Nearly 1 In 4 U.S. Workers Are ‘Functionally Unemployed’ New Data Finds

Nearly 1 in 4 U.S. workers were considered “functionally unemployed” in July, according to an alternative labor-market measure that counts people who are jobless, unable to secure full-time work, or earning poverty-level wages, CBS News reports.

The Ludwig Institute for Shared Economic Prosperity reported Aug. 20 that its True Rate of Unemployment rose to 24.9% in July, up from 24.7% in June. The rate has increased for four consecutive months and is 1.3 percentage points higher than in March. 

The institute’s findings contrast with the federal government’s official unemployment rate. The U.S. Bureau of Labor Statistics⁠ reported that the unemployment rate fell to 4.1% in July, while the number of unemployed people remained little changed at 6.9 million. 

The difference stems largely from how the two measures define employment. The Ludwig Institute classifies workers as functionally unemployed if they do not have a job, want full-time employment but cannot secure it, or earn less than $26,000 annually before taxes. 

Women experienced a substantially higher rate of functional unemployment than men in July. The rate among women reached 31%, compared with 19.5% among men. Black workers had a functional unemployment rate of 27.3%, compared with 26.7% for Hispanic workers and 23.8% for white workers. 

Official employment data also showed limited hiring in July. U.S. nonfarm payroll employment declined by 23,000 jobs, while employment estimates for May and June were revised downward by a combined 103,000 jobs, according to the Bureau of Labor Statistics.

Gene Ludwig, the institute’s chairman, said the four-month increase warrants attention if the trend continues.

“We shouldn’t read too much into a single month, but four months begin to tell a story,” Ludwig said. 

Some economists caution against treating the institute’s measure as equivalent to the government’s unemployment rate because the two track different conditions. Gregory Daco, chief economist at EY-Parthenon, told CBS News⁠ that an unemployment rate above 20% does not correspond with other indicators of the U.S. economy.

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