Sign in Subscribe
Economic growth

The Hidden Crisis of Functional Unemployment in America

Strategic Insights

— 1 min read

A wave of strong hiring numbers and low unemployment rates may be obscuring a more severe issue affecting millions of Americans. The Ludwig Institute for Shared Economic Prosperity (LISEP) has found that 24.3% of working-age individuals are "functionally unemployed," meaning they are technically employed but still unable to secure full-time, living-wage work. This statistic, which exceeds 66 million Americans, paints a stark contrast to the 4.2% official unemployment rate reported by the Bureau of Labor Statistics (BLS) in May 2025.

Key Takeaways:

  • The True Rate of Unemployment (TRU) metric, developed by LISEP, counts 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.
  • 24.3% of working-age Americans are "functionally unemployed," which means they are technically employed but still unable to secure full-time, living-wage work.
  • The number of "functionally unemployed" individuals in the United States exceeds 66 million.
  • The crisis of functional unemployment disproportionately affects women, with 29.9% of women experiencing this form of unemployment, compared to 19.3% of men.
  • Black and Hispanic Americans consistently face higher rates of functional unemployment than their white counterparts, highlighting deep-seated structural inequalities.
  • The traditional employment metrics fail to capture the widening chasm between having a job and making a living.
  • The larger question is not just about training workers better but about rebuilding pathways to meaningful, sustainable employment that provides living wages, benefits, and opportunities for upward mobility.

Statistics:

  • 24.3% of working-age Americans are "functionally unemployed" (LISEP, 2024).
  • More than 66 million Americans are trapped in jobs that do not cover even the most basic cost of living (LISEP, 2024).
  • Women experience a functional unemployment rate of 29.9%, while men experience a rate of 19.3% (LISEP, 2024).
  • Black and Hispanic Americans face higher rates of functional unemployment than their white counterparts (LISEP, 2024).
  • The Bureau of Labor Statistics (BLS) reported an official unemployment rate of 4.2% in May 2025.
  • The federal government considers anyone who worked at least one hour in the past two weeks to be employed (BLS, May 2025 Report).

Sources:

  • (2024). Report on Functional Unemployment in America. Ludwig Institute for Shared Economic Prosperity.
  • (2025). May 2025 Report. Bureau of Labor Statistics.
  • (2025). May 2025 Report. Bureau of Labor Statistics.

Read more