of Americans' financial well-being." What To Know According to the Bureau of Labor Statistics (BLS), the unemployment rate held steady at 4.2 percent for the second consecutive month in May and has remained above 4 percent since May of last year. The economy also added 139,000 jobs over the month, slightly behind the average monthly gain of 149,000 over the past year. LISEP's report, released days later, factored in the official figures alongside the share of the labor force that is seeking but unable to secure full-time employment, as well as those earning below a living wage, measured as $25,000 before taxes. The U.S. Department of Labor building in Washington, D.C., as seen in June 2025. The U.S. Department of Labor building in Washington, D.C., as seen in June the resulting figure for the True Rate of Unemployment (TRU) has been steadily improving in recent years, LISEP notes that there remain significant disparities along the lines of gender and race. The percentage of functionally unemployed White Americans (23.6 percent) sits well below the rate for the Black and Hispanic population: 26.7 percent and 27.3 percent, respectively. Additionally, 29.9 percent of women are now in this category, compared to 19.3 percent of men. LISEP's estimate that 24.3 percent of the working population finds itself functionally unemployed would equate to over 66 million Americans, based on the population included in BLS calculations. However, some experts are skeptical of the need for LISEP's unique metric, given the availability of the incorporated data. Labor economist David Card noted that the BLS already publishes several alternatives to the headline unemployment figures, including its "alternative measures of labor underutilization," which includes part-time workers who are seeking full-time work. "That is a long-standing series that many people look at. It has risen more over the past year than the standard unemployment rate," he told Newsweek. "I am not so convinced that adding all the other groups is helpful, other than as a rhetorical device." What People Are Saying LISEP Chair Gene Ludwig, in a June 18 press release: "Over the past four months, we've seen a stagnation in job opportunities that pay above poverty wages, particularly for low- and middle-income workers. As economic uncertainty grows, more Americans are losing ground. Wages aren't keeping up with the rising cost of living, and the shrinking availability of living-wage jobs is compounding the strain. The consequences for working families are becoming increasingly severe." "The TRU, and its stark contrast with government headline statistics, tells us American workers are facing greater challenges than what we are led to believe," he added. David Card, professor of economics at the University of California, Berkeley, told Newsweek: "It is useful to keep track of poverty rates and various measures of unemployment and lots of other indicators. Whether they should be combined in a single index is unclear." Josh Bivens, Chief Economist at the American Enterprise Institute, told Newsweek: "The problem of low pay in the U.S. is real and important, but it's not a new feature of the economy and it's not been hidden. And the last five years have seen this problem get substantially better. Low-pay indicators have dropped faster in that time than in any time in the past 40 years." "Compared to historic norms, the incredibly strong economy handed off to the Trump administration persists for now. Soon it might not," he added. "The signs of that will be rising unemployment, involuntary part-timism, and falling wages for low-wage workers." What Happens Next The U.S. labor market and broader economy face a mixed outlook in the coming months, primarily due to the administration's trade policies and their potential impact Last week, Federal Reserve Chair Jerome Powell said that the U.S. economy was "in solid shape," but warned of "very high uncertainty" due to the impact of tariffs. "Everyone that I know is forecasting a meaningful increase in inflation in coming months from tariffs," Powell said, "because someone has to pay for the tariffs."
