The federal government reported that unemployment is holding steady at a near 50-year low. However, a new study suggests that this may not be the whole picture.
A new Ludwig Institute for Shared Economic Prosperity (LISEP) analysis found nearly one in four Americans is considered “functionally unemployed.”
What is ‘functional unemployment’?
LISEP defines functional unemployment as individuals without jobs, unable to find full-time employment (35+ hours/week) or earn a living wage. It measures a living wage as “conservatively pegged at $25,000 annually before taxes.”
The big difference
According to the Bureau of Labor Statistics, the unemployment rate in America remained unchanged from March to April at 4.2%.
However, LISEP said its True Rate of Unemployment (TRU) report, which measures functional unemployment, rose slightly from 24% in March to 24.3% in April. LISEP also said the functional unemployment rate has remained at 24% or higher since February.
“Current trends show little sign of improvement,” LISEP Chair Gene Ludwig said. “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.”
How much do Americans need to make?
A separate analysis revealed a widening gap between Americans’ earnings and their needs for a “minimal quality of life.”
LISEP’s Minimum Quality of Life Index (MQL) encompasses daily necessities such as food and shelter, along with education, transportation and clothing.
That analysis found Americans must earn at least $67,000 a year to attain the MQL. However, the bottom 60% of U.S. households earned an average of $38,000 per year in 2023.
“Traditional headline economic indicators like GDP and unemployment tell us the economy is thriving, but they don’t reflect the lived reality of most Americans,” Ludwig said. “Americans are working harder than ever, fueling our economic growth, but the benefits of that hard work are not being distributed in a way that supports upward mobility for too many middle- and low-income Americans.”
