'Functional Unemployment' Rate Shows No Improvement, Says Ludwig Institute

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Ludwig Institute for Shared Economic Prosperity

Nov 14, 2024, 10:30 ET

Living-wage job prospects mixed across demographic categories

WASHINGTON, Nov. 14, 2024 /PRNewswire/ -- The U.S. "functional unemployment" rate saw a slight uptick in October, rising 0.1 percentage points, according to the latest True Rate of Unemployment (TRU) by the Ludwig Institute for Shared Economic Prosperity (LISEP).

The TRU—a measure of the "functionally unemployed," defined as the jobless plus those seeking, but unable to find, full-time employment paying above poverty wages ($25,000 a year in 2024 dollars) after adjusting for inflation—rose in October from 23.9% to 24%. Similarly, the official unemployment rate issued by the U.S. Bureau of Labor Statistics (BLS) remained unchanged at 4.1%. While the overall TRU rose, White workers saw an improvement, with their TRU decreasing by 0.4 points to 22.5%.

Hispanic workers also posted some gains in October, with a TRU dropping from 28.2% to 27.9%. But the rate of the total Hispanic population without functional employment, as measured by the True Rate of Unemployment Out of the Population (TRU OOP), is higher than last month (51.7% vs. 51.1%) due to a lower labor force participation rate—which appears to be a result of low-wage earners leaving the workforce. Black workers saw their TRU rise 1.7 percentage points, from 25.2 to 26.9%.

"Recent events, such as the hurricanes in the southeast U.S. and the Boeing strike, certainly had an impact on the labor market in October, albeit temporarily," said LISEP Chairman Gene Ludwig. "However, the underlying trend remains: nearly one-quarter of American workers find themselves working for poverty-level wages."

During the same period, the TRU for men increased 0.4 percentage points, from 19.5% to 19.9%, while the rate for women improved, dropping 0.2 percentage points. And while this represents a slight closing of the gender gap, the TRU for women remains considerably higher at 28.8%.

"Even though major headline economic indicators point to a strong economy that is gaining steam, the data show this is not the reality for a majority of Americans," Ludwig said. "Without thoughtful economic policy addressing the challenges facing middle-and lower-income families, we will continue to see unrest and dissatisfaction with the status quo."

About TRU

LISEP issued the white paper "Measuring Better: Development of 'True Rate of Unemployment' Data as the Basis for Social and Economic Policy'' upon announcing the new statistical measure in October 2020. The paper and methodology can be viewed here. LISEP issues TRU one to two weeks following the release of the BLS unemployment report, which occurs on the first Friday of each month. The TRU rate and supporting data are available on the LISEP website at https://www.lisep.org/tru.

About LISEP

The Ludwig Institute for Shared Economic Prosperity (LISEP) was created in 2019 by Ludwig and his wife, Dr. Carol Ludwig. The mission of LISEP is to improve the economic well-being of middle- and lower-income Americans through research and education. LISEP's original economic research includes new indicators for unemployment, earnings, and cost of living. These metrics aim to 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. On X: @LISEP_org.

About Gene Ludwig

In addition to his role as LISEP chair, Gene Ludwig is a managing partner of Canapi LLC, a financial technology venture fund. He is the founder and CEO of Ludwig Advisors, which counsels financial firms on critical matters. Ludwig is also the founder of the Promontory family of companies. He is the former vice chairman and senior control officer of Bankers Trust New York Corp. and served as the U.S. Comptroller of the Currency from 1993 to 1998. He is also author of the book The Vanishing American Dream, which investigates the economic challenges facing low- and middle-income Americans. On X (formerly Twitter): @geneludwig.

SOURCE Ludwig Institute for Shared Economic Prosperity