New study says nearly a quarter of U.S. workers are functionally unemployed
A recent analysis by the Ludwig Institute finds that 24.9% of U.S. workers are "functionally unemployed," a rate that includes part-time workers earning under $26,000.
The Ludwig Institute for Shared Economic Prosperity released its "True Measure of Unemployment" (TRU) metric, which counts not only job seekers but also involuntary part-time employees earning less than $26,000 a year. According to the institute, the functional unemployment rate reached 24.9% in July, a modest dip from 25.2% in December but marking a fourth straight month of increase. Gene Ludwig said the rise, coupled with a drop in workforce participation, suggests the labor market may be losing vigor despite the official unemployment rate staying within a historically healthy range.
He emphasized that a strong market should attract more workers, not push them out. EY-Parthenon chief economist Gregory Daco warned that a 20% unemployment figure does not match observable economic conditions and highlighted modest wage growth of 3.2% versus inflation at 3.4% as a factor dampening consumer spending. The analysis underscores concerns that stagnant income growth could curb overall economic momentum.
Why it matters
It highlights that many workers lack stable, well-paid jobs, which could affect consumer spending and economic growth.
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