CNBC
13-06-2025
- Business
- CNBC
Americans are losing spending power, say researchers: Most can no longer afford a 'minimal quality of life'
In 2023, about 11% of Americans officially lived in poverty, according to the U.S. Census Bureau. Even more struggle financially, though — and the share may be higher than you think. Many of the headline economic stats you see are based on "survival indexes," says Gene Ludwig, founder of the Ludwig Institute for Shared Economic Prosperity, and don't reflect Americans' full financial picture. "What people are thinking about — a real shared prosperity — is not, 'I can survive,' but, 'What does it take to live a middle-class life?'" he says. "'What does it take to be on the first rung, at least, of the American dream?'" To that end, LISEP developed a "Minimal Quality of Life Index," which takes into account not only essentials, such as food and shelter, but also the costs living a fulfilling life with a chance at upward mobility. Food costs in the model, for example, include occasional trips to casual restaurants as well as the cost of hosting an annual holiday meal. The index factors in basic leisure costs, such as cable and streaming subscriptions, and trips to the six movies and two MLB games per year in the cheap seats. According to LISEP's analysis, most Americans don't meet that standard. In 2023, the bottom 60% of households by income fell well short of the threshold for a minimal quality of life. That's largely because wages have failed to keep up with rising costs, the researchers say. Medical premiums rose 301% from 2001 to 2023, they note, while travel expenses were up 170%. Rent grew by 131%. The cost of raising children, which includes saving for higher education, by LISEP's estimates, grew by 107%. With wages failing to keep pace, LISEP finds that consumers' real spending power decreased by 4%, on average, over that period. Americans who fall short of the minimal quality of life costs may sink into debt or have to forego important financial planning steps, such as saving for college or investing for retirement, to afford modest discretionary expenses such as a gym membership or an occasional vacation. For families looking to get on the path to upward mobility, "it is hard to give advice without being patronizing," says Kevin Brady, a certified financial planner with Wealthspire Advisors. If your budget is stretched thin and you have mouths to feed, there's only so much financial maneuvering that can help. That said, there are a couple key things you can do to lower your living costs and help you put more money toward your goals. You may feel guilty about spending on some of the things that bring you or your family joy, but those small luxuries likely don't break your budget. "I get tired of the 'Stop your Starbucks latte habit' [advice], because in reality it's not people's fault," says Laura Lynch, a CFP and founder of The Tiny House Adviser. "The structures around us have created an expectation of a lifestyle that is increasingly becoming unreachable for folks." You're better off focusing on the major tentpoles of your budget, experts say: Housing, transportation and food costs. Marcos Segrera, a CFP and principal at Evensky & Katz/Foldes Wealth Management, calls these the "Big Three," and attacking them may involve some creativity. "This might mean refinancing a mortgage, choosing a more fuel-efficient or used car, or embracing meal planning to cut down on food waste and expensive takeout," he says. You may want to consider outside-the box solutions to lowering your housing costs, says Lynch. "Co-housing, tiny homes, [accessory dwelling units], multi-generational ownership are all ways to share expenses, resources and create wealth," she says. It's easier to fund your financial goals — paying down debt, building an emergency fund, investing for the future — if there is more money to go around. So "one other piece of advice I have here is to not just focus on expenses, but think more about growing your income however possible," says Brady. "Again, it is easy to say but harder to do this." Boosting your income may mean asking for a raise or finding a different job altogether. Workers who switched companies in May earned an average pay bump of 7%, according to data from ADP. It may make sense to look for inexpensive ways to increase your workplace skills or to familiarize yourself with emerging technologies, such as AI, Brady says. You may even think about picking up a side hustle. You may find it less difficult, in the end, to bring in more money than to cut back on what you provide for the people you love. "Look at both sides, not just spending," says Brady. "Because with a young family, that might be hard to change."
Economic Times
09-06-2025
- Business
- Economic Times
The hidden job crisis: 25% of Americans are functionally unemployed and it's worse than it sounds
The unemployment rate in America seems low. However, a new report suggests a different story. The Ludwig Institute says the 'true' unemployment rate is much higher. It includes people working part-time or earning low wages. Black and Hispanic workers are affected more. The institute hopes to provide a clearer picture of the economic situation. This helps policymakers make better decisions. Tired of too many ads? Remove Ads The True Unemployment Rate Might Surprise You How LISEP Measures Who's Really Employed Tired of too many ads? Remove Ads Work full-time (35 or more hours per week) Earn at least $25,000 annually before taxes Why the Official Numbers Doesn't Show the Real Picture Who's hit the hardest? Black workers: 27% functionally unemployed Hispanic workers: 28% White workers: 23% Women overall: more likely to be functionally unemployed than men Why it matters Tired of too many ads? Remove Ads FAQs At first glance, the U.S. job market looks strong, as the unemployment rate remained near a 50-year low in April 2025 at 4.2%, and American employers added 177,000 jobs, even amid the uncertainty of tariffs and trade wars, as per a the 'true' rate of unemployment in the US in April was 24.3%, which rose 0.03% from the previous month, as per the Ludwig Institute for Shared Economic Prosperity (LISEP) data, reported Moneywise. LISEP's True Rate of Unemployment (TRU) includes the data of the unemployed people in the US and also the workers who are employed but still struggling, according to the Chair Gene Ludwig said, 'We are facing a job market where nearly one-in-four workers are functionally unemployed, and current trends show little sign of improvement,' quoted institute's metric, called the True Rate of Unemployment (TRU), redefines what it means to be employed, and unlike the Bureau of Labour Statistics, which counts a person as employed even if they worked as little as one hour in a two-week period, TRU focuses on whether that work is actually sustainable, according to the falling short of that, like part-time workers looking for more hours, those earning poverty-level wages, or people who aren't counted by the BLS because they stopped looking for work are included in the TRU, as per explained that, 'The harsh reality is that far too many Americans are still struggling to make ends meet, and absent an influx of dependable, good-paying jobs, the economic opportunity gap will widen,' as quoted in the official unemployment rate leaves out people who aren't actively job hunting, even if they want work, and in April, that included 5.7 million people, as per Moneywise. TRU includes them along with low-wage workers and the underemployed, offering a more complete view of who's actually making a living, according to the said the rate reported by the BLS is 'not technically false,' but is 'deceiving,' considering the number of Americans in the workforce who are 'employed on poverty-like wages' or 'on a reduced workweek that they do not want,' reported numbers are even more concerning when broken down by race and gender, as per Moneywise report:The institute also revealed that Black Americans have had a higher TRU than white Americans every single month since 1995, as per the says, this method, 'provide policymakers and the public with a more transparent view of the economic situation of all Americans, particularly low- and middle-income households, compared with misleading headline statistics,' quoted said, 'Amid an already uncertain economic outlook, the rise in functional unemployment is a concerning development,' adding, 'This uncertainty comes at a price, and unfortunately, the low- and middle-income wage earners ultimately end up paying the bill," as quoted in the reported by the Ludwig Institute for Shared Economic Prosperity (LISEP), which aims to show the full picture of employment in the exactly, because it's just limited. LISEP says it's 'not technically false,' but it doesn't tell the full story.
Time of India
09-06-2025
- Business
- Time of India
The hidden job crisis: 25% of Americans are functionally unemployed and it's worse than it sounds
The unemployment rate in America seems low. However, a new report suggests a different story. The Ludwig Institute says the 'true' unemployment rate is much higher. It includes people working part-time or earning low wages. Black and Hispanic workers are affected more. The institute hopes to provide a clearer picture of the economic situation. This helps policymakers make better decisions. Tired of too many ads? Remove Ads The True Unemployment Rate Might Surprise You How LISEP Measures Who's Really Employed Tired of too many ads? Remove Ads Work full-time (35 or more hours per week) Earn at least $25,000 annually before taxes Why the Official Numbers Doesn't Show the Real Picture Who's hit the hardest? Black workers: 27% functionally unemployed Hispanic workers: 28% White workers: 23% Women overall: more likely to be functionally unemployed than men Why it matters Tired of too many ads? Remove Ads FAQs At first glance, the U.S. job market looks strong, as the unemployment rate remained near a 50-year low in April 2025 at 4.2%, and American employers added 177,000 jobs, even amid the uncertainty of tariffs and trade wars, as per a the 'true' rate of unemployment in the US in April was 24.3%, which rose 0.03% from the previous month, as per the Ludwig Institute for Shared Economic Prosperity (LISEP) data, reported Moneywise. LISEP's True Rate of Unemployment (TRU) includes the data of the unemployed people in the US and also the workers who are employed but still struggling, according to the Chair Gene Ludwig said, 'We are facing a job market where nearly one-in-four workers are functionally unemployed, and current trends show little sign of improvement,' quoted institute's metric, called the True Rate of Unemployment (TRU), redefines what it means to be employed, and unlike the Bureau of Labour Statistics, which counts a person as employed even if they worked as little as one hour in a two-week period, TRU focuses on whether that work is actually sustainable, according to the falling short of that, like part-time workers looking for more hours, those earning poverty-level wages, or people who aren't counted by the BLS because they stopped looking for work are included in the TRU, as per explained that, 'The harsh reality is that far too many Americans are still struggling to make ends meet, and absent an influx of dependable, good-paying jobs, the economic opportunity gap will widen,' as quoted in the official unemployment rate leaves out people who aren't actively job hunting, even if they want work, and in April, that included 5.7 million people, as per Moneywise. TRU includes them along with low-wage workers and the underemployed, offering a more complete view of who's actually making a living, according to the said the rate reported by the BLS is 'not technically false,' but is 'deceiving,' considering the number of Americans in the workforce who are 'employed on poverty-like wages' or 'on a reduced workweek that they do not want,' reported numbers are even more concerning when broken down by race and gender, as per Moneywise report:The institute also revealed that Black Americans have had a higher TRU than white Americans every single month since 1995, as per the says, this method, 'provide policymakers and the public with a more transparent view of the economic situation of all Americans, particularly low- and middle-income households, compared with misleading headline statistics,' quoted said, 'Amid an already uncertain economic outlook, the rise in functional unemployment is a concerning development,' adding, 'This uncertainty comes at a price, and unfortunately, the low- and middle-income wage earners ultimately end up paying the bill," as quoted in the reported by the Ludwig Institute for Shared Economic Prosperity (LISEP), which aims to show the full picture of employment in the exactly, because it's just limited. LISEP says it's 'not technically false,' but it doesn't tell the full story.
